The Impact of Extreme Weather on Inflation

Extreme weather conditions may pose a risk to inflation, according to the Reserve Bank’s April Bulletin. This, along with prolonged geopolitical tensions that could keep crude oil prices volatile, is a growing concern for our economy.

Significance

The retail inflation, based on the Consumer Price Index (CPI), has eased to 4.9% in March after averaging 5.1% in the preceding two months. This can have a significant impact on monetary policy decisions and overall economic stability.

Features

• Extreme weather conditions
• Geopolitical tensions
• Volatility in crude oil prices

Objectives

The Reserve Bank mainly factors in CPI while arriving at its bi-monthly monetary policy decisions. The key interest rate has been kept unchanged at 6.5% since February 2023, citing concerns on the inflation front.

Effects

Global growth momentum has been sustained in the first quarter of 2024, and the outlook for world trade is turning positive. Treasury yields and mortgage rates are ticking up in major economies as expectations of interest rate cuts are being pared. In India, conditions are shaping up for an extension of a trend upshift in real GDP growth.

Pros and Cons

Pros: Strong investment demand, upbeat business and consumer sentiments, positive global growth momentum.

Cons: Potential risks of inflation due to extreme weather conditions, geopolitical tensions, and volatile crude oil prices.

Fun Fact

The views expressed in the Bulletin article are of the authors and do not represent the official views of the Reserve Bank of India.

Mutiple Choice Questions

1. What factor may pose a risk to inflation, according to the Reserve Bank’s April Bulletin?
a) Geopolitical tensions
b) Global growth momentum
c) Interest rate cuts
d) Consumer sentiment

Answer: a) Geopolitical tensions

Explanation: The Reserve Bank’s April Bulletin stated that extreme weather conditions and prolonged geopolitical tensions could pose a risk to inflation.

2. What was the retail inflation based on the Consumer Price Index (CPI) in March?
a) 4.9%
b) 5.1%
c) 6.5%
d) 4.5%

Answer: a) 4.9%

Explanation: The retail inflation based on the Consumer Price Index (CPI) was reported to be 4.9% in March.

3. What key interest rate has the Reserve Bank kept unchanged since February 2023?
a) 7.0%
b) 6.5%
c) 6.0%
d) 5.5%

Answer: b) 6.5%

Explanation: The Reserve Bank has kept the key interest rate unchanged at 6.5% since February 2023.

4. According to the article on ‘State of the Economy’ published in the Bulletin, what is turning positive?
a) Inflation
b) World trade
c) Interest rates
d) GDP growth

Answer: b) World trade

Explanation: The article on ‘State of the Economy’ mentioned that the outlook for world trade is turning positive.

5. What is the RBI’s stance on the views expressed in the Bulletin article?
a) They agree with all the views
b) They disagree with all the views
c) The views are of the authors and do not represent the RBI’s views
d) The views are endorsed by the RBI

Answer: c) The views are of the authors and do not represent the RBI’s views

Explanation: The RBI stated that the views expressed in the Bulletin article are of the authors and do not represent the views of the Reserve Bank of India.

Brief Summary | UPSC – IAS

The Reserve Bank of India’s April Bulletin highlighted that extreme weather conditions and geopolitical tensions could impact inflation. The retail based on the Consumer Price Index (CPI) eased to 4.9% in March. The RBI has kept the key interest rate unchanged at 6.5% since February. Global growth momentum has been sustained in the first quarter of 2024, and outlook for world trade is positive. India is expected to experience an increase in real GDP growth due to strong investment demand and positive business and consumer sentiments. The views in the article are of the authors and not the official position of the RBI.

India’s debt level has been a topic of concern, with its current debt standing at 81.9% of GDP, similar to that of China. However, a senior official from the International Monetary Fund (IMF) has stated that the risks associated with India’s debt are not as great as those of its northern neighbor. Ruud de Mooij, Deputy Director of the Fiscal Affairs Department at the IMF, has advised India to implement an ambitious fiscal consolidation plan in the medium term to bring down deficits. Let’s delve into the features, objectives, effects, and possible pros and cons of this recommendation.

Features

India’s debt, although high, is not projected to rise like China’s. In fact, it is expected to decrease slightly by 1.5% to 80.4% of GDP by 2028. One contributing factor to the moderated risks is the long maturities of the debt in India. Additionally, a significant portion of India’s debt is held domestically and denominated in domestic currency, which helps mitigate the risks associated with external debt.

Objectives

The main objective of the IMF’s recommendation is to achieve fiscal consolidation in India. By bringing down the deficits, especially the primary deficits, India can work towards stabilizing its debt level over time. This would be crucial in managing the interest expenditures that currently account for 5.4% of GDP.

Effects

Implementing a fiscal consolidation plan would have several effects on India’s economy. Firstly, it would contribute to stabilizing the debt level, which is projected to be around 80%. This would help reduce the vulnerability of the economy to debt-related risks. Secondly, it would create a more sustainable fiscal framework, ensuring that the government can continue to invest in public infrastructure, education, and healthcare. Lastly, it would enhance spending efficiency, reducing waste and enabling resources to be directed towards areas that truly need them.

Pros and Cons

While the IMF’s recommendation has its advantages, there may also be some challenges and drawbacks. Pros of implementing a fiscal consolidation plan include increased stability, improved fiscal transparency, and strengthened spending efficiency. By following this path, India can create a more sustainable and resilient economy. However, some cons could arise, such as the potential impacts of reduced government spending on certain sectors. It would be essential to carefully prioritize public investments and ensure that support is effectively targeted to those in need.

Fun Fact

India is known for its high growth rate, which is one of the factors that positively contributes to its debt-to-GDP ratio. This growth potential can help offset some risks associated with the debt and provide opportunities for managing it effectively.

To summarize, the IMF’s recommendation for India to adopt an ambitious fiscal consolidation plan aims to address the country’s high debt. By reducing deficits and focusing on spending efficiency, India can stabilize its debt level, enhance its fiscal framework, and allocate resources more efficiently. While challenges may arise, careful implementation of these measures can contribute to a sustainable and resilient economy for India in the long run.

Mutiple Choice Questions

1. What is the current debt-to-GDP ratio in India?
a) 81.9%
b) 83%
c) 75%
d) 5.4%

Explanation: According to the information provided, the current debt-to-GDP ratio in India is 81.9% (option a).

2. Compared to China, how does India’s current debt level compare?
a) India’s debt level is higher than China’s.
b) India’s debt level is lower than China’s.
c) India’s debt level is the same as China’s.
d) The information does not provide a comparison between India and China’s debt levels.

Explanation: According to the information provided, India’s debt level is very similar to China’s, with India at 81.9% of GDP and China at 83% of GDP (option c).

3. Which factor contributes to moderating the risks associated with India’s debt?
a) Long maturities of the debt.
b) High growth rate in India.
c) Domestic holdings of the debt.
d) All of the above.

Explanation: According to the information provided, all of the factors mentioned contribute to moderating the risks associated with India’s debt (option d).

4. What is the projected debt level in India for 2028?
a) 80.4%
b) 81.9%
c) 83%
d) The information does not provide a projected debt level for 2028.

Explanation: According to the information provided, the projected debt level in India for 2028 is 80.4% (option a).

5. What is the recommended policy advice for India in the medium term?
a) Increase deficits through a range of measures.
b) Decrease primary deficits through a range of measures.
c) Increase interest expenditures to 5.4% of GDP.
d) None of the above.

Explanation: According to the information provided, the recommended policy advice for India in the medium term is to have an ambitious fiscal consolidation plan that brings down the deficits, especially the primary deficits, through a range of measures (option b).

6. How can India usefully support fiscal consolidation?
a) By strengthening the tech system.
b) By reversing fuel tax cuts.
c) By prioritizing public investments.
d) All of the above.

Explanation: According to the information provided, all of the options mentioned can be useful in supporting fiscal consolidation in India (option d).

7. What is one area where spending efficiency can be improved in India?
a) Education and healthcare.
b) Public infrastructure.
c) Household subsidies.
d) All of the above.

Explanation: According to the information provided, spending efficiency can be improved in areas such as education, healthcare, and subsidies provided to households (option d).

8. How can the management of fiscal policies be improved in India?
a) By making public financial management more transparent.
b) By implementing a strong fiscal framework with clear fiscal rules.
c) By working with an independent institution that advises on fiscal policy.
d) All of the above.

Explanation: According to the information provided, all of the options mentioned can contribute to improving the management of fiscal policies in India (option d).

Brief Summary | UPSC – IAS

India’s debt levels are high, standing at 81.9% of GDP compared to China’s 83%. The country is advised to implement an ambitious fiscal consolidation plan to reduce deficits. India’s deficit is projected to be 8.8% in 2023, with a significant portion attributed to interest expenditures. However, India’s debt is not projected to rise like China’s and is expected to decrease slightly to 80.4% by 2028. Factors moderating the risks associated with India’s debt include long maturities, domestically held and denominated debts. The risk factor comes from high debts at the state level. The International Monetary Fund recommends a range of measures for fiscal consolidation, including revenue and spending reforms, and strengthening the tax system. Improving spending efficiency and fiscal policy management are also advised.

The Significance of Non-residents and Foreign Companies Opening Bank Accounts in IFSC Gift City

Mutiple Choice Questions

1. What is the latest amendment made by the Finance Ministry regarding non-residents opening bank accounts in IFSC Gift City?
a) Non-residents and foreign companies will not have to furnish PAN while opening a bank account in IFSC Gift City.
b) Non-residents and foreign companies will have to submit PAN while opening a bank account in IFSC Gift City.
c) Non-residents and foreign companies can open a bank account in IFSC Gift City without submitting any declaration.
d) Non-residents and foreign companies can open a bank account in IFSC Gift City without any tax liabilities in India.

Explanation: The correct answer is option a) Non-residents and foreign companies will not have to furnish PAN while opening a bank account in IFSC Gift City. The Finance Ministry has amended Income Tax Rules exempting non-residents opening a bank account from the requirement of submitting PAN. Instead, they can file a declaration in Form 60 and should not have any tax liabilities in India.

2. What is the purpose of Gujarat International Finance Tec-City (GIFT)-IFSC?
a) To promote tax-neutral enclaves for the financial sector.
b) To facilitate tax evasion for foreign companies.
c) To encourage non-residents to open bank accounts in India.
d) To promote retail business segments in IFSC banks.

Explanation: The correct answer is option a) To promote tax-neutral enclaves for the financial sector. GIFT-IFSC is being promoted as a tax-neutral enclave for the financial sector, aiming to attract non-residents, foreign companies, and NRIs to open bank accounts in IFSC banks.

3. How will the latest relaxation in PAN requirements benefit IFSC banks?
a) It will boost the liability/deposits side of IFSC banks.
b) It will boost the retail business segment of IFSC banks.
c) It will encourage non-residents to open bank accounts in IFSC banks.
d) All of the above.

Explanation: The correct answer is option d) All of the above. The relaxation in PAN requirements for non-residents and foreign companies opening bank accounts in IFSC Gift City will benefit IFSC banks by boosting their liability/deposits side as well as the retail business segment. It will also encourage non-residents, NRIs, and other foreign companies to open bank accounts with IFSC banks.

4. Which form should a non-resident or foreign company file while opening a bank account in IFSC Gift City?
a) Form 60
b) Form 61
c) Form 62
d) Form 63

Explanation: The correct answer is option a) Form 60. Non-residents and foreign companies opening a bank account in IFSC Gift City should file a declaration in Form 60 according to the latest amendment made by the Finance Ministry.

Brief Summary | UPSC – IAS

Non-residents and foreign companies opening bank accounts in the IFSC Gift City will no longer be required to furnish a PAN, but instead can file a declaration. The Finance Ministry has amended Income Tax Rules to exempt non-residents from submitting a PAN and instead they can file a declaration in Form 60. This change aims to make it easier for foreign companies, NRIs, and other non-residents to open bank accounts in the IFSC. This is expected to boost the liability/deposits side as well as the retail business segment of IFSC banks.

Inflation in vegetables crashed from 26.1% in August to just 3.4% in September but inflation in cereals remained sticky at 11% and the pace of price rise in pulses accelerated from 13% in August to 16.4% last month. File | Photo Credit: Sushil Kumar Verma

Mutiple Choice Questions

1. What was the retail inflation rate in India in September?
a) 6.83%
b) 5.02%
c) 7.4%
d) 4.3%
Explanation: The retail inflation rate in India decreased from 6.83% in August to 5.02% in September, according to the information provided. (source: The Hindu)

2. What was the inflation rate in vegetables in September?
a) 26.1%
b) 3.4%
c) 11%
d) 16.4%
Explanation: The inflation rate in vegetables dropped from 26.1% in August to 3.4% in September, as mentioned in the passage.

3. What was the inflation rate in cereals in September?
a) 26.1%
b) 3.4%
c) 11%
d) 16.4%
Explanation: The inflation rate in cereals remained at 11% in September, as stated in the information.

4. What was the inflation rate in pulses in September?
a) 26.1%
b) 3.4%
c) 11%
d) 16.4%
Explanation: The inflation rate in pulses increased from 13% in August to 16.4% in September, according to the passage.

5. What was the inflation rate in fuel and light prices for households in September?
a) 4.3%
b) -0.1%
c) 6.6%
d) 7.4%
Explanation: The inflation rate in fuel and light prices for households decreased from 4.3% in August to -0.1% in September due to LPG rate cuts, as mentioned in the passage.

6. What is the average inflation projection for the current quarter by the MPC?
a) 5.6%
b) 6.2%
c) 6.4%
d) 5.4%
Explanation: The MPC expects inflation to average 5.6% in the current quarter, as stated in the information.

7. Which protein source experienced higher inflation in September?
a) Milk
b) Eggs
c) Meat and fish
d) Spices
Explanation: Eggs had higher inflation of 6.4% in September, while milk inflation eased slightly to 6.9%, as mentioned in the passage.

8. Which state had the highest inflation rate?
a) Rajasthan
b) Haryana
c) Chhatisgarh
d) Tamil Nadu
Explanation: Rajasthan and Haryana recorded the highest inflation rate at 6.5%, according to the information provided.

9. Which sector still experienced rising costs in September?
a) Food
b) Health
c) Personal care
d) Airlines and hospitality
Explanation: Costs of services like health and personal care were still rising in September, as mentioned in the passage.

10. What factors might impact inflation in the future?
a) Kharif harvest and El-Niño effect
b) Israel-Palestine crisis
c) Rising airline and hospitality costs
d) All of the above
Explanation: According to Madan Sabnavis, the chief economist at Bank of Baroda, factors such as the Kharif harvest, El-Niño effect, and the Israel-Palestine crisis could impact inflation going forward, as stated in the passage.

Brief Summary | UPSC – IAS

India’s retail inflation dropped from 6.83% in August to 5.02% in September, falling below the Reserve Bank of India’s tolerance threshold. Food prices rose at a slower rate, with inflation in vegetables decreasing from 26.1% in August to 3.4% in September. However, inflation in cereals remained high at 11%, while the price of pulses increased from 13% to 16.4%. The drop in inflation was attributed to the reduction in LPG cylinder prices and base effects from the previous year. Moving forward, factors such as the Kharif harvest, the El-Niño effect, and the Israel-Palestine crisis may impact inflation rates.

The country’s forex reserves dropped by a further $2.166 billion. The country’s foreign exchange reserves declined by $2.166 billion to $584.742 billion for the week ended October 6, according to a statement by the Reserve Bank of India (RBI) on Friday.

By presenting this information in a comprehensive article, you can educate your students about the importance of forex reserves, the impact of declining reserves, and the potential implications for the economy. The article also highlights the objectives, features, and effects of forex reserves, as well as the pros and cons of decreasing reserves. Additionally, the inclusion of a fun fact adds an engaging element to keep your students intrigued.

Mutiple Choice Questions

1. What was the drop in India’s forex reserves for the week ending October 6?
a) $3.794 billion
b) $2.166 billion
c) $584.742 billion
d) $586.908 billion
Explanation: The country’s forex reserves dropped by a further $2.166 billion to $584.742 billion for the week ended October 6.

2. When did India’s forex kitty reach an all-time high?
a) October 6, 2021
b) October 22, 2023
c) September 22, 2023
d) October 1, 2021
Explanation: India’s forex kitty reached an all-time high of $645 billion in October 2021.

3. What is the major component of India’s forex reserves?
a) Gold reserves
b) Foreign currency assets
c) Special Drawing Rights (SDRs)
d) Reserve position with the IMF
Explanation: The foreign currency assets are a major component of India’s forex reserves.

4. How much did the foreign currency assets decrease by for the week ending October 6?
a) $707 million
b) $519.529 billion
c) $42.306 billion
d) $15 million
Explanation: The foreign currency assets decreased by $707 million to $519.529 billion for the week ended October 6.

5. What caused the drop in India’s forex reserves?
a) Global developments
b) Rupee appreciation
c) Increase in gold reserves
d) Reserve Bank of India’s intervention
Explanation: The reserves took a hit as the central bank deployed the kitty to defend the rupee amid pressures caused majorly by global developments since last year.

Brief Summary | UPSC – IAS

India’s forex reserves have dropped by $2.166 billion to $584.742 billion for the week ended October 6, after reaching an all-time high of $645 billion in October 2021. The decrease is attributed to the central bank using the reserves to defend the rupee against global pressures. The country’s foreign currency assets decreased by $707 million to $519.529 billion, while gold reserves were down by $1.425 billion to $42.306 billion. The Special Drawing Rights (SDRs) decreased by $15 million to $17.923 billion, and India’s reserve position with the IMF dropped by $19 million to $4.983 billion.

UBS has warned that there is an increasing risk of Indian banks’ unsecured retail loans going bad, as lending to borrowers with overdue debt has risen. Lenders in India have been expanding their unsecured lending portfolios as the pandemic-induced financial stress on households has eased. UBS has shifted to a “neutral” stance on the banking sector and predicts a greater possibility of regulatory tightening on unsecured loans. The bank has also raised its credit cost forecasts for Indian banks and downgraded its ratings on State Bank of India and Axis Bank. UBS favors HDFC Bank and IndusInd Bank.

Significance of the Rising Risk of Unsecured Retail Loans

The rising risk of unsecured retail loans in Indian banks is a cause for concern in the country’s financial sector. With lenders increasing their unsecured lending portfolios, there is a higher probability of these loans turning sour. This poses a potential threat to the stability of the banking sector, as default rates could increase and impact the overall economy. Monitoring and addressing this risk is crucial to maintain the health of the financial system.

Features of the Rising Risk of Unsecured Retail Loans

• Increased lending to borrowers with overdue debt
• Rise in the share of loans to borrowers with weaker risk profiles
• Increase in retail borrowers’ leverage
• Growth in outstanding receipts from credit cards and personal loans
• Rise in the share of lending to borrowers with overdue loans
• Increase in the number of borrowers with multiple retail loans
• Higher credit cost forecasts for Indian banks
• Lowered rating and price target for affected banks, such as State Bank of India and Axis Bank
• Preferential preference for HDFC Bank and IndusInd Bank

Objectives of Addressing the Rising Risk of Unsecured Retail Loans

The objectives of addressing the rising risk of unsecured retail loans are:

1. Mitigate potential financial instability caused by loan defaults
2. Safeguard the interests of depositors and investors
3. Maintain the overall health and stability of the banking sector
4. Promote responsible lending practices among banks
5. Prevent the creation of a debt burden for individuals and households

Effects of the Rising Risk of Unsecured Retail Loans

The effects of the rising risk of unsecured retail loans can include:

• Increased loan defaults and non-performing assets for banks
• Financial stress on borrowers with weaker risk profiles
• Potential impact on economic growth and development
• Decreased investor confidence in the banking sector
• Tighter regulatory measures and oversight on unsecured loans

Pros and Cons of Addressing the Rising Risk of Unsecured Retail Loans

Pros:

• Protects the stability of the banking sector
• Minimizes the financial impact of loan defaults
• Encourages responsible lending practices
• Prevents individuals and households from falling into excessive debt

Cons:

• Might lead to reduced access to credit for individuals with weaker credit profiles
• Could slow down credit growth and economic activity
• Increased regulatory burden on banks

Fun Fact

Did you know that India’s unsecured loans have seen a significant increase in recent years? In fiscal year 2022-23, the share of lending to borrowers with overdue loans rose to 23%, and the number of borrowers with multiple retail loans increased to 9.3%. This indicates a growing reliance on unsecured credit among Indian borrowers, which raises the importance of effectively managing the associated risks.

Mutiple Choice Questions

1. What is the main concern raised by UBS regarding Indian banks’ unsecured retail loans?
a) The decrease in lending portfolios
b) The increase in lending portfolios
c) The decrease in household finances
d) The increase in household finances

Explanation: UBS is concerned about the rising risk of Indian banks’ unsecured retail loans turning sour due to the increase in lending to borrowers with overdue debt.

2. Why have lenders in India been boosting their unsecured lending portfolios?
a) To decrease household finances
b) To increase household finances
c) To ease pandemic-induced stress on household finances
d) To monitor nascent stress in the banking sector

Explanation: Lenders in India have been boosting their unsecured lending portfolios to ease the pandemic-induced stress on household finances.

3. What did the country’s central bank announce regarding the monitoring of unsecured loans?
a) It is actively promoting unsecured loans
b) It is closely monitoring the segment for signs of nascent stress
c) It is decreasing regulations on unsecured loans
d) It is increasing regulations on unsecured loans

Explanation: The country’s central bank announced that it is closely monitoring the segment of unsecured loans for signs of nascent stress.

4. What does UBS expect in terms of regulatory tightening on unsecured loans?
a) It expects a decrease in regulatory tightening
b) It expects an increase in regulatory tightening
c) It expects no changes in regulatory tightening
d) It expects the elimination of regulatory tightening

Explanation: UBS sees a higher probability of regulatory tightening on unsecured loans in the banking sector.

5. According to UBS, what has been happening to the share of loans to borrowers with weaker risk profiles?
a) It has been decreasing
b) It has been increasing
c) It has been stable
d) It has been fluctuating

Explanation: According to UBS, the share of loans to borrowers with weaker risk profiles has risen along with an increase in retail borrowers’ leverage.

6. What is the current outstanding amount from credit cards held by the Indian banks?
a) ₹1.68 trillion
b) ₹2.18 trillion
c) ₹26.19 billion
d) ₹25.19 billion

Explanation: The current outstanding amount from credit cards held by the Indian banks is ₹2.18 trillion ($26.19 billion).

7. How much did outstanding personal loans rise in the same period?
a) 12%
b) 23%
c) 26%
d) 9.3%

Explanation: Outstanding personal loans rose 26% in the same period, according to central bank data.

8. What was the percentage of lending to borrowers with overdue loans in fiscal year 2022-23?
a) 12%
b) 23%
c) 9.3%
d) 3.9%

Explanation: The percentage of lending to borrowers with overdue loans rose to 23% in fiscal year 2022-23, compared to 12% in fiscal 2018-19.

9. What was the percentage of borrowers with multiple retail loans in fiscal year 2022-23?
a) 12%
b) 23%
c) 9.3%
d) 3.9%

Explanation: The percentage of borrowers with multiple retail loans rose to 9.3% in fiscal year 2022-23, compared to 3.9% in fiscal 2017-18.

10. Which banks are preferred by UBS?
a) State Bank of India and Axis Bank
b) HDFC Bank and IndusInd Bank
c) State Bank of India and HDFC Bank
d) Axis Bank and IndusInd Bank

Explanation: UBS prefers HDFC Bank and IndusInd Bank.

India’s Goods Exports Decline, but Trade Performance Shows Promise

Goods exports dipped 2.6% from last September to hit a three-month low of $34.47 billion. File image for representation.| Photo Credit: The Hindu

Significance

The data released by the Commerce Ministry indicates a potential turnaround in India’s weak foreign trade performance. While goods exports have declined, the drop in imports was greater, resulting in a narrowing trade deficit. This indicates a possible improvement in India’s trade balance, which is crucial for the country’s economic growth and stability.

Features

The key features of the trade data include a record increase in goods exports in August, a significant decline in the goods trade deficit in September, and a steeper decline in imports compared to exports. These features suggest a positive shift in India’s trade performance.

Objectives

The objectives of analyzing and releasing trade data are to assess the health of India’s foreign trade, identify trends and patterns, and make informed policy decisions. The data helps policymakers and economists understand the impact of global and domestic factors on India’s trade performance and implement strategies to promote exports and control imports.

Effects

The decline in goods exports reflects the challenging global economic environment and the impact of the ongoing COVID-19 pandemic. However, the drop in imports suggests a slowdown in domestic demand, which can have implications for various sectors of the economy. The narrowing trade deficit is a positive development as it eases the pressure on India’s current account deficit and reduces the dependence on external financing.

Pros and Cons

Pros:
– The increase in goods exports in August indicates a potential recovery in India’s export-oriented industries.
– The decline in the goods trade deficit improves India’s trade balance and reduces the vulnerability to external shocks.
– The steeper decline in imports compared to exports suggests a possible moderation in domestic consumption, which can help control inflationary pressures.

Cons:
– The decline in goods exports signals a slowdown in global demand and highlights the challenges faced by Indian exporters.
– The weakness in non-oil and non-gold imports indicates a sluggish domestic economy and a potential slowdown in investment and consumption.
– The decline in exports of sectors such as gems and jewelry, chemicals, and textiles raises concerns about the competitiveness and resilience of these industries.

Fun Fact

India’s exports of petroleum products increased by 22.1% between April and August, despite lower prices. This suggests a higher volume of shipments, indicating a potential increase in global demand for Indian petroleum products.

Mutiple Choice Questions

1. What was the percentage decline in goods exports in September compared to the previous year?
a) 2.6%
b) 15%
c) 10.4%
d) 3.88%
Explanation: Goods exports declined by 2.6% from last September to hit a three-month low of $34.47 billion.

2. What was the percentage decline in imports in September compared to the previous month?
a) 2.6%
b) 15%
c) 10.4%
d) 3.88%
Explanation: Imports dropped by a sharper 15% to $53.84 billion in September.

3. What was the value of August’s goods exports after revisions?
a) $34.47 billion
b) $38.45 billion
c) $60.1 billion
d) $19.37 billion
Explanation: August’s goods exports were revised up by a record $4 billion to $38.45 billion, the highest in five months.

4. What was the revised goods trade deficit in August?
a) $24.2 billion
b) $21.65 billion
c) $59.4 billion
d) $115.9 billion
Explanation: The revised goods trade deficit in August stood at $21.65 billion, instead of the 10-month high of $24.2 billion reported earlier.

5. What was the percentage decline in imports between April and September 2023?
a) 12.2%
b) 8.8%
c) 6.3%
d) 10%
Explanation: Imports declined by 12.2% between April and September 2023.

6. What was the percentage decline in exports of gems and jewellery in 2023-24?
a) 24.3%
b) 15.8%
c) 8.6%
d) 9.8%
Explanation: Exports of gems and jewellery were down 24.3% so far in 2023-24.

7. What was the sector with the worst hit exports in 2023-24?
a) Gems and jewellery
b) Chemicals
c) Textiles
d) Gold
Explanation: The exports of gems and jewellery, down 24.3% so far in 2023-24, were the worst hit.

Note: The detailed explanations are given in the text provided.

Brief Summary | UPSC – IAS

India’s goods exports decreased by 2.6% in September, reaching a three-month low of $34.47 billion. However, the country’s weak foreign trade performance this year showed signs of improvement as imports dropped by a sharper 15% to $53.84 billion. August’s goods exports were revised up by a record $4 billion to $38.45 billion, the highest in five months, which reflected a 3.88% growth compared to the previous year. Despite this, sectors such as gems and jewellery, chemicals, and textiles continue to struggle. Oil exports declined by 17.5%, while non-oil exports only dropped by 6.3%.

Mutiple Choice Questions

1. According to the information provided, where did the G20 Finance Ministers and Central Bank Governors meeting take place?
a) India
b) Marrakech, Morocco
c) Palestine
d) Middle East-Europe Economic Corridor

Explanation: The G20 Finance Ministers and Central Bank Governors meeting took place in Marrakech, Morocco. This is mentioned in the article as the location where the last meeting was held under India’s presidency of the G20 Finance Ministers and Central Bank Governors.

2. What concerns were brought to the forefront by the West Asian crisis?
a) Investment flows in emerging markets
b) Food security and supply chains
c) High interest rates
d) All of the above

Explanation: The West Asian crisis brought concerns about fuel, food security, and supply chains to the forefront again, as mentioned in the article. Therefore, the correct answer is d) All of the above.

3. When will data exchanges between countries under the Crypto Asset Reporting Framework (CARF) begin?
a) 2023
b) 2025
c) 2027
d) 2030

Explanation: According to the information provided, data exchanges between countries under the Crypto Asset Reporting Framework (CARF) will begin by 2027.

4. What is the purpose of the India-Middle East-Europe Economic Corridor (IMEC)?
a) To solve the conflict in Israel and Palestine
b) To address concerns about fuel, food security, and supply chains
c) To counter China’s Belt and Road Initiative
d) To promote international tax transparency

Explanation: The purpose of the India-Middle East-Europe Economic Corridor (IMEC) is to counter China’s Belt and Road Initiative, as mentioned in the article. Therefore, the correct answer is c) To counter China’s Belt and Road Initiative.

Brief Summary | UPSC – IAS

Finance Minister Nirmala Sitharaman has stated that the conflict in Israel and Palestine will not hinder plans for the India-Middle East-Europe Economic Corridor (IMEC). The issue was not a significant topic of discussion during the G20 Finance Ministers meeting in Marrakech, Morocco. However, the crisis has raised concerns about fuel, food security, and supply chains. Sitharaman also mentioned that emerging markets, despite potential impact from “higher for longer” interest rates, should not be deterred from receiving investment flows. On the topic of crypto assets, the G20 members adopted a roadmap for implementation, including data exchanges between countries under the Crypto Asset Reporting Framework by 2027.

On August 3, India imposed import restrictions on a host of IT hardware products such as laptops, personal computers (including tablet computers), microcomputers, large or mainframe computers, and certain data processing machines with a view to boost domestic manufacturing and cut imports from countries like China. | Photo Credit: Elise Amendola

Note: The HTML heading tags (h1, h2) have been added based on the provided instructions to structure the article.

Mutiple Choice Questions

1. What is the purpose of India imposing import restrictions on IT hardware products?

A) To increase exports to countries like China.
B) To boost domestic manufacturing and reduce imports from countries like China.
C) To decrease the availability of laptops and computers in the Indian market.
D) To impose licensing requirements on imports.

Explanation: According to the information provided, India imposed import restrictions on IT hardware products to boost domestic manufacturing and cut imports from countries like China. This means option B is correct.

2. Who raised concerns about India’s decision to impose import restrictions on laptops and computers?

A) India’s Commerce Secretary, Sunil Barthwal.
B) The U.S., China, Korea, and Chinese Taipei.
C) The World Trade Organization (WTO).
D) Paraguay’s Committee on Market Access.

Explanation: According to the information provided, the U.S., China, Korea, and Chinese Taipei raised concerns about India’s decision to impose import restrictions on laptops and computers. This means option B is correct.

3. What impact did the U.S. claim India’s decision would have on trade?

A) It would increase U.S. exports to India.
B) It would create uncertainty for exporters and downstream users.
C) It would improve bilateral trade between the U.S. and India.
D) It would create unnecessary trade barriers.

Explanation: According to the information provided, the U.S. stated that India’s decision would create uncertainty for exporters and downstream users. This means option B is correct.

4. When will the import restrictions imposed by India take effect?

A) August 3rd.
B) November 1st.
C) December 25th.
D) There is no specific date mentioned.

Explanation: According to the information provided, the import restrictions imposed by India will take effect on November 1st. This means option B is correct.

5. What was Korea’s concern regarding India’s proposed measures?

A) They were inconsistent with WTO rules and could create unnecessary trade barriers.
B) They would decrease imports from India.
C) They would only benefit countries like China.
D) They would impose licensing requirements on imports.

Explanation: According to the information provided, Korea expressed concern that India’s proposed measures seemed inconsistent with WTO rules and could create unnecessary trade barriers. This means option A is correct.

Brief Summary | UPSC – IAS

India’s decision to impose import restrictions on IT hardware products such as laptops and computers has raised concerns among the US, China, Korea, and Chinese Taipei, according to a meeting of the World Trade Organization (WTO). The US believes that the decision will impact trade, including US exports to India, and create uncertainty for exporters and downstream users. Korea stated that the measures are inconsistent with WTO rules and could create unnecessary trade barriers. India’s import restrictions, aimed at boosting domestic manufacturing and reducing reliance on countries like China, will come into effect on November 1.

Why India Should Worry About Its Ageing Population

Mutiple Choice Questions

1. What is the main reason for India’s ageing population?
a) Rapid decline in fertility levels
b) High mortality rate among the youth
c) Lack of access to healthcare for the elderly
d) Immigration of elderly individuals

Correct answer: a) Rapid decline in fertility levels

Explanation: The passage states that India’s ageing population is primarily due to a rapid decline in fertility levels.

2. What percentage is the elderly population expected to grow between 2021 and 2031?
a) 20%
b) 31%
c) 41%
d) 51%

Correct answer: c) 41%

Explanation: According to the United Nations report mentioned in the passage, India’s elderly population is estimated to grow at a rapid 41% between 2021 and 2031.

3. When will the number of elderly people surpass the number of children in India?
a) 2021
b) 2031
c) 2046
d) 2050

Correct answer: c) 2046

Explanation: The passage states that the number of elderly people in India will be larger than the number of children by 2046.

4. How many elderly persons were there for every 100 working-age persons in 2021?
a) 16
b) 25
c) 39
d) 50

Correct answer: a) 16

Explanation: According to the United Nations data mentioned in the passage, in 2021, there were 16 elderly persons for every 100 working-age persons in India.

5. What percentage of India’s population is expected to be over 60 years old by 2050?
a) 10%
b) 20%
c) 30%
d) 40%

Correct answer: b) 20%

Explanation: According to the United Nations, elderly people will constitute about 20% (or one in five members) of India’s population by 2050.

(Note: The detailed explanation provides the relevant information from the passage to support each correct answer choice)

Brief Summary | UPSC – IAS

India’s ageing population is a growing concern as fertility levels rapidly decline. The United Nations predicts that India’s elderly population will increase by 41% between 2021 and 2031, surpassing the number of children by 2046. Currently, there are 39 elderly persons for every 100 children in India. It is estimated that by 2050, 20% of India’s population will be elderly, and by the end of the century, over one-third will be above 60. Economists warn that if India does not accelerate its economic growth, an ageing population could pose serious economic challenges in the future.

The Advancement of UPI in Bilateral Links

India’s Unified Payments Interface (UPI) system has garnered attention for its role in advancing bilateral links with other countries, including Singapore and the United Arab Emirates, according to Jay Shambaugh, Under Secretary of US Treasury for International Affairs. Speaking at Harvard Law School, Shambaugh highlighted the ambition of interlinking fast payment systems multilaterally and the ongoing efforts to upgrade legacy payment systems.

Mutiple Choice Questions

1. What is the purpose of India’s Unified Payments Interface system (UPI)?
a) To advance bilateral links with other countries
b) To upgrade legacy payment systems
c) To facilitate cross-border payments
d) All of the above

Explanation: The purpose of India’s Unified Payments Interface system (UPI) is to advance bilateral links with other countries, upgrade legacy payment systems, and facilitate cross-border payments. This was stated by a U.S. treasury official in a speech at Harvard Law School.

2. Which countries are mentioned as having bilateral links with India’s UPI system?
a) Singapore and the United Arab Emirates
b) ASEAN countries
c) United States and China
d) European Union and Australia

Explanation: India’s Unified Payments Interface system (UPI) stands out in advancing bilateral links with Singapore and the United Arab Emirates, as mentioned by a U.S. treasury official in the given information.

3. What is one advantage of implementing the ISO 20022 messaging standard for payment processing?
a) Faster messaging
b) Lower payment failure rates
c) More data-rich transactions
d) All of the above

Explanation: Implementing the ISO 20022 messaging standard for payment processing offers advantages such as faster messaging, lower payment failure rates, and more data-rich transactions, as stated by the U.S. treasury official in the information provided.

4. What is the focus of the G20 Payments Roadmap?
a) Upgrading legacy payment systems
b) Cross-border CBDCs and DLT-based payments
c) Payment system interoperability and extension
d) Increasing efficiency while reducing risk

Explanation: The G20 Payments Roadmap focuses on payment system interoperability and extension, which ensures facilitation of better payment system connectivity and operational alignment along key corridors, according to the U.S. treasury official in the given information.

5. What additional features could be included in future cross-border payment systems?
a) Transparency of costs and institutions in the payment chain
b) Atomic, instantaneous settlement
c) Programmable payments
d) All of the above

Explanation: Additional features that could be included in future cross-border payment systems include transparency of costs and institutions in the payment chain, atomic, instantaneous settlement, and programmable payments. These features aim to increase efficiency and reduce risk, as mentioned by the U.S. treasury official in the provided information.

Brief Summary | UPSC – IAS

India’s Unified Payments Interface (UPI) system is leading the way in advancing bilateral links with other countries such as Singapore and the United Arab Emirates, according to Jay Shambaugh, Under Secretary of US Treasury for International Affairs. Shambaugh highlighted that the G20 Payments Roadmap is focusing on enhancing payment system connectivity and operational alignment along key corridors, which enables the instant transfer and settlement of payments across systems. He also noted that jurisdictions are exploring future states of money and payments, including experiments with cross-border central bank digital currencies (CBDCs) and distributed ledger technology (DLT)-based payments. Overall, the goal is to increase efficiency while reducing risk in payment systems.

As life expectancy rises and birth rates decline, a nation begins to see a larger proportion of its population ageing. India will soon approach a critical juncture where the proportion of elderly will peak, placing an overwhelming strain on the working populace. Women, who generally outlive men, are at the centre of this crisis. As a high share of them are out of the labour force, they lack savings. They are more prone to health issues compared to men and often find basic tasks more challenging during their sunset years. They are also less aware of government schemes than men.

Significance of the Aging Crisis

• The share of elderly population is estimated to double to 20.8% by 2050. Also, elderly women will outnumber senior men.
• Close to 30% of women above 60 years have one morbidity and nearly 25% suffer from two morbidities.
• 30% of elderly women have difficulty getting out of bed, while 25% find it tough to take a bath and eat without assistance.
• Less than 25% of elderly women are aware of concession schemes given by the government for senior citizens.

Objectives

The objective is to understand the challenges faced by the aging population in India, particularly elderly women, and identify potential solutions to alleviate their hardships and improve their quality of life. By addressing these issues, the aim is to ensure that the elderly population can age with dignity and have access to the necessary support and resources.

Effects of the Aging Crisis

The effects of the aging crisis in India are manifold:

• An increased strain on the working population as the proportion of elderly individuals rises.
• Higher healthcare costs due to the prevalence of health issues among the elderly population.
• Greater demand for caregiving, as a significant number of elderly individuals require assistance with basic activities.
• Inadequate awareness of government schemes, leading to a lack of utilization of available benefits.
• Potential social isolation and mental health issues among the elderly population.

Pros and Cons of Addressing the Crisis

Addressing the aging crisis in India has several potential advantages:

• Improved quality of life for the elderly population, particularly women.
• Reduced burden on the working population through the implementation of appropriate support systems and policies.
• Enhanced social cohesion and intergenerational relationships through caregiving and support networks.

However, there may also be challenges in addressing the crisis:

• Financial implications associated with the provision of healthcare and support for the aging population.
• Complexity in implementing and ensuring efficient distribution of resources to those in need.
• The need for societal and cultural changes to foster a supportive environment for the elderly.

Fun Fact

Did you know that by the year 2100, seniors in India are projected to constitute 36% of the total population? This signifies a significant shift in demographics and highlights the urgency in addressing the challenges faced by the aging population.

Mutiple Choice Questions

1. What is the estimated proportion of elderly population by 2050?
a) 10.4%
b) 15.2%
c) 20.8%
d) 25.6%
Explanation: The share of elderly population is estimated to double to 20.8% by 2050 (as stated in the information).

2. Which gender generally outlives the other?
a) Men generally outlive women
b) Women generally outlive men
c) There is no significant difference in life expectancy between men and women
d) Both genders have an equal chance of outliving the other
Explanation: Women generally outlive men (as stated in the information).

3. What percentage of women above 60 years have at least one morbidity?
a) 15%
b) 20%
c) 25%
d) 30%
Explanation: Close to 30% of women above 60 years have one morbidity (as stated in the information).

4. What percentage of elderly women have difficulty getting out of bed?
a) 15%
b) 20%
c) 25%
d) 30%
Explanation: 30% of elderly women have difficulty getting out of bed (as stated in the information).

5. How many elderly women are aware of concession schemes given by the government for senior citizens?
a) Less than 10%
b) Less than 25%
c) Approximately 50%
d) More than 75%
Explanation: Less than 25% of elderly women are aware of concession schemes given by the government for senior citizens (as stated in the information).

Brief Summary | UPSC – IAS

India is facing an impending crisis as its population ages and birth rates decline. The number of elderly people is expected to double to 20.8% by 2050, with elderly women outnumbering senior men. Many elderly women are out of the labor force and lack savings, making them more vulnerable to health issues and difficulties with basic tasks. They are also less aware of government schemes for senior citizens. The prevalence of chronic health conditions is higher among elderly women, and they face challenges in performing basic activities. Additionally, there is a lack of awareness and utilization of social security schemes among elderly women in low-income households.

Recent data from the Periodic Labour Force Survey (PLFS) of 2022-23 has revealed positive trends in the Indian labour market, with unemployment rates falling and labour force participation rates (LFPRs) rising. However, while these numbers indicate a strengthening economy, it is essential to closely examine the condition of earnings in order to get a comprehensive understanding of the overall situation. This article delves into the data provided by the PLFS, highlighting the significance, features, objectives, effects, and potential pros and cons of the findings.

Significance

The PLFS data sheds light on the changing dynamics of the Indian labour market, particularly in terms of rural women’s participation and earnings. The significant increase in LFPRs for rural women is seen as a positive outcome, reflecting a shift towards greater inclusivity in the workforce. Analyzing the data is important to assess the impact of various factors and policies on the earning potential of different cohorts.

Features

According to the PLFS data, there has been a notable rise in self-employment for women, especially in rural areas. Unfortunately, this increase in employment seems to come at the cost of suitable working conditions, particularly for women. Additionally, while there has been an increase in wages and earnings, high inflation rates have eroded the real earnings, impacting the purchasing power of workers.

Objectives

The primary objective of this analysis is to understand the changing trends in earnings for different segments of the workforce over the period of April-June 2019 to April-June 2023. By examining the data for regular wage workers, casual workers, and the self-employed, we can assess the impact of inflation on earnings and identify any disparities between urban and rural sectors.

Effects

The findings demonstrate that only casual workers witnessed a net increase in their average real monthly earnings between 2019 and 2023. While women casual workers experienced a 13% increase in earnings, inflation led to a reduction in real earnings for most other cohorts. The impact of inflation was especially prevalent among rural women in self-employment, whose average monthly real gross earnings decreased by 7.72%.

Pros and Cons

Pros:
– The data indicates a significant increase in LFPRs for rural women, suggesting improved opportunities for economic empowerment.
– Women in regular wage work in rural areas experienced a substantial increase in earnings, reflecting progress in bridging the gender pay gap.
– Urban and rural self-employed men enjoyed gains in real earnings, indicating potential entrepreneurial opportunities.

Cons:
– The rise in self-employment for women has resulted in lower earnings and increased vulnerability to poor working conditions.
– Wage workers, both casual and regular, witnessed limited gains in real earnings, indicating a potential decline in the share of wages compared to output.

Fun Fact

Did you know that rural women in regular wage employment experienced a remarkable 27.5% increase in monthly real earnings in the quarter of April-June 2023 compared to April-June 2019? While they make up only 8% of the rural female workforce, this growth highlights the potential for progress in narrowing income disparities.

Rahul Menon is Associate Professor, Jindal School of Government and Public Policy, O.P. Jindal Global University

Mutiple Choice Questions

1. What is the main focus of the provided information?
a) The rise in unemployment rates in the Indian economy
b) The increase in labour force participation rates for rural women in India
c) The decrease in suitable working conditions for women in India
d) The impact of inflation on earnings in India

Explanation: The main focus of the provided information is the impact of inflation on earnings in India. It discusses the changes in real earnings for different cohorts of workers and highlights the effects of inflation on purchasing power.

2. According to the data, which cohort experienced the highest growth in real earnings between 2019 and 2023?
a) Rural women in self-employment
b) Urban men in regular wage employment
c) Rural women in regular wage employment
d) Urban women in casual work

Explanation: The cohort that experienced the highest growth in real earnings between 2019 and 2023 is rural women in regular wage employment. Their monthly real earnings were 27.5% higher in the quarter of April-June 2023 compared to April-June 2019.

3. Which cohort saw a decrease in real earnings between 2019 and 2023?
a) Urban men in self-employment
b) Rural men in casual work
c) Urban women in regular wage employment
d) Rural women in self-employment

Explanation: The cohort that saw a decrease in real earnings between 2019 and 2023 is rural women in self-employment. Their average monthly real gross earnings reduced by 7.72%, the largest reduction for any cohort.

4. What is the main concern associated with the increase in employment for women?
a) Lack of suitable working conditions
b) Decrease in labour force participation rates
c) Rise in unemployment rates
d) Inflation outpacing earnings growth

Explanation: The main concern associated with the increase in employment for women is the lack of suitable working conditions. The information mentions that much of the new employment generated for women has been in self-employment, which may not provide suitable working conditions.

5. In the year 2023, which cohort saw the highest growth in real earnings compared to 2019?
a) Urban women in casual work
b) Rural men in self-employment
c) Urban men in regular wage employment
d) Rural women in regular wage employment

Explanation: The cohort that saw the highest growth in real earnings in the year 2023 compared to 2019 is rural women in regular wage employment. Their monthly real earnings were 35.5% higher in the quarter of April-June 2023 compared to April-June 2019.

6. Which cohort experienced a decrease in real earnings in urban areas?
a) Urban men in self-employment
b) Urban women in casual work
c) Urban men in regular wage employment
d) Urban women in regular wage employment

Explanation: The cohort that experienced a decrease in real earnings in urban areas is urban women in regular wage employment. Their real incomes in 2023 were 2.34% lesser than in 2019.

7. What is the overall trend in real earnings between 2022 and 2023?
a) A widespread decrease in real earnings for all cohorts
b) Significant increase in real earnings for all cohorts
c) Mixed trends with some cohorts experiencing growth and others experiencing a decrease
d) No significant change in real earnings for any cohort

Explanation: The overall trend in real earnings between 2022 and 2023 is mixed, with some cohorts experiencing growth and others experiencing a decrease. Self-employed men enjoyed significant gains, while wage workers (both casual and regular) did not see extensive gains. Urban women casual workers were the only cohort that saw a decrease in real earnings.

8. What does the information suggest about India’s recovery from the pandemic?
a) India is experiencing a robust recovery with widespread income growth.
b) India is experiencing a K-shaped recovery with uneven income growth among different cohorts.
c) India is experiencing a slow recovery with declining income rates.
d) India’s recovery is yet to be determined based on the data provided.

Explanation: The information suggests that India is experiencing a K-shaped recovery with uneven income growth among different cohorts. While some cohorts saw an increase in real earnings, wage workers as a whole did not see extensive gains, indicating a reduction in the share of wages.

Note: The explanations provided are based on the given information and may vary depending on the context.

Brief Summary | UPSC – IAS

Recent data from the Periodic Labour Force Survey (PLFS) of 2022-23 shows positive trends in India’s labor market, with falling unemployment rates and rising labor force participation rates for rural women. However, there are concerns about the quality of employment, as much of the new jobs for women are in self-employment and unpaid family help. In terms of earnings, only casual workers saw a net increase in their average real monthly earnings. Women casual workers experienced a 13% increase, while male casual workers enjoyed a 10.33% increase. Most workers experienced lesser real earnings due to high inflation. Overall, the data suggests a K-shaped recovery with slower wage growth compared to output.

During the annual Future Investment Initiative (FII) in Riyadh, World Bank President Ajay Banga expressed concerns about the impact of geopolitical tensions on the world economy. He highlighted various risks, including rising U.S. 10-year Treasury yields and the threat of future pandemics. This article examines the significance of Banga’s remarks and their implications for economic development.

Mutiple Choice Questions

1. According to World Bank President Ajay Banga, what is the biggest threat to the world economy?
a) Geopolitic tensions
b) The U.S. 10-year Treasury yield
c) The next pandemic
d) Geopolitics in the wars

Explanation: World Bank President Ajay Banga stated that geopolitic tensions pose the biggest threat to the world economy.

2. What did the U.S. 10-year Treasury yield do recently?
a) It crossed 5%
b) It reached an all-time low
c) It remained stable
d) It increased steadily

Explanation: The U.S. 10-year Treasury yield briefly crossed 5% recently, which is an unusual occurrence.

3. According to Ajay Banga, what other risk should not be ignored?
a) Cybersecurity threats
b) Climate change
c) Financial market volatility
d) The impact of wars

Explanation: While geopolitics pose the biggest threat, Ajay Banga mentioned that risks “tend to move around” fast, so others should not be ignored.

4. What recent event involving Israel and Gaza did Ajay Banga refer to?
a) Protest demonstrations
b) Natural disaster
c) Conflict and war
d) Economic cooperation

Explanation: Ajay Banga mentioned the recent conflict in Israel and Gaza as an example of the geopolitical tensions and wars that impact economic development.

5. According to Ajay Banga, what is the current state of economic development?
a) Better than expected in the developed world
b) Stagnant in most countries
c) Declining globally
d) Unpredictable and uncertain

Explanation: Ajay Banga stated that while economic development looks better than expected in the developed world, the current juncture is still considered very dangerous.

Brief Summary | UPSC – IAS

World Bank President Ajay Banga highlighted that geopolitic tensions are the biggest threat to the global economy, but also emphasized the need to be mindful of other risks. He mentioned the recent increase in the US 10-year Treasury yield and the potential impact of future pandemics. Banga pointed out ongoing geopolitical conflicts, such as those in Israel and Gaza, and their potential to negatively impact economic development. Despite positive economic indicators in the developed world, he believes that the world is currently in a precarious situation.

The Weakening of the Global Minimum Corporate Tax Agreement: A Comprehensive Analysis

The implementation of a global minimum corporate tax has long been discussed as a means to combat tax evasion and ensure multinational corporations pay their fair share. In 2021, an agreement was reached by more than 140 countries and territories to set a minimum global corporate tax rate of 15%. This landmark agreement, brokered by the Organization for Economic Cooperation and Development (OECD), aimed to address the practice of shifting earnings to low-tax or no-tax havens. However, a tax watchdog supported by the European Union (EU) has warned that the agreement has been weakened by loopholes, resulting in significantly reduced revenue generation. Let’s delve deeper into the significance, features, objectives, effects, pros and cons, and an interesting fact of this agreement.

Significance

The agreement on a global minimum corporate tax is significant due to several reasons. Firstly, it aims to curb the practice of multinational corporations exploiting tax havens by artificially relocating profits to jurisdictions with low or no taxation. This practice has led to substantial revenue losses for countries, estimated at $100 billion to $240 billion annually. By setting a minimum tax rate, countries seek to prevent tax base erosion and profit shifting, ensuring a fair distribution of tax burdens.

Features and Objectives

The key feature of the agreement is the establishment of a minimum global corporate tax rate of 15%. This rate serves as a threshold for multinational corporations, preventing them from taking advantage of jurisdictions with extremely low tax rates. The main objective is to create a level playing field for businesses and eliminate the race-to-the-bottom phenomenon, where countries compete by offering lower tax rates to attract corporations.

Effects

According to the EU Tax Observatory report, the weakened agreement is expected to generate only half the anticipated revenue, amounting to less than 5% of global corporate tax revenue. Loopholes have been identified, which have diminished the effectiveness of the minimum tax. For example, the agreement allows companies with tangible operations in a country to pay a tax rate lower than 15%. This provision could incentivize companies to shift production to countries with lower tax rates, exacerbating the race-to-the-bottom issue.

Another concern is the allowance of tax credits for green technologies, which may reduce companies’ tax rates below the minimum threshold while still complying with the agreement. This poses a risk of depleting government revenues and increasing income inequality by benefiting shareholders disproportionately.

Pros and Cons

The implementation of a global minimum corporate tax has its advantages and disadvantages. The pros include:

• Prevention of tax base erosion and profit shifting.
• Creating a fairer tax system that promotes corporate responsibility.
• Reducing global tax competition and ensuring a level playing field for businesses.

On the other hand, the cons of the agreement are:

• The presence of loopholes that weaken the effectiveness of the minimum tax.
• The potential for companies to relocate operations to countries with lower tax rates.
• The risk of reducing government revenues through tax credits for green technologies.

Fun Fact

The EU Tax Observatory’s report revealed that multinational corporations shifted a staggering $1 trillion, which accounted for 35% of their profits earned outside their home countries, to tax havens. Furthermore, American companies were responsible for approximately 40% of global profit shifting.

In conclusion, the weakening of the global minimum corporate tax agreement highlights the challenges in establishing a comprehensive solution to tax evasion. While the agreement’s objectives are commendable, the presence of loopholes raises concerns regarding its effectiveness. As the global tax landscape continues to evolve, it is crucial for countries to address these challenges and work towards a fair and sustainable global tax regime.

Mutiple Choice Questions

1. What was the purpose of the 2021 agreement reached by more than 140 countries and territories?
a) To implement a global minimum corporate tax of 15%
b) To stop multinational corporations from evading taxes through legal maneuvers
c) To raise revenue equal to nearly 10% of global corporate tax revenue
d) To ban tax havens such as Bermuda and the Cayman Islands

Explanation: The purpose of the 2021 agreement was to stop multinational corporations from using accounting and legal maneuvers to shift earnings to low- or no-tax havens, thereby evading taxes.

2. Which organization brokered the landmark agreement for a global minimum corporate tax?
a) European Union (EU)
b) Organization for Economic Cooperation and Development (OECD)
c) The Tax Observatory
d) The Paris School of Economics

Explanation: The Organization for Economic Cooperation and Development (OECD) brokered the landmark agreement for a global minimum corporate tax.

3. How much revenue was the agreement expected to raise according to the EU Tax Observatory?
a) Nearly 10% of global corporate tax revenue
b) Half of global corporate tax revenue
c) $100 billion to $240 billion a year
d) Roughly $270 billion in 2023

Explanation: According to the EU Tax Observatory, the agreement was expected to raise an amount equal to nearly 10% of global corporate tax revenue.

4. Why has the expected revenue of the minimum tax been reduced?
a) Due to the introduction of loopholes during the refinement of the agreement
b) Due to the delayed provision for imposing additional taxes on U.S. multinational companies
c) Due to the ability of companies with tangible businesses to pay less than 15% tax
d) All of the above

Explanation: The expected revenue of the minimum tax has been reduced due to the introduction of loopholes during the refinement of the agreement, the delayed provision for imposing additional taxes on U.S. multinational companies, and the ability of companies with tangible businesses to pay less than 15% tax.

5. What is a concern raised by the EU Tax Observatory regarding tax breaks for green technologies?
a) It depletes government revenues
b) It increases inequality by boosting after-tax profits of shareholders
c) It raises the same issues as standard tax competition
d) All of the above

Explanation: The EU Tax Observatory is concerned that tax breaks for green technologies deplete government revenues, increase inequality by boosting after-tax profits of shareholders, and raise the same issues as standard tax competition.

6. How much of the profits earned outside their home countries do multinational corporations shift to tax havens?
a) 25%
b) 35%
c) 40%
d) 50%

Explanation: Multinational corporations shift 35% of the profits they earned outside their home countries to tax havens.

7. What is the proposed global tax on billionaires’ wealth by the EU Tax Observatory?
a) 1%
b) 2%
c) 5%
d) 10%

Explanation: The EU Tax Observatory is proposing a 2% global tax on billionaires’ wealth, which it estimates would raise $250 billion annually from fewer than 3,000 people.

Brief Summary | UPSC – IAS

A tax watchdog backed by the EU has warned that an agreement involving more than 140 countries and territories to tackle tax havens and ensure that multinational corporations pay a minimum tax has been weakened by loopholes and will generate only a fraction of the intended revenue. The landmark agreement implemented a minimum global corporate tax rate of 15% to prevent companies from shifting profits to low-tax jurisdictions. However, the EU Tax Observatory report states that the weakened plan will generate less than 5% of corporate tax revenue, instead of the anticipated nearly 10%. The report estimates that the weakened agreement will raise around $136bn in 2023 instead of $270bn. Loopholes include provisions that permit companies to pay a tax rate below 15% if they have tangible businesses operating in a particular country. The agreement will now be delayed until 2026 pending the resolution of several outstanding matters.

Online Gaming Companies Issued ₹1 Lakh Crore GST Notices for Tax Evasion

A host of online gaming, like Dream11, and casino operator, like Delta Corp, have received GST show cause notices last month for alleged short payment of taxes. File.
| Photo Credit: Reuters

Source: The Hindu

Mutiple Choice Questions

1. According to the information provided, how much worth of show cause notices have GST authorities issued to online gaming companies?
a) ₹10,000
b) ₹1,000
c) ₹1,00,000
d) ₹1,00,00,000
Explanation: The senior official mentioned that GST authorities have issued show cause notices worth ₹1 lakh crore to online gaming companies for tax evasion.

2. What is the recent amendment in the GST law regarding overseas online gaming companies?
a) They are exempt from registering in India.
b) They are required to register in India from October 1.
c) They must pay a higher GST rate than Indian gaming companies.
d) They must submit annual reports to the GST authorities.
Explanation: The recent amendment in the GST law makes it mandatory for overseas online gaming companies to register in India from October 1.

3. Which online gaming companies have received GST show cause notices for alleged tax evasion?
a) Dream11
b) Delta Corp
c) Both Dream11 and Delta Corp
d) GamesKraft
Explanation: Both Dream11 (an online gaming company) and Delta Corp (a casino operator) have received GST show cause notices for alleged short payment of taxes.

4. What is the GST rate levied on the full value of bets placed on online gaming platforms?
a) 15%
b) 18%
c) 28%
d) 30%
Explanation: The GST Council has clarified that 28% Goods and Services Tax (GST) would be levied on the full value of bets placed on online gaming platforms.

5. Which company received a show cause notice for alleged GST evasion of ₹21,000 crore?
a) Dream11
b) Delta Corp
c) GamesKraft
d) None of the above
Explanation: GamesKraft received a show cause notice in September last year for alleged GST evasion of ₹21,000 crore. The case is currently being heard in the Supreme Court.

Brief Summary | UPSC – IAS

The Indian government has issued show cause notices totaling ₹1 lakh crore to online gaming companies for alleged tax evasion under the Goods and Services Tax (GST). These companies, including Dream11 and Delta Corp, have been accused of short payment of taxes. Additionally, the amended GST law now requires foreign gaming companies to register in India as of October 1, although there is currently no data on the registration of foreign gaming companies. A separate show cause notice was sent to GamesKraft in September 2019 for alleged GST evasion of ₹21,000 crore, with the central government filing a Special Leave Petition in July.

Tech Mahindra Reports a 61% Decline in Net Profit for Q2 FY24: Analysis and Outlook

Tech Mahindra, one of India’s leading technology companies, recently announced a significant decline in its net profit for the second quarter of fiscal year 2024. The company’s net profit dropped by 61%, amounting to ₹505.3 crore, compared to ₹1,299.2 crore in the same period last year. This significant decline can be attributed to various factors and has implications for both Tech Mahindra and the broader industry.

Significance

The decline in Tech Mahindra’s net profit is a significant development that sheds light on the ongoing challenges faced by the company and the technology sector as a whole. It highlights the impact of slowing demand in the telecom and communications segments as well as delays in deal cycles. Tech Mahindra’s performance in this quarter reflects the volatile nature of the industry and reminds us of the need for adaptability and strategic planning.

Features

This decline in net profit reinforces the current trends seen in the technology sector, particularly in the telecom and communications segments. The company’s CEO and Managing Director, C.P Gurnani, emphasized the challenging demand environment and macro uncertainties that Tech Mahindra is navigating. In response, Tech Mahindra is focusing on working closely with clients, assisting them in streamlining and modernizing operations as they reprioritize resources.

The strategy of reducing exposure to non-core areas of business, as mentioned by Rohit Anand, Chief Financial Officer of Tech Mahindra, is viewed as a key feature in improving the company’s financial performance and enabling long-term sustainable growth.

Objectives

The objectives of Tech Mahindra are twofold. Firstly, the company aims to address the current challenges facing the technology sector by adapting its strategies and working closely with clients to effectively navigate uncertainties. Secondly, it seeks to enhance its financial performance and achieve sustainable growth in the long run by focusing on core areas of business and reducing exposure to non-core areas.

Effects

The decline in net profit may have wide-ranging effects on various stakeholders. Shareholders and investors may show concern and may closely monitor the company’s performance and future plans. Employees may be affected by the lower net profit, particularly in terms of remuneration and job security. Clients might perceive the situation as an opportunity to negotiate better terms, and Tech Mahindra will need to ensure it continues providing value to maintain existing contracts and attract new business.

Pros and Cons

While a decline in net profit is typically viewed as a negative outcome, it can also present opportunities for Tech Mahindra. By addressing the challenges and streamlining their operations, the company can build resilience and adapt to a changing competitive landscape. The focus on core areas of business and reduction of exposure to non-core areas can result in improved financial performance and increased profitability in the long term. However, there is also a risk that these measures may limit diversification and potentially hinder future growth prospects.

Fun Fact

Despite the challenges faced by Tech Mahindra, the company’s attrition rate decreased from 13% in the previous quarter to 11% in Q2 FY24. This suggests that employees are showing loyalty and a commitment to the organization, indicating a positive work culture and a strong talent pool within the company.

In conclusion, Tech Mahindra’s decline in net profit for Q2 FY24 highlights the challenges faced by the company amidst a difficult demand environment and macro uncertainties. By implementing strategic measures and focusing on core operations, Tech Mahindra aims to improve its financial performance and achieve sustainable growth. While there are both pros and cons associated with these measures, it is essential for the company to adapt and innovate to remain competitive in the ever-evolving technology sector.

Mutiple Choice Questions

1. What was the net profit of Tech Mahindra in the second-quarter of FY24?
a. ₹505.3 crore
b. ₹1,299.2 crore
c. ₹806.1 crore
d. ₹874.5 crore
Answer: a. ₹505.3 crore
Explanation: Tech Mahindra’s net profit in the second-quarter of FY24 was ₹505.3 crore, which is a 61% decline compared to the net profit of ₹1,299.2 crore in the corresponding period last year.

2. What were the main factors that contributed to the difficult quarters for Tech Mahindra?
a. Slowing demand in telecom and communications segments
b. Delays in deal cycles
c. Both a and b
d. None of the above
Answer: c. Both a and b
Explanation: According to Tech Mahindra, the last two quarters were challenging due to slowing demand in telecom and communications segments and delays in deal cycles.

3. What did Tech Mahindra’s CEO mention about the demand environment and macro uncertainties?
a. The demand environment is favorable and there are no macro uncertainties
b. The demand environment is challenging and there are prolonged macro uncertainties
c. The demand environment is stable and there are short-term macro uncertainties
d. None of the above
Answer: b. The demand environment is challenging and there are prolonged macro uncertainties
Explanation: The company’s CEO, C.P Gurnani, stated that the year is being characterized by a challenging demand environment and prolonged macro uncertainties.

4. What actions did Tech Mahindra take to improve its financial performance?
a. Reduced exposure to non-core areas of business
b. Increased capital expenditures
c. Invested in new business areas
d. None of the above
Answer: a. Reduced exposure to non-core areas of business
Explanation: Tech Mahindra’s CFO, Rohit Anand, mentioned that the company has taken actions to reduce the exposure to non-core areas of business, which will help improve financial performance over time.

5. What was Tech Mahindra’s attrition rate in Q2 FY24?
a. 11%
b. 13%
c. 9%
d. 15%
Answer: a. 11%
Explanation: Tech Mahindra’s attrition rate in Q2 FY24 decreased to 11% from 13% in the previous quarter.

6. What was the interim dividend declared by Tech Mahindra?
a. ₹6 per equity share
b. ₹8 per equity share
c. ₹10 per equity share
d. ₹12 per equity share
Answer: d. ₹12 per equity share
Explanation: Tech Mahindra declared an interim dividend of ₹12 per equity share of ₹5 each.

Note: This is a sample set of multiple-choice questions and their explanations. The actual number and content of questions may vary depending on the requirements of the exam.

Brief Summary | UPSC – IAS

Indian IT company Tech Mahindra saw a 61% decline in net profit in the second quarter of FY24, due to slowing demand in telecom and communications sectors and delays in deal cycles. The company’s CEO, C.P Gurnani, described the current year as being characterised by a challenging demand environment and prolonged macro uncertainties. In response to these challenges, Tech Mahindra is focusing on working closely with clients to help streamline and modernise operations. The company is also taking actions to reduce exposure to non-core business areas and improve its financial performance. Tech Mahindra’s attrition rate decreased to 11% in Q2 FY24.

The Gender Earnings Gap: Exploring the Comprehensive Data from Periodic Labour Force Surveys

The Periodic Labour Force Surveys (PLFS) have been instrumental in monitoring the gender earnings gap in various forms of employment from April-June 2019 to 2023. The latest round of surveys has brought attention to the significance of weekly hours worked in understanding the complete picture of inequality. While men, on average, earn more than women, this disparity is not solely attributed to gender, but also shaped by societal norms and individual choices that influence women to work fewer hours. As a teacher, understanding these dynamics is essential to address gender disparities in the workforce.

How Does the Gender Earnings Gap Differ?

The pioneering work of Claudia Goldin, a Nobel laureate, in analyzing the various factors influencing gender inequalities in America, resonates with the situation in India. Indian scholars have extensively examined the disparities affecting working women in terms of work participation and wages. To gauge the gender earnings gap, all types of workers’ earnings are converted into weekly figures. Table 1 showcases the ratio of weekly earnings for men and women at the all-India level, integrating the rural and urban sectors, from April-June 2019 to April-June 2023. A ratio above 1 indicates higher men’s earnings relative to women, such as a figure of 1.24, signifying that men’s earnings are 24% greater than women’s.

Interestingly, men consistently earn more than women across all forms of work, with the wage gap being most significant for self-employed individuals. In 2023, male self-employed workers earned 2.8 times more than their female counterparts. On the other hand, male regular wage workers earned 24% more, and male casual workers earned 48% more. The persistence of the gender gap in earnings is undeniable. However, there are discernible trends – the gender earnings gap has increased for self-employed workers while declining for regular wage workers. From 2019 to 2022, male regular wage workers earned 34% more than women, with the gap reducing to 24% in 2023.

Are There Any Notable Differences in Average Weekly Work Hours?

While the gender earnings gap provides insights, it does not fully capture the inequalities in earnings per work effort. Women generally work fewer hours than men across all forms of work, as depicted in Table 2. In 2023, the largest gap in work hours was observed among self-employed workers, with men working 50% more hours than women. In comparison, the gap was lowest for regular wage workers (19%). Interestingly, despite having the smallest gap, men and women in regular wage work had the longest work hours, with men averaging 51 hours per week and women averaging 43 hours. While the ratio of work hours remained relatively stable for regular wage workers, it witnessed a significant increase for self-employed workers.

This rise in the gender gap in hours worked, coupled with the growing number of women in self-employment, necessitates explanation. Rural women’s labor force participation rates (LFPRs) have risen, accompanied by a significant increase in the proportion of self-employed women. However, the average weekly hours worked by rural self-employed women declined from 37.1 in 2019 to 30.1 in 2023. This suggests that the increased employment for rural self-employed women has primarily been part-time in nature, in contrast to men’s full-time work. In contrast, the ratio of hours worked for regular wage workers remained relatively constant.

By utilizing data on weekly earnings and hours worked, researchers have calculated earnings per hour for each category of workers. Table 3 demonstrates the ratio between men and women’s hourly earnings.

What Is the Percentage Decrease in the Gap in Hourly Earnings?

Considering hourly earnings provides valuable insights into the forces influencing changes in inequality over this period. The gender gap in hourly earnings reduces significantly for regular wage workers. In 2023, men in regular wage employment earned 24% more than women over the week, but also worked 19% longer. Thus, the gap in hourly earnings narrows down to approximately 4%, declining from 11% in 2019.

Remarkably, women in regular wage work earn less per week, but nearly the same when considering earnings per hour. However, it is crucial to acknowledge that averages conceal significant disparities, necessitating further research to determine if the gap in hourly earnings holds true across all workers, occupations, and industries. Inequality in hourly earnings remains higher in other forms of work, albeit not as high as when considering total earnings. In 2023, male casual workers earned 23% more per hour than women, representing a reduction from 33% in 2019. The gender gap has slightly increased for self-employed individuals, rising from 84% in 2019 to 87% in 2023.

What Influences Hours of Work?

Lower inequality in hourly earnings for regular wage workers does not imply that the inequality arises solely from women choosing to work fewer hours. Often, the available options for working hours are restricted due to social norms that assign domestic and child-rearing duties predominantly to women. Working hours are not purely driven by unconstrained choices. Therefore, it is critical to not only understand the factors influencing differences in remuneration but also those shaping disparities in total hours of work.

Policies aimed at addressing this issue should focus on removing barriers that limit the hours of work available to women. Interventions within the workspace, such as mandating creches and providing more generous maternity leaves, can facilitate this process. Additionally, comprehensive transformations in social norms are necessary to distribute the burden of childcare and domestic work more equitably across both genders.

As we delve deeper into the comprehensive data provided by the Periodic Labour Force Surveys, we gain a better understanding of the gender earnings gap and the underlying factors shaping it. By recognizing the significance of weekly hours worked, addressing disparities in earnings per work effort, and addressing socio-cultural constraints, we can strive towards a more equitable and inclusive workforce.

Fun Fact: Did you know that as of 2021, only 36% of women were employed worldwide, compared to 75% of men? The gender earnings gap and inequalities in work participation are significant global challenges that need to be tackled.

(Rahul Menon is Associate Professor, Jindal School of Government and Public Policy, O.P. Jindal Global University)

Mutiple Choice Questions

1. What do the Periodic Labour Force Surveys (PLFS) monitor?
a) Gender disparities in the workforce
b) Gender earnings gap across various forms of employment
c) Women’s work participation and wages
d) All of the above

Explanation: The Periodic Labour Force Surveys (PLFS) monitor the gender earnings gap across various forms of employment, including work participation and wages affecting working women.

2. What does a figure above 1 indicate in Table 1?
a) Greater men’s earnings relative to women
b) Equal earnings between men and women
c) Greater women’s earnings relative to men
d) None of the above

Explanation: A figure above 1 in Table 1 indicates greater men’s earnings relative to women.

3. In what form of work do men earn the most compared to women in 2023?
a) Regular wage workers
b) Self-employed workers
c) Casual workers
d) None of the above

Explanation: In 2023, male self-employed workers earned 2.8 times that of women, indicating that men earn the most compared to women in self-employment.

4. How has the gender gap in earnings changed for regular wage workers from 2019 to 2023?
a) It has increased
b) It has decreased
c) It has remained constant
d) It is not mentioned in the information

Explanation: The gender gap in earnings for regular wage workers has decreased from 34% in 2019 to 24% in 2023.

5. What is the gap in work hours between men and women in regular wage workers in 2023?
a) Men work 50% more hours than women
b) Men work 19% more hours than women
c) Men work 84% more hours than women
d) None of the above

Explanation: In 2023, the gap in work hours between men and women in regular wage workers is 19%, indicating that men work 19% more hours than women.

6. What has been the trend in average hours worked per week for rural self-employed women from 2019 to 2023?
a) It has increased
b) It has remained constant
c) It has decreased
d) It is not mentioned in the information

Explanation: The average hours worked per week for rural self-employed women has decreased from 37.1 in 2019 to 30.1 in 2023.

7. How has the gap in hourly earnings for regular wage workers changed from 2019 to 2023?
a) It has increased
b) It has decreased
c) It has remained constant
d) It is not mentioned in the information

Explanation: The gap in hourly earnings for regular wage workers has decreased from 11% in 2019 to around 4% in 2023.

8. What is the gap in hourly earnings between male casual workers and women in 2023?
a) Men earn 23% per hour more than women
b) Men earn 33% per hour more than women
c) Men earn 84% per hour more than women
d) None of the above

Explanation: In 2023, male casual workers earn 23% per hour more than women.

9. What is the main driving factor behind rising inequality amongst self-employed workers?
a) Changes in hours worked
b) Changes in hourly earnings
c) Changes in the gender gap
d) None of the above

Explanation: The main driving factor behind rising inequality amongst self-employed workers is changes in hours worked. The influx of women into part-time work reduced their average hours of work, leading to increased inequality in total earnings.

10. What must policies focus on to address differences in total hours of work for women?
a) Removing barriers that limit the hours of work available to women
b) Interventions within the workspace, such as mandating creches and more generous maternity leaves
c) Transformations in social norms that do not place the entire burden of child care and domestic work on women
d) All of the above

Explanation: Policies must focus on removing barriers that limit the hours of work available to women, including interventions within the workspace and transformations in social norms. This can help address differences in total hours of work.

Brief Summary | UPSC – IAS

The Periodic Labour Force Surveys (PLFS) in India have been tracking the gender earnings gap from 2019 to 2023. The latest round of surveys has highlighted the importance of considering weekly hours worked when measuring inequality. Women tend to work fewer hours than men due to societal pressures and personal choices, highlighting the complex factors that contribute to gender disparities in the workforce. Men consistently earn more than women in all forms of work, with the largest gap seen among self-employed workers. However, the gender gap has decreased among regular wage workers while increasing for self-employed workers. The analysis also demonstrates that women work fewer hours than men across all types of work. When examining hourly earnings, the gap decreases significantly for regular wage workers, suggesting that the difference in total earnings is largely influenced by the difference in hours worked. It is important to understand and address the factors that influence both remuneration and total hours of work in order to reduce gender inequality in the workforce.

The Impending High Inflation and its Impact on the World Economy

Mutiple Choice Questions

1. What is the main risk associated with high inflation next year, according to economists?
a) Interest rates will remain higher for longer
b) Central banks will start cutting interest rates sooner than expected
c) Prices will continue to rise faster than preferred by central banks
d) Inflation will turn out lower than forecasted

Explanation: According to the information given, the main risk associated with high inflation next year is that interest rates will remain higher for longer. This is supported by the statement that three-quarters of over 200 economists polled by Reuters believe that the main risk is that inflation turns out higher than they forecast, suggesting that interest rates will also remain higher for longer.

2. When are several central banks expected to begin cutting interest rates?
a) By the middle of 2023
b) By the middle of 2024
c) In the first half of next year
d) In the second half of next year

Explanation: The information provided states that several central banks are still expected to begin cutting interest rates, but a growing number of economists surveyed are adjusting their views and pushing the more likely date into the second half of next year.

3. How do economists’ expectations regarding interest rate cuts this year compare to the start of the year?
a) Investment banks were predicting rate cuts at the start of the year
b) Expectations for rate cuts have remained unchanged
c) Expectations for rate cuts have shifted to later in the year
d) Economists were not predicting rate cuts at the start of the year

Explanation: The information states that at the start of this year, some investment banks were predicting the U.S. Federal Reserve, which sets the tone for many others, would be cutting rates right around now. This indicates that economists’ expectations for rate cuts have shifted to later in the year.

4. What is the current trend in inflation rates?
a) Inflation rates are significantly declining
b) Inflation rates are rising faster than preferred by central banks
c) Inflation rates are stable and on target
d) Inflation rates are expected to increase next year

Explanation: According to the information given, despite success in bringing inflation down from its highs, prices are still rising faster than most central banks would prefer. This indicates that inflation rates are rising faster than preferred by central banks.

5. What were the results of the Reuters poll regarding inflation forecasts?
a) Majority of the 48 surveyed economies had inflation downgrades
b) Majority of the 48 surveyed economies had inflation upgrades
c) Inflation forecasts for all surveyed economies remained unchanged
d) The poll did not cover inflation forecasts

Explanation: The information states that the Reuters poll of over 500 economists produced inflation upgrades for a majority of the 48 economies surveyed. This implies that a majority of the surveyed economies had inflation upgrades.

6. How do economists view the risk to upgraded inflation forecasts?
a) Majority of economists believe the risk is higher than forecasted
b) Majority of economists believe the risk is lower than forecasted
c) There is equal belief among economists that the risk is higher or lower than forecasted
d) The risk was not addressed in the information provided

Explanation: The information states that a 75% majority of economists surveyed believe that the risk to the broadly-upgraded inflation forecasts is skewed higher. This indicates that the majority of economists believe the risk is higher than forecasted.

7. What was the unexpected growth rate of the U.S. economy in the third quarter?
a) 5%
b) 2.6%
c) 2.9%
d) 4.5%

Explanation: The information states that the U.S. economy unexpectedly grew nearly 5%, annualised, in the third quarter. Therefore, the correct answer is 5%.

8. What did European Central Bank President Christine Lagarde say regarding interest rate cuts?
a) It is premature to discuss interest rate cuts
b) Interest rate cuts are necessary to stimulate the economy
c) Interest rate cuts will be implemented in the second half of next year
d) Interest rate cuts are more likely to happen in the first half of next year

Explanation: The information states that Christine Lagarde said after the ECB snapped a 10-meeting tightening streak that “even having a discussion on a cut is totally, totally premature.” This indicates that Lagarde believes it is premature to discuss interest rate cuts.

9. Which central bank is still expected to maintain ultra-loose policy through next year?
a) Reserve Bank of Australia
b) Bank of Japan
c) Federal Reserve
d) European Central Bank

Explanation: The information states that even the Bank of Japan, which has been the outlier sticking to ultra-loose policy through this entire round of inflation, is now expected to abandon negative interest rates next year. Therefore, the correct answer is the Bank of Japan.

10. What would prompt the first cut by the central bank, according to a majority of economists?
a) To make real interest rates less restrictive as inflation falls
b) To stimulate the economy due to a significant hit to demand and inflation
c) In response to pressure from financial market traders
d) To address the negative effects of high inflation on the global economy

Explanation: The information states that over a two-thirds majority of economists surveyed said the first cut by the central bank they cover would be simply to make real interest rates less restrictive as inflation falls. Therefore, the correct answer is to make real interest rates less restrictive as inflation falls.

Note: The questions and answers have been generated based on the provided information, but may require additional context or clarification for a complete understanding.

Brief Summary | UPSC – IAS

A majority of over 200 economists surveyed by Reuters believe that high inflation will be a persistent issue in the world economy next year, with the main risk being that it turns out higher than anticipated. As a result, interest rates are likely to remain higher for a longer period of time. While some central banks had anticipated cutting interest rates by mid-2024, growing number of economists are pushing back their expectations to the second half of next year. Economists also downgraded growth forecasts for 2024 while upgrading inflation forecasts for a majority of the 48 economies surveyed.

Working Hours: Exploring Narayana Murthy’s Suggestion

Mutiple Choice Questions

1. According to the information, who recently suggested that young Indians should work for 70 hours a week?
a) N.R. Narayana Murthy
b) Rebecca Rose Varghese
c) The employees of Infosys
d) The government of India

Answer: a) N.R. Narayana Murthy

Explanation: The information states that Infosys founder N.R. Narayana Murthy recently suggested that young Indians should work for 70 hours a week.

2. What is the average number of hours an urban Indian aged 15-29 spends in a day on employment and related activities?
a) 7.2 hours
b) 8.5 hours
c) 9.6 hours
d) 11.5 hours

Answer: c) 9.6 hours

Explanation: According to the information, the average number of hours an urban Indian aged 15-29 spends in a day on employment and related activities is 9.6 hours.

3. In which countries did the average annual working hours per worker peak after the Second World War?
a) Germany and Japan
b) India and Japan
c) India and Germany
d) Japan and India

Answer: a) Germany and Japan

Explanation: The information states that the average annual working hours per worker peaked after the Second World War in Germany and Japan.

4. What is the relation between labour productivity and working hours in Germany and Japan?
a) As labour productivity increased, working hours increased
b) As labour productivity increased, working hours decreased
c) Labour productivity and working hours are unrelated
d) Labour productivity and working hours have a negative correlation

Answer: b) As labour productivity increased, working hours decreased

Explanation: According to the information, as labour productivity increased in Germany and Japan, the average working hours reduced drastically.

5. What is the percentage share of informal employment in the total workforce in Germany compared to India and Japan?
a) 4.2%
b) 8%
c) 89%
d) 100%

Answer: a) 4.2%

Explanation: The information states that the percentage share of informal employment in the total workforce is 4.2% in Germany, while it is 89% in India and around 8% in Japan.

Brief Summary | UPSC – IAS

Infosys founder N.R. Narayana Murthy suggested that young Indians should work 70 hours a week, sparking both support and criticism. Currently, young Indians spend around 7.2 to 8.5 hours a day on employment and related activities. Murthy argues that increasing work productivity is crucial for India’s competitiveness, citing Germany and Japan as examples where increased productivity led to reduced working hours. However, critics question whether longer work hours are the answer or if productivity should be enhanced through technology. It is also important to consider the difference in the nature of the labor force and the viability of comparing India to Germany and Japan.

The Indian Railways and the Carriage of General Cargo: Significance, Features, and Objectives

A cargo train near the Tuticorin Port. | Photo Credit: File Photo

Mutiple Choice Questions

1. What was the total earnings of Indian Railways from the carriage of general cargo in 2018-19?
a) ₹8,247 crore
b) ₹5,339 crore
c) ₹12,584 crore
d) ₹3,384 crore

Explanation: In 2018-19, the Indian Railways earned a total of ₹8,247 crore from the carriage of general cargo.

2. According to a RITES study in 2008, what was the projected general cargo loading for the Indian Railways for the next ten years?
a) Between 194 to 292 MT
b) Between 100 to 150 MT
c) Between 500 to 600 MT
d) Between 50 to 100 MT

Explanation: According to a RITES study in 2008, the projected general cargo loading for the Indian Railways for the next ten years was between 194 to 292 MT.

3. What are the two approaches currently used by the Indian Railways to move general cargo?
a) Passenger trains and parcel vans
b) Freight trains and container trains
c) Heavy parcel vans and truck transport
d) Special heavy parcel van (VPH) trains and premium scale rates

Explanation: The two approaches currently used by the Indian Railways to move general cargo are passenger trains and special heavy parcel van (VPH) trains.

4. Why has there been a decline in the parcel segment of general cargo?
a) High tariff rates
b) Improper terminals
c) Inconsistent weighbridges
d) All of the above

Explanation: The decline in the parcel segment of general cargo can be attributed to reasons such as high tariff rates, improper terminals, inconsistent weighbridges, and other factors mentioned in the passage.

5. What is the suggested alternative to VPH parcel trains for carrying general cargo?
a) Covered Bogie Wagon Type with Air Brake and Heavy Load (BCNHL)
b) Freight trains
c) Truck transport
d) Premium scale rates

Explanation: The suggested alternative to VPH parcel trains for carrying general cargo is a Covered Bogie Wagon Type with Air Brake and Heavy Load (BCNHL), which can carry 700% more cargo with 45% more volume.

6. How much domestic cargo moved by containers as a percentage of the Indian Railways’ loading?
a) 0.3%
b) 1%
c) 5%
d) 10%

Explanation: Only 0.3% of the Indian Railways’ loading is domestic cargo moved by containers.

7. What is the main issue faced by shippers for the carriage of general cargo by the Indian Railways?
a) Lack of service to meet their needs
b) High haulage rates
c) Risk of losses involved
d) Predatory pricing by other container train operators

Explanation: The main issue faced by shippers for the carriage of general cargo by the Indian Railways is that it lacks a service to meet their needs.

8. What are the three categories into which general cargo is segmented?
a) Highly time sensitive (HTSG), medium time sensitive (MTSG), and low time sensitive (LTSG)
b) Domestic cargo, international cargo, and perishable cargo
c) Bulk cargo, containerized cargo, and non-bulk cargo
d) Premium scale rates, Rajdhani rates, and truck rates

Explanation: General cargo is segmented into three categories — highly time sensitive (HTSG), medium time sensitive (MTSG), and low time sensitive (LTSG).

9. How can the Indian Railways attract shippers to use their freight rates for moving price-sensitive cargo?
a) By permitting shippers to book individual wagons
b) By reducing the freight rates
c) By adding freight of any kind (FAK) to the tariff table
d) All of the above

Explanation: The Indian Railways can attract shippers to use their freight rates for moving price-sensitive cargo by permitting shippers to book individual wagons, reducing the freight rates, and adding freight of any kind (FAK) to the tariff table.

10. What does the IR need to encourage in order to optimize payload and speed for the carriage of general cargo?
a) Cargo aggregators
b) More freight forwarders
c) Rajdhani express trains
d) Sleeper coaches

Explanation: The IR needs to encourage cargo aggregators in order to optimize payload and speed for the carriage of general cargo.

Brief Summary | UPSC – IAS

The Indian Railways (IR) has been facing challenges in the carriage of non-bulk and general cargo. In 2018-19, the IR loaded 62 million tonnes of general cargo, which fell short of a projected target of 194 to 292 million tonnes. The decline in the parcel segment can be attributed to high tariffs, improper terminals, and unreliable transit times. The use of heavy parcel vans (VPH) trains has been counterproductive, and a better alternative would be matching covered wagons. Private container train operators have also failed to boost general cargo movement due to high haulage rates and market risks. To improve the situation, the IR should focus on segmenting general cargo, permitting the booking of individual wagons, and incentivizing volumetric loading.

The Slowdown in India’s Manufacturing Sector

Image for representational purposes only | Photo Credit: B. Velankanni Raj

Note: HTML heading tags (h1, h2) have been used to organize the content.

Mutiple Choice Questions

1. According to the S&P Global India Manufacturing Purchasing Managers’ Index (PMI), the manufacturing sector growth in October was:
a) The highest it has been since February
b) The lowest it has been since February
c) The same as it was in September
d) Not mentioned in the given information

Explanation: The given information states that the manufacturing sector growth in October eased to the slowest pace since February, implying that the correct answer is b) The lowest it has been since February.

2. What was the reason for the slow growth in the manufacturing sector in October?
a) Lack of demand for certain types of products
b) Increase in job creation
c) Rise in business confidence levels
d) Decrease in input cost pressures

Explanation: The given information mentions that growth subsided on several fronts as demand for certain types of products faded, implying that the correct answer is a) Lack of demand for certain types of products.

3. Which sector was the worst hit in terms of sales and production growth?
a) Consumer goods
b) Capital goods
c) Export goods
d) Job creation

Explanation: The given information states that consumer goods were behind most of the slowdown, recording considerably softer increases in sales and production, implying that the correct answer is a) Consumer goods.

4. What was the rate at which output prices were raised by firms?
a) It remained the same as previous months
b) It increased compared to previous months
c) It decreased compared to previous months
d) Not mentioned in the given information

Explanation: The given information mentions that the rate at which output prices were raised by firms receded, implying that the correct answer is c) It decreased compared to previous months.

5. What factor was expected to dent future demand and production growth according to firms surveyed?
a) Rising inflation expectations
b) Decreasing input cost pressures
c) Increase in job creation
d) Rise in business confidence levels

Explanation: The given information highlights that firms signalled that rising inflation expectations were expected to dent demand and subsequently production growth over the coming 12 months, implying that the correct answer is a) Rising inflation expectations.

Brief Summary | UPSC – IAS

The growth of India’s manufacturing sector in October slowed to the lowest level since February, according to the S&P Global India Manufacturing Purchasing Managers’ Index (PMI). The index fell to 55.5 in October from 57.6 in September, with new orders hitting a one-year low. Demand for consumer goods was particularly weak, while job creation was at its lowest level since April. Business confidence also dropped to a five-month low. International orders slowed to a four-month low, although some firms reported increased demand from Asia, Europe, the Middle East, and the US. Input costs rose for producers, but the rate at which output prices increased decreased.

The Impact of Price Increase in Commercial LPG Gas Cylinders

Representational file image. | Photo Credit: E. LAKSHMI NARAYANAN

Significance

The increase in prices of commercial LPG gas cylinders has significant implications for businesses and consumers. It directly impacts the operational costs of businesses, particularly small enterprises such as shops and restaurants. Consumers also bear the brunt of these price hikes, as they result in higher prices for various goods and services. Understanding the significance of these price changes helps to evaluate the overall economic impact on different stakeholders.

Features

• Retail price increase of ₹101 for 19 kg commercial LPG gas cylinders in Delhi.
• Similar price hikes observed in other major cities like Kolkata, Mumbai, and Chennai.
• Monthly revisions in LPG cylinder prices as per government regulations and market dynamics.
• Previous price decrease in August provided temporary relief to businesses and consumers.

Objectives

The objectives behind the price increase in commercial LPG gas cylinders can include:

• Improvement of revenue for oil marketing companies.
• Balancing supply and demand dynamics in the LPG market.
• Addressing fluctuating manufacturing and distribution costs.

Effects

The effects of the price increase in commercial LPG gas cylinders are:

• Higher operational costs for businesses, potentially leading to price hikes for consumers.
• Inflationary pressure on small businesses, affecting their profitability and sustainability.
• Financial burden on consumers who rely on LPG for cooking and heating purposes.

Pros and Cons

Pros of the price increase:

• Improved revenue for oil marketing companies, supporting their operations.
• Potential stabilization of the LPG market and supply chain.

Cons of the price increase:

• Negative impact on the profitability of small businesses.
• Increased financial burden on consumers already facing inflationary pressures.

Fun Fact

Jet fuel or aviation turbine fuel (ATF) prices have experienced both significant increases and decreases in recent months. While the price cut mentioned in the article provides relief to financially strained airlines, previous rounds of increases have put additional pressure on their operating costs. The fluctuating prices of ATF reflect the volatility in the aviation industry and its direct correlation with global oil prices.

By analyzing the significance, features, objectives, effects, pros and cons, and including a fun fact, this comprehensive article provides a detailed understanding of the impact of the price increase in commercial LPG gas cylinders.

Mutiple Choice Questions

1. What is the new retail price of a 19 kg commercial LPG gas cylinder in Delhi after the price hike on November 1?

a) ₹1,522.50
b) ₹1,731.50
c) ₹1,839.50
d) ₹1,898.00

Explanation: The retail price of a 19 kg commercial LPG gas cylinder in Delhi after the November 1 price hike is ₹1,833 per cylinder. This is a hike of ₹101 from the previous price of ₹1,731.50.

2. When was the previous increase in the price of 19 kg commercial LPG gas cylinders?

a) November 1
b) October 1
c) September 1
d) August 1

Explanation: The previous increase in the price of 19 kg commercial LPG gas cylinders occurred on October 1. The price was raised by ₹209, bringing the price in Delhi to ₹1,731.50.

3. Which city witnessed a hike in the price of a 19 kg commercial LPG gas cylinder to ₹1,684.00?

a) Delhi
b) Kolkata
c) Mumbai
d) Chennai

Explanation: Mumbai witnessed a hike in the price of a 19 kg commercial LPG gas cylinder to ₹1,684.00. Other cities like Kolkata and Chennai also saw increases in prices.

4. According to the article, why are shopkeepers urging the government to take action?

a) To increase the prices of commercial LPG gas cylinders
b) To control inflation and ease the financial burden on small businesses
c) To decrease the prices of commercial LPG gas cylinders
d) To support large enterprises during trying times

Explanation: Shopkeepers are urging the government to take measures to control inflation and ease the financial burden on small businesses. The rise in prices of commercial LPG gas cylinders has left business owners concerned.

5. What is the purpose of monthly price revisions for both commercial and domestic LPG cylinders?

a) To stabilize prices and support small enterprises
b) To maximize profits for oil marketing companies
c) To create fluctuations in the market
d) To meet government regulations and market dynamics

Explanation: The purpose of monthly price revisions for both commercial and domestic LPG cylinders is to meet government regulations and market dynamics. It allows adjustments based on factors affecting the market.

6. What percentage was the cut in the price of aviation turbine fuel (ATF)?

a) 5.8%
b) 6%
c) 14.1%
d) 8.5%

Explanation: The price of aviation turbine fuel (ATF) was cut by almost 5.8%. This cut comes after four rounds of monthly price increases since July.

7. What percentage of an airline’s operating cost does jet fuel (ATF) make up for?

a) 10%
b) 20%
c) 30%
d) 40%

Explanation: Jet fuel (ATF) makes up for approximately 40% of an airline’s operating cost. The price cut in jet fuel will ease the financial burden on already financially strained airlines.

Brief Summary | UPSC – IAS

Oil marketing companies (OMCs) have announced an increase in the prices of commercial LPG gas cylinders, affecting businesses and consumers. The retail price of a 19 kg commercial LPG gas cylinder in Delhi will see a hike of ₹101, bringing the new rate to ₹1,833 per cylinder. Similar increases were observed in other major cities as well. This rise in prices has left business owners, particularly shopkeepers and restaurateurs, concerned and they are urging the government to take measures to control inflation and ease the financial burden on small businesses. In addition, the price of aviation turbine fuel (ATF) has been cut by almost 6%, providing some relief to financially strained airlines.

Growth in India’s GST Revenues Reaches 10-Month High in October

An Indian consumer goods trader shows letters GST representing “Goods and Services Tax” (GST)at his shop in Hyderabad on August 3, 2016. Growth in India’s gross Goods and Services Tax (GST) revenues bounced back in October with tax collections rising 13.4% to the second-highest monthly tally of ₹1.72 lakh crore.

Significance of India’s GST Revenues Growth

The growth in India’s gross Goods and Services Tax (GST) revenues reaching a 10-month high in October is a positive indicator for the country’s economy. A 13.4% increase in tax collections signifies a strong rebound and breaks a three-month streak of deceleration. This growth indicates increased economic activity, both in domestic transactions and services imports.

Features of October’s GST Revenues

• October’s GST revenues reached a second-highest monthly tally of ₹1.72 lakh crore.
• GST levies on imports of goods rose 13.9% in October, faster than the growth from domestic transactions.
• GST Compensation Cess collections, including levies on goods imports, hit a record high of ₹12,456 crore.

Objectives of Goods and Services Tax (GST)

The Goods and Services Tax (GST) system in India was introduced to simplify the indirect tax structure and create a unified tax regime across the country. The main objectives of GST are:

1. To eliminate cascading taxes and reduce the multiplicity of taxes.
2. To create a seamless national market for goods and services.
3. To promote ease of doing business and improve the competitiveness of Indian businesses.
4. To improve tax compliance and increase tax revenues for the government.

Effects of October’s GST Revenues Growth

The growth in GST revenues has positive effects on the Indian economy:

• Increased tax collections provide more funds for the government to invest in infrastructure development, welfare programs, and other public services.
• Improved revenue collection indicates higher economic activity and consumer spending.
• Strengthened tax compliance helps in curbing tax evasion and promoting a fairer tax system.

Pros and Cons of GST Revenues Growth

Pros:

• Boosts government revenue and fiscal stability.
• Encourages economic growth and development.
• Fosters a transparent and simplified tax system.

Cons:

• Possible burden on small businesses due to compliance requirements.
• Impact on prices of goods and services, which may affect consumers.
• Challenges in administering and implementing GST across diverse sectors and regions.

Fun Fact

October’s GST revenues saw an uptick in part due to festive spending and compliance deadlines. This reflects how cultural celebrations and legal requirements can influence economic activities and revenue growth.

Mutiple Choice Questions

1. What was the growth rate of India’s gross Goods and Services Tax (GST) revenues in October?
a) 10.2%
b) 13.4%
c) 27%
d) 5.7%
Explanation: The growth rate of India’s gross Goods and Services Tax (GST) revenues in October was 13.4%, as mentioned in the article.

2. When did growth in India’s GST revenues bounce back?
a) September
b) October
c) November
d) December
Explanation: Growth in India’s GST revenues bounced back in October, according to the article.

3. What was the growth in October’s GST receipts compared to September?
a) 5.7%
b) 10.2%
c) 27%
d) 13.4%
Explanation: October’s GST receipts were 5.7% over the kitty in September, as mentioned in the article.

4. What was the uptick in October’s revenues from domestic transactions and services imports?
a) 10.2%
b) 13.9%
c) 5.7%
d) 13%
Explanation: October’s revenues from domestic transactions and services imports yielded a 13% uptick, as mentioned in the article.

5. What were the GST levies on imports of goods in October?
a) 13.4%
b) 13%
c) 13.9%
d) 10.2%
Explanation: GST levies on imports of goods rose 13.9% in October, which is faster than the growth from domestic transactions, as mentioned in the article.

6. What was the highest collection of the GST Compensation Cess in October?
a) ₹1,294 crore
b) ₹12,025 crore
c) ₹12,456 crore
d) ₹1.72 lakh crore
Explanation: The highest collection of the GST Compensation Cess in October was ₹12,456 crore, as mentioned in the article.

7. How much were State GST revenues up between April and October 2023?
a) 2%
b) 19%
c) 12%
d) -2%
Explanation: State GST revenues were up 12% between April and October 2023, as mentioned in the article.

8. What is the average gross monthly GST collection in the FY 2023-24?
a) ₹1.66 lakh crore
b) ₹1.72 lakh crore
c) ₹1,294 crore
d) ₹12,025 crore
Explanation: The average gross monthly GST collection in the FY 2023-24 now stands at ₹1.66 lakh crore, as mentioned in the article.

9. What were the reasons for the rise in October’s GST collection?
a) Festive spending and compliance deadlines
b) Economic momentum and settlement of disputes
c) Anti-evasion drive and time barring period
d) All of the above
Explanation: The rise in October’s GST collection was due to festive spending, compliance deadlines, and steps to curb evasion, as mentioned in the article.

10. How much was the Central GST (CGST) in October?
a) ₹30,062 crore
b) ₹38,171 crore
c) ₹91,315 crore
d) ₹72,934 crore
Explanation: The Central GST (CGST) in October was ₹30,062 crore, as mentioned in the article.

Brief Summary | UPSC – IAS

In October, India’s gross Goods and Services Tax (GST) revenues rebounded, increasing by 13.4% to reach ₹1.72 lakh crore, the second-highest monthly tally in 10 months. This growth comes after a slower period in September, when GST revenues only saw a 10.2% increase. The 13.4% growth is the sharpest year-on-year increase since December 2022, breaking a three-month streak of deceleration. The majority of the growth came from domestic transactions and services imports, with GST levies on imports of goods rising by 13.9%. GST Compensation Cess collections also hit a record high of ₹12,456 crore in October.

Salary Increase Forecast for Companies in India in 2024

Image used for representative purpose only. | Photo Credit: AFP

Note: The article content is a placeholder and may not represent actual information.

Mutiple Choice Questions

1. According to Willis Tower Watson’s ‘Salary Budget Planning India Report’, what is the forecasted median salary increase in India for 2024?
a) 10%
b) 9%
c) 9.8%
d) 8%

Explanation: According to the report, the forecasted median salary increase in India for 2024 is 9.8%.

2. In which year did companies in India give a salary increase of 10%?
a) 2022
b) 2023
c) 2024
d) 2025

Explanation: Companies in India gave a salary increase of 10% in the year 2023.

3. Which country in Asia Pacific is projected to have the highest salary increase for 2024?
a) China
b) India
c) Vietnam
d) Philippines

Explanation: Vietnam is projected to have the highest salary increase of 8% in Asia Pacific for 2024.

4. In which sector are salary increments expected to reduce for 2024?
a) IT sector
b) Manufacturing sector
c) Pharmaceuticals sector
d) Media sector

Explanation: Salary increments are expected to reduce in the IT sector for 2024.

5. What are some of the major concerns influencing salary increase budget changes for 2024?
a) Tighter labour markets and rising inflation
b) Decreased demand in the market
c) Decreased profitability for companies
d) Government regulations

Explanation: According to the report, tighter labour markets and rising inflation have been cited as some of the major concerns influencing salary increase budget changes for 2024.

6. Which sectors are expected to see the highest salary increase at 10% for 2024?
a) Technology, media and gaming
b) Financial services and retail sectors
c) Manufacturing and engineering sectors
d) IT and pharmaceutical sectors

Explanation: The technology, media and gaming, financial services, and retail sectors are expected to see the highest salary increase at 10% for 2024.

7. What is the voluntary attrition rate in India for 2023?
a) 15.3%
b) 14.6%
c) 12.9%
d) 16.8%

Explanation: The voluntary attrition rate in India for 2023 is 14.6%.

Brief Summary | UPSC – IAS

Indian companies are anticipated to increase salaries by 9.8% in 2024, slightly less than the actual increase of 10% in 2023, according to Willis Tower Watson’s Salary Budget Planning India Report. The survey revealed that salary increases in India continue to be among the highest in the Asia Pacific region. While the IT sector is expected to see a decrease in salary increments, sectors such as manufacturing, pharmaceuticals, media, gaming, and global captive centres are expanding. Tighter labor markets and rising inflation are cited as major concerns impacting salary budget changes, but more companies have increased their salary hike budgets compared to 2022.

Record High Income Tax Return Filings: Significance, Features, Objectives, Effects, Pros, and Cons

Income Tax Return (ITR) filings for this assessment year crossed a record 7.65 crore by October 31, about 11.7% higher than the 6.85 crore returns filed by November 7 last year, the Income Tax Department said on Wednesday. 
| Photo Credit: Twitter/@IncomeTaxIndia 

The State of Local Governments in Indian Cities: An Analysis

Mega cities: The illuminated view of the Brihan Mumbai Municipal Corporation building.
| Photo Credit: ROY CHOWDHURY A

The Changing Landscape of Regular Wage Jobs in India

Mutiple Choice Questions

1. According to the report, the share of workers with regular wage has increased since which year?
a) 2004
b) 2017
c) 2019
d) 2023

Explanation: According to the report, the share of workers with regular wage has increased since 2004.

2. How many regular jobs did the country create annually till 2017, according to the report?
a) 1 million
b) 3 million
c) 5 million
d) 10 million

Explanation: According to the report, the country created three million regular jobs annually till 2017.

3. Why did the pace of regular wage jobs creation decrease since 2019, according to the report?
a) Economic growth
b) Government policies
c) Economic slowdown and the pandemic
d) Increase in automation

Explanation: According to the report, the pace of regular wage jobs creation decreased since 2019 due to economic slowdown and the pandemic.

4. What percentage of regular wage jobs provide social security, according to the report?
a) 20%
b) 35%
c) 50%
d) 6%

Explanation: According to the report, only 6% of regular wage jobs provide any kind of social security.

5. What is the percentage increase in men working in regular jobs over the years, according to the report?
a) 7%
b) 10%
c) 18%
d) 25%

Explanation: According to the report, the percentage of men working in regular jobs has increased from 18% to 25% over the years.

6. How has gender-based earnings disparity changed in the last 20 years, according to the report?
a) Decreased
b) Increased
c) Remained constant
d) Fluctuated

Explanation: According to the report, gender-based earnings disparities have reduced in the last 20 years.

7. What is the unemployment rate among graduates under 25 years, according to the report?
a) 15%
b) 25%
c) 42%
d) 50%

Explanation: According to the report, the unemployment rate among graduates under 25 years is 42%.

8. What is the percentage of women who were self-employed before COVID, according to the report?
a) 40%
b) 50%
c) 60%
d) 70%

Explanation: According to the report, before COVID, 50% of women were self-employed.

9. What has happened to self-employment earnings post-COVID, according to the report?
a) Increased
b) Stayed the same
c) Decreased
d) Fluctuated

Explanation: According to the report, earnings from self-employment declined in real terms post-COVID.

Brief Summary | UPSC – IAS

A report from Azim Premji University reveals that the rate of regular wage job creation in India has slowed down since 2019 due to economic downturn and the pandemic. Only 6% of these jobs offer any form of social security, such as health insurance. However, the share of workers with regular wages has increased over the years, with men increasing from 18% to 25% and women increasing from 10% to 25%. Caste-based segregation in employment has also decreased, particularly among non-SC/ST castes. Gender-based earnings disparities have reduced, but unemployment rates remain high, especially for graduates and young women in self-employment.

The Indian Economy Set to Grow at 6.5% in the Current Fiscal Year, Says NITI Aayog Member

The Indian economy is projected to grow at around 6.5% in the current fiscal year, according to Arvind Virmani, a member of NITI Aayog. This growth is expected despite challenges such as high crude oil prices and increased uncertainty due to climate change. Mr. Virmani highlights the consistent increase in gross household savings in India as a positive indicator.

Significance

The projected growth of the Indian economy is significant as it indicates stability and resilience in the face of external challenges. It demonstrates the ability of the Indian economy to navigate through global fluctuations and maintain a reasonable growth rate. The increase in gross household savings also reflects the financial consciousness and saving habits of Indian households.

Features

According to Mr. Virmani, the fluctuations in global GDP have more or less balanced out for India, assuming normal changes. This suggests that India’s growth projection of 6.5% has been calculated by taking into account global economic fluctuations. He also emphasizes the importance of understanding how GDP is constructed to avoid misunderstandings and claims of inflated economic growth.

Objectives

The objective of projecting a 6.5% GDP growth rate is to provide a realistic outlook for the Indian economy in the current fiscal year. This projection serves as a guide for policymakers, businesses, and individuals to make informed decisions based on the expected economic growth. It also reassures investors and international agencies about India’s economic potential.

Effects

The projected GDP growth rate of 6.5% has several effects on different aspects of the economy. It instills confidence in businesses, leading to increased investments and expansion plans. It also creates job opportunities and promotes consumer spending, contributing to overall economic growth. Additionally, the increase in gross household savings reflects a healthier financial position for households, providing a cushion against unforeseen expenses.

Pros and Cons

The projected GDP growth rate of 6.5% has several pros, including economic stability, job creation, and increased investments. It indicates that the Indian economy is resilient and can withstand external challenges. However, there may be cons associated with high inflation due to rising crude oil prices. Inflation can impact the purchasing power of consumers, leading to decreased discretionary spending and potential economic slowdown.

Fun Fact

A fun fact related to the Indian economy is that it is the world’s sixth-largest economy by nominal GDP and the third-largest by purchasing power parity. India has made significant progress in recent years, becoming a major player in global trade and investment.

In conclusion, the projected GDP growth rate of 6.5% for the current fiscal year demonstrates the resilience and stability of the Indian economy. It highlights the increase in gross household savings and reaffirms India’s economic potential. However, challenges such as high crude oil prices and inflation should be effectively managed to ensure sustained economic growth.

Mutiple Choice Questions

1. According to NITI Aayog member Arvind Virmani, what is the projected GDP growth for the Indian economy in the current fiscal year?
a) 6.5% plus minus 0.5%
b) 7.2%
c) 9.1%
d) 6.83%

Explanation: Arvind Virmani projected that the GDP growth for the Indian economy in the current fiscal year is 6.5% plus minus 0.5%.

2. Which factor presents a risk for India’s economy, according to Arvind Virmani?
a) Climate change
b) Consumer debt
c) Crude oil prices
d) Falling household savings

Explanation: Arvind Virmani mentioned that the risk for India’s economy is crude oil prices, as they have increased in recent years.

3. How did the Finance Ministry respond to the criticism of inflated GDP?
a) By dismissing the criticism and stating that income side estimates were used
b) By acknowledging the criticism and promising to revise their GDP calculations
c) By ignoring the criticism and refusing to provide any explanation
d) By blaming international agencies for the inflated GDP figures

Explanation: The Finance Ministry dismissed the criticism of inflated GDP by stating that they have followed the consistent practice of using income side estimates to compute economic growth. They also highlighted that many international agencies have revised upwards their forecast after seeing the first quarter data.

4. According to Arvind Virmani, why is the net household savings ratio in India falling?
a) Increased debt-to-GDP ratio
b) Decreased gross household savings
c) Falling consumer debt
d) Rise in crude oil prices

Explanation: Arvind Virmani explained that the net household savings ratio in India is falling because consumer debt is increasing faster, but the gross household savings ratio has consistently gone up.

5. How has the rise in crude oil prices impacted inflation, according to Arvind Virmani?
a) It has led to a decrease in inflation
b) It has had no impact on inflation
c) It has caused inflation to increase
d) It has stabilized inflation at a moderate level

Explanation: Arvind Virmani stated that the rise in crude oil prices will have some inflationary impact, as the income of the people goes down. However, he also mentioned that the government has managed food inflation reasonably well.

6. How did former Chief Economic Advisor Arvind Subramanian argue that India’s GDP should be measured?
a) From the expenditure side
b) From the productivity side
c) From the income side
d) From the savings side

Explanation: Arvind Subramanian argued that India’s GDP should be measured from the expenditure side rather than the productivity side.

7. How did Chief Economic Advisor V Anantha Nageswaran respond to criticism of “statistical discrepancy” in the first quarter GDP data?
a) He acknowledged the discrepancy and promised to address it
b) He dismissed the criticism and referred to past data
c) He blamed the statistical authority for the discrepancy
d) He called for a revision in the methodology of calculating GDP

Explanation: Chief Economic Advisor V Anantha Nageswaran rejected criticism of “statistical discrepancy” in the first quarter GDP data by referring to past data. He stated that when the same statistical authority reported the severest contraction in the first quarter of 2020, the naysayers had called it credible as it suited their narrative.

Brief Summary | UPSC – IAS

The Indian economy is expected to grow at around 6.5% in the current fiscal year, despite challenges such as high crude oil prices and increased uncertainty due to climate change, according to NITI Aayog member Arvind Virmani. He stated that fluctuations in global GDP have balanced out for India. Virmani dismissed claims by US-based economists that India is overstating economic growth, arguing that they lack an understanding of how GDP is constructed. The Finance Ministry also defended the country’s GDP data, highlighting other indicators such as purchasing managers’ indices and bank credit growth. High crude oil prices and climate change were highlighted as risks. Gross household savings in India have consistently increased, although net household savings have fallen due to rising consumer debt. Virmani noted that India’s debt-to-GDP ratio is low compared to other countries and said the government has managed food inflation reasonably well.

The Nuanced Story of India’s GDP Growth Rate: A Comprehensive Analysis

For representative purposes.
| Photo Credit: Getty Images

Significance of India’s GDP Growth Rate

India’s GDP growth rate is a crucial metric used to assess the country’s economic performance. It provides insights into the overall health and sustainability of the economy. The growth rate influences investor confidence, policy decisions, and public sentiment. Understanding the nuances of these figures is essential to make informed judgments and predictions about the future trajectory of the economy.

Key Features of India’s GDP Growth Rate

• The nominal growth rate for Q1 FY24 is reported at 8%, while the real growth rate stands at 7.8%.
• The growth is driven by the agriculture sector (3.5%) and the services industry, particularly financial, real estate, and professional services (12.2%).
• Growth figures are adjusted for inflation using the price deflator.
• The income approach is used for calculating GDP, taking into account factors like national incomes and taxes.
• The divergence between income and expenditure approaches results in significant disparities in growth figures.

Objectives and Effects of GDP Growth Rate

The primary objective of achieving a positive GDP growth rate is to ensure economic stability, improve living standards, and reduce unemployment. Sustainable and robust growth can lead to increased investment, higher incomes, and improved infrastructure. However, an overly optimistic or misrepresented growth narrative can result in misallocation of resources, policy misjudgments, and inaccurate economic forecasts.

Pros and Cons

Pros:

• Positive GDP growth rate reflects economic progress and potential for development.
• Increased growth can attract foreign investment and boost exports.
• Provides opportunities for job creation and poverty alleviation.

Cons:

• Overstated growth figures can lead to unrealistic expectations and misinformed policy decisions.
• Unequal distribution of growth benefits can exacerbate income inequality.
• Environmental implications of growth, such as increased carbon emissions, resource depletion, and ecological degradation.

Fun Fact

India is the world’s seventh-largest economy by nominal GDP and third-largest by purchasing power parity. Its GDP growth rate has been a topic of significant interest and debate among economists, policymakers, and investors due to its potential to drive global economic performance.

Mutiple Choice Questions

1. What is the conventional way to assess a country’s economic situation?
A) Analyzing the quarterly and annual GDP growth rates
B) Reviewing the report card of the country’s economic performance
C) Comparing the current GDP figures with previous quarters and years
D) All of the above

Explanation: The conventional way to assess a country’s economic situation is by looking at the quarterly and annual GDP growth rates and comparing them to previous quarters and years, similar to reviewing a report card of its economic performance.

2. What is the nominal growth rate of India’s GDP in Q1 of FY24?
A) 4.5%
B) 7.8%
C) 8%
D) 12.2%

Explanation: The nominal growth rate of India’s GDP in Q1 of FY24 is 8%.

3. Which sector of the Indian economy is unlikely to sustain its growth due to the El Niño phenomenon?
A) Agriculture sector
B) Services industry
C) Financial sector
D) Real estate sector

Explanation: The agriculture sector is unlikely to sustain its growth due to the pressure from the El Niño phenomenon.

4. Which approach did the NSO use to calculate India’s GDP growth rate?
A) Income approach
B) Expenditure approach
C) Both approaches
D) None of the above

Explanation: The NSO used the income approach to calculate India’s GDP growth rate.

5. What is the headline growth rate of India’s GDP according to the expenditure approach?
A) 4.5%
B) 7.8%
C) 8%
D) 12.2%

Explanation: According to the expenditure approach, the headline growth rate of India’s GDP is 4.5%.

6. What is the purpose of using the price deflator in adjusting growth figures?
A) To overstate the real growth
B) To adjust for inflation
C) To calculate the nominal growth rate
D) To calculate the GDP per capita

Explanation: The purpose of using the price deflator is to adjust growth figures when they are overstated by inflation.

7. What is the significance of the base effect on India’s growth figures?
A) It causes inflationary adjustments
B) It reflects the impact of the El Niño phenomenon
C) It is a result of falling commodity prices
D) It affects comparative statistics

Explanation: The base effect from the COVID-19 degrowth period has a role in comparative statistics due to sporadic growth in the years following FY20-21.

8. Why is the impending depreciation of the Indian rupee against the dollar a concern for India’s growth?
A) It leads to capital outflow pressures
B) It increases import costs
C) It affects the consumer price index
D) It causes a decline in direct tax revenue

Explanation: The impending depreciation of the Indian rupee against the dollar leads to capital outflow pressures and increases import costs, which can impact India’s growth.

9. Which sector serves as a proxy for economic activity in India?
A) Agriculture sector
B) Services industry
C) Financial sector
D) Crude petroleum sector

Explanation: The domestic consumption of diesel serves as a proxy for economic activity in India.

10. What does the weakening of direct tax revenue compared to indirect tax revenue indicate?
A) A progressive taxation system
B) A regressive taxation system
C) A K-shaped pattern
D) A decline in government expenditure

Explanation: The weakening of direct tax revenue compared to indirect tax revenue indicates a K-shaped pattern, where progressive taxation is lagging behind.

Brief Summary | UPSC – IAS

India’s reported GDP growth rate of 7.8% for Q1 of FY24 may be overstated due to various factors, including the use of the income approach instead of the expenditure approach, which would result in a lower growth rate of 4.5%. The adjustment for inflation using the price deflator has also worked to overstate real growth, and there is a base effect from the COVID-19 pandemic that continues to impact growth figures. In addition, there are concerns about sustaining low inflation rates and the impact of rising crude oil prices and a depreciating rupee. Furthermore, tax revenue streams indicate forced austerity measures and government expenditure may not contribute significantly to growth in the current financial year. Overall, a nuanced and critical approach is needed when assessing India’s economic trajectory.

The Liberalization of Foreign Direct Investment in India’s Space Sector

After the touchdown by ISRO’s Chandrayaan-3 spacecraft near the moon’s South pole, three G-20 countries have expressed interest in possible collaborations or partnerships with India in the space sector.
| Photo Credit: PTI

Mutiple Choice Questions

1. Which sector is the Indian government looking to further liberalize foreign direct investment (FDI) norms?
a) Education sector
b) Health sector
c) Space sector
d) Automotive sector

Explanation: The Indian government is looking to further liberalize foreign direct investment (FDI) norms in the space sector to attract overseas players and private companies.

2. What is the current limit for FDI in the space sector?
a) 50%
b) 75%
c) 100%
d) No limit

Explanation: Currently, FDI in the space sector is allowed up to 100% in the area of satellite establishment and operations through government route only.

3. Which countries have expressed interest in possible collaborations or partnerships with India in the space sector?
a) G-7 countries
b) BRICS countries
c) G-20 countries
d) ASEAN countries

Explanation: After the touchdown by ISRO’s Chandrayaan-3 spacecraft near the moon’s South pole, three G-20 countries have expressed interest in possible collaborations or partnerships with India in the space sector.

4. What is the estimated value of the global space economy in 2022?
a) USD 100 billion
b) USD 546 billion
c) USD 1 trillion
d) USD 2 trillion

Explanation: The global space economy is valued at about USD 546 billion in 2022 and is projected to reach about USD 1 trillion by 2040.

5. What is the purpose of the Indian Space Policy 2023?
a) To promote space tourism
b) To institutionalize private sector participation in the space sector
c) To establish a moon base
d) To discover extraterrestrial life

Explanation: The Indian Space Policy 2023 seeks to institutionalize private sector participation in the space sector, with ISRO focusing on research and development of advanced space technologies.

6. What is the role of NewSpace India Limited (NSIL) according to the Indian Space Policy-2023?
a) Research and Development (R&D) outfits
b) Manufacturers of space hardware
c) Providers of space-enabled products and services
d) Space sector PSU

Explanation: The Indian Space Policy-2023 delineated the roles and responsibilities of ISRO, space sector PSU NewSpace India Limited (NSIL), and Indian National Space Promotion and Authorization Center (IN-SPACe).

7. How can the Indian government incentivize companies engaged in space sector activities?
a) Tax exemptions
b) Tax holidays
c) Accelerated depreciation
d) All of the above

Explanation: The Indian government can provide tax exemptions, tax holidays, and accelerated depreciation for companies directly or indirectly engaged in space sector activities to incentivize them.

8. According to a report, what is the need for creating a sustainable market demand for private startups in the space sector?
a) To attract investors
b) To establish a robust private space ecosystem in India
c) To enhance government contracts
d) To drive cost reduction efforts

Explanation: There is a need for creating a sustainable market demand for the private startups, which in turn contributes to the establishment of a robust private space ecosystem in India.

9. What is the initial customer base for numerous startups in the space sector?
a) General consumers
b) Governments
c) Investors
d) Space agencies

Explanation: Within the space industry, governments often serve as the initial customers for numerous startups, while also acting as stable clients for companies engaged in strategic space and national security initiatives.

10. How are space agencies fostering capital inflow in the space sector?
a) Offering government contracts
b) Providing tax incentives
c) Attracting foreign investors
d) All of the above

Explanation: Space agencies are fostering capital inflow in the space sector by offering government contracts, providing tax incentives, and attracting foreign investors.

Brief Summary | UPSC – IAS

Three G-20 countries have expressed interest in collaborating with India in the space sector following the successful touchdown of ISRO’s Chandrayaan-3 spacecraft near the moon’s South pole. To attract foreign players and private companies, the Indian government is currently discussing the liberalisation of foreign direct investment (FDI) norms in the space sector. Presently, FDI is allowed up to 100% for satellite establishment and operations through the government route only. The Indian Space Policy 2023, which aims to involve the private sector in the space industry, has already been approved. The global space economy is projected to reach $1 trillion by 2040.

Finance Ministry Exudes Confidence in India’s Economic Growth

Finance Ministry exuded confidence that the country will achieve 6.5% growth in FY24 on the back of improved corporate profitability, private capital formation, and bank credit growth, notwithstanding the risks of rising crude oil prices and monsoon deficit.

Mutiple Choice Questions

1. According to the Finance Ministry, what factors contribute to the projected 6.5% growth in FY24 for the country?
a) Improved corporate profitability, private capital formation, and bank credit growth
b) Rising crude oil prices and monsoon deficit
c) Global stock market correction and private sector formation cycle
d) Record e-way bills generation and electronic toll collections

Explanation: The correct answer is a) Improved corporate profitability, private capital formation, and bank credit growth. The Finance Ministry stated that these factors are expected to contribute to the projected growth.

2. What are the risks identified by the Finance Ministry for the Indian economy?
a) Climbing oil prices and monsoon deficit
b) Overdue global stock market correction and low private sector formation
c) Record e-way bills generation and electronic toll collections
d) High food inflation and declining core inflation

Explanation: The correct answer is a) Climbing oil prices and monsoon deficit. The Finance Ministry identified these as risks to the economic outlook.

3. What indicators were cited by the Finance Ministry as signals of healthy economic activity?
a) Record e-way bills generation and electronic toll collections
b) Climbing oil prices and monsoon deficit
c) High food inflation and declining core inflation
d) International bond yield and S&P 500 index

Explanation: The correct answer is a) Record e-way bills generation and electronic toll collections. The Finance Ministry cited these indicators as signals of healthy economic activity.

4. What does the Finance Ministry’s monthly economic review for August reveal about the private sector?
a) Private sector is in good health and businesses are investing
b) Private sector is facing a decline in advance tax payments
c) Private sector is experiencing a stock market correction
d) Private sector formation cycle has come to a halt

Explanation: The correct answer is a) Private sector is in good health and businesses are investing. The review revealed that the private sector is in good health based on data on advance tax payments for the second quarter.

5. According to the Finance Ministry, what is the outlook for inflation in the country?
a) Food inflation remains high, but core inflation has declined
b) Inflation is within the RBI tolerance limit of 5.6%
c) Core inflation is the lowest in the last 40 months
d) Government interventions have targeted specific crops to ease inflation

Explanation: The correct answer is a) Food inflation remains high, but core inflation has declined. The review mentioned that food inflation eased due to government interventions, but core inflation has declined for the last three consecutive months.

Brief Summary | UPSC – IAS

The Indian Finance Ministry is confident that the country’s economy will achieve 6.5% growth in the fiscal year 2024. Despite concerns over rising crude oil prices and a monsoon deficit, the ministry believes that improved corporate profitability, private capital formation, and bank credit growth will drive the growth. While the rise in global oil prices is a concern, the ministry does not believe it is cause for alarm yet. Additionally, the ministry expects food prices to stabilize and inflation to ease due to government interventions. The ministry also highlighted positive indicators such as high e-way bill and toll collections, as well as increased capital goods imports.

The Rising Global Debt: Significance, Features, Objectives, Effects, and Pros and Cons

Mutiple Choice Questions

1) What does global debt refer to?
a) Borrowings of governments only
b) Borrowings of private businesses and individuals only
c) Borrowings of governments as well as private businesses and individuals
d) Borrowings of international organizations

Explanation: Global debt refers to the borrowings of governments as well as private businesses and individuals. Governments borrow to meet various expenditures, while the private sector borrows predominantly to make investments.

2) What has been the trend in global debt over the last decade?
a) It has remained stable
b) It has decreased by $100 trillion
c) It has increased by $100 trillion
d) It has fluctuated periodically

Explanation: Global debt has risen by about $100 trillion over the last decade, reaching an all-time high of $307 trillion in the second quarter of 2023.

3) Why has global debt started to rise again in recent quarters?
a) Economic activity has turned sluggish
b) Lending has slowed down
c) Advanced economies have significantly increased their borrowing
d) Emerging market economies have significantly increased their borrowing

Explanation: Global debt levels have started to rise again in recent quarters, with most of the rise coming from advanced economies such as the U.S., the U.K., Japan, and France. China, India, and Brazil have also seen significant growth in debt.

4) How has the decline in global debt as a share of GDP been attributed?
a) Rise in price inflation
b) Government’s purchase of government bonds
c) Increase in money supply
d) Creation of fresh money causing prices to rise

Explanation: The decline in global debt as a share of GDP over seven consecutive quarters prior to 2023 has been attributed to the rise in price inflation. Inflating away of debt refers to the phenomenon where the central bank uses freshly created currency to effectively pay off outstanding government debt.

5) What are the concerns associated with rising global debt levels?
a) Sustainability of debt
b) High interest rates
c) Risk of default
d) All of the above

Explanation: Rising global debt levels lead to concerns about the sustainability of such debt, particularly in the case of government debt. When central banks raise interest rates, servicing outstanding debt becomes a challenge for heavily indebted governments, increasing the risk of default.

6) What is the potential consequence of rising interest rates on governments with heavy debt burdens?
a) Default on debt
b) Inflating away debt
c) Increase in savings
d) Decrease in borrowing

Explanation: Rising interest rates can increase pressure on governments with heavy debt burdens and force them to either default outright or inflate away their debt. Many analysts believe that inflating away debt is the only way for governments to avoid an outright default.

7) What is the concern associated with rapidly rising private debt levels?
a) Unsustainable booms
b) Economic crises
c) Lack of genuine savings
d) All of the above

Explanation: Rapidly rising private debt levels lead to worries about unsustainable booms that can end in economic crises when such lending is not backed by genuine savings.

Overall Explanation: Global debt refers to the borrowings of governments as well as private businesses and individuals. It has risen by about $100 trillion over the last decade, reaching an all-time high of $307 trillion in the second quarter of 2023. The recent rise in global debt levels can be attributed to increased borrowing by both advanced and emerging market economies. The decline in global debt as a share of GDP over seven consecutive quarters prior to 2023 was due to the rise in price inflation. Concerns associated with rising global debt levels include debt sustainability, high interest rates, and the risk of default for heavily indebted governments. Rising interest rates can increase pressure on governments to either default or inflate away their debt. Rapidly rising private debt levels can lead to unsustainable booms and economic crises when not backed by genuine savings.

Brief Summary | UPSC – IAS

Global debt reached a record high of $307 trillion by the end of June 2023, a $100 trillion increase over the past decade, according to the Institute of International Finance (IIF). Debt-to-GDP ratios have started to rise again, reaching 336% after seven consecutive quarters of decline. The majority of the increase in global debt in the first half of the year came from advanced economies like the US, UK, Japan, and France, as well as emerging markets such as China, India, and Brazil. While rising debt levels are a concern, the decline in debt as a share of GDP in previous quarters was attributed to inflation helping governments inflate away their debt. Rising interest rates could increase pressure on governments to pay their debt, and the IIF has warned that the international financial infrastructure is not equipped to handle unsustainable levels of debt.

Ordinary households and small businesses under intense pressure, says Congress MP Jairam Ramesh

Ordinary households and small businesses are currently facing intense pressure due to high unemployment and inflation levels. This statement was made by Congress General Secretary in-charge of Communications, Jairam Ramesh, who cited data points from the Reserve Bank of India’s latest bulletin and other sources to support his claim. The statement aims to highlight the difficulties faced by the majority of people amidst the government’s claims of economic growth.

According to Mr. Ramesh, the government’s argument that declining savings were a result of car and home purchases is invalid. Instead, he pointed to RBI data showing a significant increase in gold loans and personal loans in the last year, indicating that people are going into debt to meet basic expenses. These figures indicate clear signs of distress among the population.

Mr. Ramesh further criticized the Modi government’s response to the COVID-19 pandemic, stating that the latest RBI bulletin exposes its failure to execute a recovery. He highlighted the decline in labor force participation, with only 40% of the population in the labor force as of now compared to 43% in February 2020. He also mentioned the significant gender pay gap that still exists, as women are earning only 85% of what they made before the pandemic. Additionally, he cited a report from Azim Premji University, revealing that over 42% of graduates under the age of 25 were unemployed in 2021-22.

Rise in prices

Mr. Ramesh drew attention to the rising prices of essential commodities such as pulses, sugar, atta, besan, and gur, which have had a direct impact on the household budgets of ordinary families. He also noted a 16% fall in Foreign Direct Investment (FDI), attributing this decline to the government’s failed economic policies and communal tensions.

The Congress leader emphasized how small businesses are suffering under the Modi government’s crony capitalism, making it nearly impossible for MSMEs to compete. He referenced a Marcellus report which states that 80% of profits in 2022 went to just 20 companies. Moreover, he highlighted the decline in the share of sales for small businesses, dropping from 7% before 2014 to 4% in Q1 of 2023.

Mr. Ramesh concluded his statement by stating that the Modi government has mismanaged the economy across all sectors, leading to increasing unemployment, rising prices, shrinking MSME sales, slow domestic credit growth, increased household financial liabilities, and declining FDI. He remarked that the government is too inept to resolve these issues.

Significance: Jairam Ramesh’s statement sheds light on the challenging economic conditions faced by ordinary households and small businesses. It highlights the discrepancy between the government’s claims of economic growth and the reality experienced by the majority of citizens. This brings attention to the need for effective policies to alleviate the financial strain on the population.

Features: The statement includes data points from the Reserve Bank of India and other sources to support the claims made by Jairam Ramesh. It addresses various aspects of the economy, such as unemployment, inflation, labor force participation, gender pay gap, rising prices of essential commodities, and the impact on small businesses.

Objectives: The main objective of the statement is to highlight the struggles faced by ordinary households and small businesses due to economic hardships. It aims to criticize the government’s handling of the economy and call attention to the need for effective measures to alleviate these difficulties.

Effects: The statement may create public awareness about the economic challenges faced by individuals and small businesses. It may also put pressure on the government to address these issues and formulate better economic policies to promote growth, reduce unemployment, and control inflation.

Pros:
– Draws attention to the economic hardships faced by ordinary households and small businesses
– Provides data evidence to support the claims made
– Raises awareness about the government’s alleged mismanagement of the economy
– Calls for effective measures to alleviate financial strain and promote economic growth

Cons:
– The statement may be perceived as politically motivated due to the involvement of a Congress party representative
– Critics may argue that the statement only presents a one-sided view and ignores positive aspects of the economy
– Some may question the accuracy or reliability of the data presented

Fun Fact: Did you know that India is the world’s largest consumer of gold? The demand for gold in the country is driven by cultural traditions and the belief in gold as a symbol of wealth and prosperity.

Mutiple Choice Questions

1. According to Jairam Ramesh, Congress General Secretary, what is the current state of households and small businesses in India?
a) They are flourishing and experiencing economic growth
b) They are under intense pressure due to high unemployment and inflation levels
c) They are facing no significant challenges or issues
d) They are thriving due to effective government policies

Answer: b) They are under intense pressure due to high unemployment and inflation levels

Explanation: Jairam Ramesh states in his statement that ordinary households and small businesses in India are under intense pressure due to high unemployment and inflation levels.

———————————————————————————————————————–

2. Based on RBI data, what are the clear signs of distress mentioned by Jairam Ramesh?
a) A decline in savings due to increased car and home purchases
b) A decline in personal loans and a decrease in gold loans
c) A 23% increase in gold loans and a 29% increase in personal loans
d) A decrease in debt and basic expenses

Answer: c) A 23% increase in gold loans and a 29% increase in personal loans

Explanation: Jairam Ramesh highlights RBI data which shows a 23% increase in gold loans and a 29% increase in personal loans in the last year, which he considers as clear signs of distress as people go into debt to meet basic expenses.

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3. According to Jairam Ramesh, what does the latest bulletin of the RBI show about the Modi government’s recovery from the COVID-19 pandemic?
a) A successful execution of the recovery
b) A partial failure in executing the recovery
c) A complete failure in executing the recovery
d) A steady progress in executing the recovery

Answer: c) A complete failure in executing the recovery

Explanation: Jairam Ramesh states that the latest bulletin of the RBI shows the complete failure of the Modi government to execute a recovery from the COVID-19 pandemic.

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4. What percentage of the population was in the labor force as of February 2020 according to Mr. Ramesh?
a) 43%
b) 40%
c) 85%
d) 42%

Answer: a) 43%

Explanation: Jairam Ramesh mentions that around 43% of the population was in the labor force as of February 2020.

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5. What is the impact of price rise in essential commodities, according to Jairam Ramesh?
a) It is not affecting ordinary families’ household budgets
b) It is leading to increased savings for ordinary families
c) It is impacting the household budget of ordinary families
d) It is not a major concern for ordinary families

Answer: c) It is impacting the household budget of ordinary families

Explanation: Jairam Ramesh highlights the price rise in essential commodities such as pulses, sugar, atta, besan, and gur, and states that it is impacting the household budget of ordinary families.

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6. According to Jairam Ramesh, what is the reason for the decline in small businesses’ share in sales?
a) Increased competition from large corporations
b) Decreased demand for their products or services
c) Ineffective government policies
d) Modi government’s crony capitalism

Answer: d) Modi government’s crony capitalism

Explanation: Jairam Ramesh states that small businesses are losing out because of the Modi government’s crony capitalism, which has made it “impossible for the MSMEs to compete.”

———————————————————————————————————————–

7. How has the Modi government mismanaged the economy, according to Jairam Ramesh?
a) By effectively managing all sectors
b) By increasing unemployment and household financial liabilities
c) By decreasing inflation and improving savings
d) By implementing successful economic policies

Answer: b) By increasing unemployment and household financial liabilities

Explanation: Jairam Ramesh accuses the Modi government of mismanaging the economy by increasing unemployment, rising prices of household essentials, shrinking MSME sales, slow domestic credit growth, increased household financial liabilities, and declining FDI.

Brief Summary | UPSC – IAS

Congress General Secretary Jairam Ramesh criticized the Indian government for its failure to address the economic challenges faced by ordinary households and small businesses. Ramesh cited data from the Reserve Bank of India’s bulletin, showing a rise in gold loans and personal loans, as clear signs of distress as people go into debt to meet basic expenses. He also mentioned a decrease in savings and highlighted the impact of rising prices of essential commodities. Ramesh further criticized the government for crony capitalism, which he claimed disadvantaged small businesses and deterred foreign investors. He concluded by stating that the government was inept in managing the economy.

Understanding Aadhaar: Significance, Features, Objectives, Effects, and Pros and Cons

September 25, 2023 11:09 pm | Updated September 26, 2023 11:52 am IST – NEW DELHI

Representational image of a person going through the process of a fingerprint scanner for the Unique Identification (UID) database system at an Aadhaar enrollment centre
| Photo Credit: Reuters

The Aadhaar system, also known as the Unique Identification (UID) database system, has been a topic of discussion lately after a report from Moody’s Investors Service raised questions about its efficacy. The report highlighted concerns about security and privacy, as well as the reliability of biometric authentication systems in hot and humid conditions. In response, the Electronics and IT Ministry dismissed these concerns, emphasizing the trust and confidence expressed by over a billion Indians who have used Aadhaar over 100 billion times for authentication. Let’s delve deeper into Aadhaar’s significance, features, objectives, effects, and consider the pros and cons of this centralised system.

Significance of Aadhaar

Aadhaar holds immense significance as it serves as a unique identification system for individuals in India. It provides a 12-digit identification number based on biometric and demographic data. Aadhaar is considered the most trusted digital ID in the world, with numerous international agencies and institutions lauding its effectiveness. The system has gained widespread acceptance among the Indian population, with over a billion individuals using it for authentication.

Features of Aadhaar

Aadhaar’s features include biometric authentication systems such as fingerprint scanning, face authentication, and iris authentication. Additionally, mobile OTP (One-Time Passcode) is available for various use cases. The system also ensures privacy and security through robust technological and organizational arrangements. The data is encrypted both at rest and in motion, and the system adheres to international security and privacy standards.

Objectives of Aadhaar

The main objectives of Aadhaar are:

1. To establish a unique identification system for individuals in India.
2. To streamline and simplify the process of accessing government services and subsidies.
3. To enhance financial inclusion by facilitating the opening of bank accounts.
4. To eliminate duplicate and fake identities, reducing identity-related fraud and corruption.
5. To enable the delivery of services and benefits directly to the intended beneficiaries.

Effects of Aadhaar

Aadhaar has had several significant effects since its implementation:

• Enhanced access to government services and subsidies for individuals, particularly those in rural areas.
• Promotion of financial inclusion by providing a unique identification system linked to bank accounts.
• Reduction in identity-related fraud and corruption.
• Streamlined administration and delivery of services, leading to improved efficiency and accountability.

Pros and Cons of Aadhaar

As with any system, Aadhaar has its share of pros and cons:

Pros:

1. Simplifies access to government services and subsidies, making them more accessible to the general population.
2. Reduces identity-related fraud and corruption by eliminating duplicate and fake identities.
3. Enhances financial inclusion by linking Aadhaar to bank accounts, making it easier for individuals to access financial services.
4. Streamlines administration and service delivery, improving efficiency and accountability in governance.

Cons:

1. Concerns about security and privacy of personal data in a centralised system.
2. Reliability issues with biometric authentication systems, especially in hot and humid conditions.

Overall, while Aadhaar has brought significant benefits and convenience to individuals in India, it is essential to address the concerns related to privacy and security.

Fun Fact: The G-20 New Delhi Declaration has welcomed India’s plan to build and maintain a Global Digital Public Infrastructure Repository (GDPIR), a virtual DPI repository shared voluntarily by G-20 members and beyond, indicating the trust and recognition of India’s expertise in digital identification systems.

Mutiple Choice Questions

1. What is the title of the note issued by the Electronics and IT Ministry?
a) “Aadhaar and its Impact on Digital ID Systems”
b) “Moody’s Report: Concerns about Aadhaar’s Efficacy”
c) “The Trustworthiness of Aadhaar as a Digital ID”
d) “International Agencies’ Opinions on Aadhaar”

Explanation: The note issued by the Electronics and IT Ministry is titled “Aadhaar, the most trusted digital ID in the world — Moody’s Investors Service opinions baseless”.

2. According to the Ministry, how many times have Indians used Aadhaar to authenticate themselves?
a) Over 100 million times
b) Over 1 billion times
c) Over 100 billion times
d) Over 1 trillion times

Explanation: The Ministry stated that over a billion Indians have expressed their trust in Aadhaar by using it to authenticate themselves “over 100 billion times”.

3. What risks did Moody’s highlight regarding Aadhaar’s biometric authentication systems?
a) Service denials and unreliable performance in hot and humid conditions
b) Privacy breaches and security vulnerabilities
c) Lack of trust and low adoption rates
d) Inaccuracy in data collection and user identification

Explanation: Moody’s highlighted risks such as service denials for users and the unreliability of biometric authentication systems in hot and humid conditions.

4. How does the Ministry refute Moody’s concerns regarding biometric authentication and service denials?
a) By emphasizing the use of mobile OTP and contactless biometric submission methods
b) By conducting a comprehensive study on the performance of Aadhaar in manual labour-intensive sectors
c) By implementing stricter regulations on the usage of biometric data
d) By developing a more advanced biometric authentication system

Explanation: The Ministry refutes Moody’s concerns by highlighting that biometric submission is possible through contactless means like face authentication and iris authentication. They also mention the availability of mobile OTP as an alternative authentication method.

5. What security measures are in place for the Aadhaar system, according to the Ministry?
a) Encryption of data and compliance with international security and privacy standards
b) Regular system audits and vulnerability assessments
c) Use of AI and machine learning algorithms for data protection
d) Collaboration with international cybersecurity organizations

Explanation: The Ministry mentions that the Aadhaar system has state-of-the-art security solutions in place, with a federated database and encryption of data both at rest and in motion. They also highlight that the system is certified as per international security and privacy standards.

6. According to the G-20 Global Partnership for Financial Inclusion, what role has Aadhaar played in enhancing ownership of transaction accounts?
a) It has led to a decrease in ownership of transaction accounts.
b) It has had no significant impact on ownership of transaction accounts.
c) It has played a critical role in enhancing ownership of transaction accounts.
d) It has had a negative impact on the adoption of transaction accounts.

Explanation: The G-20 Global Partnership for Financial Inclusion, in a report prepared by the World Bank, stated that the implementation of Aadhaar, along with Jan Dhan bank accounts and mobile phones, has played a critical role in enhancing ownership of transaction accounts.

Brief Summary | UPSC – IAS

India’s Electronics and IT Ministry has rejected a report by Moody’s Investors Service that questioned the effectiveness of the country’s Aadhaar system. The ministry cited praise from international agencies and over a billion users who have authenticated themselves “over 100 billion times” as proof of the system’s success. Moody’s had raised concerns about service denials due to biometric authentication issues and the security of centralised systems, but the ministry said these claims lacked evidence. The ministry also highlighted that the G-20 New Delhi Declaration supported India’s plan to develop a Global Digital Public Infrastructure Repository.

The Amended Rules for Valuation of Startup Investments: A Game Changer

Image for representation
| Photo Credit: Getty Images

The Income Tax department has recently introduced new rules for the valuation of equity and compulsorily convertible preference shares (CCPS) issued by startups to both resident and non-resident investors. These changes, which came into effect on September 25, are set to bring significant benefits to both startups and investors.

Significance of the Amended Rules

The amendments to Rule 11UA of the Income Tax (I-T) Act hold great significance as they offer taxpayers greater flexibility through multiple valuation methods. This simplifies the valuation process, incentivizes venture capital investments, and encourages foreign investment in Indian startups. The rules also provide clarity on the valuation of CCPS, which is an important aspect for investors.

Key Features of the Amended Rules

The amended rules retain the five new valuation methods proposed in the draft rules:

1. Comparable Company Multiple Method
2. Probability Weighted Expected Return Method
3. Option Pricing Method
4. Milestone Analysis Method
5. Replacement Cost Method

These methods enable startups to determine the fair market value of their unquoted equity shares accurately. Additionally, the rules introduce a tolerance threshold for minor valuation discrepancies, enhancing efficiency and fairness in tax assessments.

Objectives and Effects of the Amended Rules

The primary objective of these rules is to bridge the gap between the regulations outlined in the Foreign Exchange Management Act (FEMA) and the Income Tax Act. So far, only investments by domestic investors or residents in closely-held companies or unlisted firms were subject to taxation above the fair market value, commonly known as “angel tax.”

The amendments aim to ensure that investments over and above the fair market value are taxed, regardless of whether the investor is a resident or non-resident. This helps tackle concerns related to the calculation of fair market value under different laws and promotes transparency in valuation practices.

Pros and Cons

The implementation of the amended rules brings several advantages for startups, investors, and the government. Some of the pros include:

• Greater flexibility in valuation methods, attracting domestic and foreign investments
• Simplified valuation process, reducing complexities for startups
• Specific guidelines for CCPS valuation, providing clarity for investors
• Tolerance threshold for minor valuation discrepancies, fostering fairness in tax assessments

However, it is essential to consider the potential cons of these rules. One challenge could be ensuring accurate and consistent valuation across different methods. Startups may also face increased scrutiny from tax authorities, requiring them to maintain thorough documentation and evidence for fair market value determination.

Fun Fact: The Rise of Startup Investments

In recent years, startup investments have witnessed remarkable growth globally. According to a report, global venture capital investment in startups reached a record high of $295 billion in 2021. This surge indicates the growing interest and confidence in the startup ecosystem, making the amended rules for valuation even more relevant and crucial.

In conclusion, the Income Tax department’s amendments to the rules for valuation of equity and CCPS investments provide much-needed flexibility, clarity, and simplicity to startups and investors. By encouraging venture capital investments and attracting foreign funding, these rules contribute to the growth and development of the startup ecosystem in India.

Mutiple Choice Questions

1. According to the changes in Rule 11UA of the Income Tax rules, what can be used as the basis for the valuation of compulsorily convertible preference shares (CCPS) issued by startups?
a) Comparable Company Multiple Method
b) Fair market value of unquoted equity shares
c) Replacement Cost Method
d) Option Pricing Method

Explanation: The changes in Rule 11UA allow the valuation of CCPS to be based on the fair market value of unquoted equity shares.

2. Which organization has notified the rules for the valuation of equity and compulsorily convertible preference shares issued by startups?
a) Income Tax department
b) Central Board of Direct Taxes (CBDT)
c) Nangia & Co LLP
d) AKM Global

Explanation: The Income Tax department has notified the rules for the valuation of equity and compulsorily convertible preference shares issued by startups.

3. What are the five new valuation methods proposed in the draft rules for consideration received from non-resident investors?
a) Comparable Company Multiple Method, Probability Weighted Expected Return Method, Option Pricing Method, Milestone Analysis Method, Replacement Cost Method
b) Fair market value, Replacement Cost Method, Option Pricing Method, Comparable Company Multiple Method, Milestone Analysis Method
c) Option Pricing Method, Replacement Cost Method, Probability Weighted Expected Return Method, Milestone Analysis Method, Comparable Company Multiple Method
d) Option Pricing Method, Comparable Company Multiple Method, Replacement Cost Method, Milestone Analysis Method, Probability Weighted Expected Return Method

Explanation: The five new valuation methods proposed in the draft rules for consideration received from non-resident investors are: Comparable Company Multiple Method, Probability Weighted Expected Return Method, Option Pricing Method, Milestone Analysis Method, and Replacement Cost Method.

4. What positive changes do the amendments to Rule 11UA of the Indian Income Tax Act bring?
a) Flexibility through multiple valuation methods
b) Incentivizing venture capital investments
c) Providing clarity on CCPS
d) All of the above

Explanation: The amendments to Rule 11UA bring positive changes by offering taxpayers flexibility through multiple valuation methods, simplifying the valuation date consideration, incentivizing venture capital investments, facilitating investments from notified entities, providing clarity on CCPS, and encouraging foreign investments.

5. What is the purpose of the changes in the angel tax rules?
a) To bridge the gap between the rules outlined in FEMA and the Income Tax
b) To tax investments over and above the fair market value
c) To encourage foreign exchange fluctuations
d) To encourage domestic investors to invest in startups

Explanation: The changes in the angel tax rules are aimed at bridging the gap between the rules outlined in FEMA and the Income Tax.

Brief Summary | UPSC – IAS

The Income Tax department in India has notified rules for the valuation of equity and convertible preference shares issued by startups to both resident and non-resident investors. The changes to the rules include allowing the valuation of convertible preference shares to be based on the fair market value of unquoted equity shares. The amended rules also retain five new valuation methods proposed in the draft rules for consideration received from non-residents. These changes aim to incentivize venture capital investments, facilitate investments from notified entities, and encourage foreign investments. The rules are also aimed at bridging the gap between the rules outlined in the Foreign Exchange Management Act and the Income Tax Act.

The European Union’s Proposed Carbon Tax and its Impact on India’s Manufacturing Sector

Note: The HTML heading tags (h1, h2, h3) have been used to structure the article and provide semantic meaning to each section.

Mutiple Choice Questions

1. What is the European Union’s proposed Carbon Tax on imports?
a) A tax on carbon emissions for imported goods
b) A tax on all imports from non-EU countries
c) A tax on all exports to non-EU countries
d) A tax on carbon emissions within the EU

Answer: a) A tax on carbon emissions for imported goods

Explanation: The European Union’s proposed Carbon Tax on imports is a tax specifically targeting carbon emissions associated with imported goods.

2. When is the EU’s Carbon Border Adjustment Mechanism (CBAM) set to kick in?
a) 2022
b) 2024
c) 2026
d) 2028

Answer: c) 2026

Explanation: The EU’s Carbon Border Adjustment Mechanism (CBAM) is set to kick in from 2026, according to the information provided.

3. Why does Commerce and Industry Minister Piyush Goyal believe the EU’s Carbon Tax would be detrimental to its manufacturing sector?
a) The tax would increase the cost of production in Europe
b) The tax would discourage foreign investment in European manufacturing
c) The tax would make European exports less competitive
d) The tax would lead to job losses in the manufacturing sector

Answer: a) The tax would increase the cost of production in Europe

Explanation: Commerce and Industry Minister Piyush Goyal believes that the EU’s Carbon Tax would cause the death of manufacturing in Europe because it would increase the cost of production, making it less competitive.

4. According to Piyush Goyal, what sector of the European economy may be the first casualty of the Carbon Tax?
a) Agriculture
b) Manufacturing
c) Tourism
d) Financial services

Answer: b) Manufacturing

Explanation: Piyush Goyal suggests that the auto sector of Europe, where steel and aluminum are used, may be the first casualty of the Carbon Tax.

5. How does Piyush Goyal believe the Carbon Tax would benefit India?
a) It would attract European producers to move production to India
b) It would decrease the cost of inputs for Indian manufacturers
c) It would reduce carbon emissions in India
d) It would increase India’s exports to the EU

Answer: a) It would attract European producers to move production to India

Explanation: According to Piyush Goyal, the Carbon Tax would provide India with a competitive edge as European producers may move their production to India due to the tax.

6. What does Piyush Goyal suggest as a countermeasure to the EU’s Carbon Tax?
a) Levying India’s own carbon tax
b) Imposing trade sanctions on European imports
c) Negotiating a lower tax rate with the EU
d) Implementing stricter carbon emission regulations in India

Answer: a) Levying India’s own carbon tax

Explanation: Piyush Goyal suggests that India would neutralize the EU’s Carbon Tax by levying its own carbon tax.

7. How does Piyush Goyal propose India could avoid additional CBAM tax at the European border?
a) By negotiating a lower tax rate with the EU
b) By increasing the competitiveness of Indian exports
c) By utilizing the tax collected for India’s green energy transition
d) By imposing retaliatory trade measures against the EU

Answer: c) By utilizing the tax collected for India’s green energy transition

Explanation: Piyush Goyal suggests that if India collects the tax internally and uses it for its own green energy transition, there would be no additional CBAM tax at the European border.

8. What is the government’s current status in the negotiation with the EU regarding the Carbon Tax?
a) The negotiation is ongoing and no agreement has been reached yet
b) The negotiation has been successful and the Carbon Tax has been dropped
c) The negotiation has failed and the government is planning retaliatory measures
d) The negotiation has been postponed indefinitely

Answer: a) The negotiation is ongoing and no agreement has been reached yet

Explanation: The government is still in dialogue with its EU counterparts on the levy, indicating that the negotiation is ongoing and no agreement has been reached yet.

Brief Summary

Indian Commerce and Industry Minister, Piyush Goyal, has criticized the European Union’s proposed Carbon Border Adjustment Mechanism (CBAM) as an “ill-conceived” move that would harm the EU’s manufacturing sector. Goyal argued that carbon cannot be priced the same in India and Europe, and therefore the CBAM is unfair. He suggested that India would neutralize the impact of the CBAM by imposing its own carbon tax. Goyal believes that European producers would likely move their production to India as a result of the tax, and that the EU would eventually realize the need to drop the CBAM.

SVAMITVA Scheme is a Central Sector scheme launched by Hon’ble Prime Minister of India on National Panchayat Day i.e 24^th April 2020.

Aim: To provide an integrated property validation solution for rural India.

The demarcation of rural abadi areas using Drone Surveying technology. and Continuously Operating Reference Station (CORS).

This would provide the ‘record of rights’ to village household owners possessing houses in inhabited rural areas in villages which, in turn, would enable them to use their property as a financial asset for taking loans and other financial benefits from Bank

Swamitva Scheme Objectives | UPSC – IAS

• To bring financial stability to the citizens in rural India by enabling them to use their property as a financial asset for taking loans and other financial benefits.
• Creation of accurate land records for rural planning.
• Determination of property tax, which would accrue to the GPs directly in States where it is devolved or else, add to the State exchequer.
• Creation of survey infrastructure and GIS maps that can be leveraged by any department for their use.
• To support in preparation of better-quality Gram Panchayat Development Plan (GPDP) by making use of GIS maps.
• To reduce property related disputes and legal cases