Weekly Current Affairs Prelims (17th to 23rd December, 2019)

Weekly Current Affairs Prelims (17th to 23rd December, 2019)

(Info-graphic Summary at the end)

Topic: Stagflation

Topic in Syllabus: Indian Economy

Context:

With fast decelerating economic growth and sharply rising inflation, it may appear that india is in stagflation faces but India is not yet in the stagflation territory.

What is Stagflation?

   Simply put, Stagflation is a portmanteau of stagnant growth and rising inflation. Typically, inflation rises when the economy is growing fast. That’s because people are earning more and more money and are capable of paying higher prices for the same quantity of goods. When the economy stalls, inflation tends to dip as well – again because there is less money now chasing the same quantity of goods.

   Stagflation is said to happen when an economy faces stagnant growth as well as persistently high inflation. In other words, the worst of both worlds. That’s because with stalled economic growth, unemployment tends to rise and existing incomes do not rise fast enough and yet, people have to contend with rising inflation. So people find themselves pressurised from both sides as their purchasing power is reduced.

Has it happened in the past?

    The term was coined by Iain Macleod, a Conservative Party MP in United Kingdom, who while speaking on the UK economy in the House of Commons in November 1965 stated: “We now have the worst of both worlds—not just inflation on the one side or stagnation on the other, but both of them together. We have a sort of “stagflation” situation. And history, in modern terms, is indeed being made.”

   But the most famous case of stagflation happened in the early and mid-1970s when OPEC (The Organisation of Petroleum Exporting Countries), which works like a cartel, decided to cut supply and sent oil prices soaring across the world.

     On the one hand, the rise in oil prices constrained the productive capacity of most western economies that heavily depended on oil, thus hampering economic growth. On the other hand, the oil price spike also led to inflation and commodities became more costly. For instance, just in 1974, the oil prices went up by almost 70%; consequently, inflation in the US, for example, reached almost double-digits.

     The net result was lower growth, higher unemployment, and higher price level. That’s stagflation.

Why is everyone asking about Stagflation in India?

   Over the past six quarters, economic growth in India has decelerated with every quarter. In the second quarter (July to September), for which the latest data is available, the GDP grew by just 4.5%.

   In the coming quarter (October to December), too, GDP growth is likely to stay at roughly the same level. For the full financial year, the GDP growth rate is expected to average around 5% – a six-year low.

   Yet, in October and November, retail inflation has soared. In fact, the October inflation was a 16-month high and the November inflation, at 5.54%, is at a three-year high. Inflation for the rest of the financial year is expected to stay above the RBI’s comfort level of 4%.

   So, with growth decelerating every quarter and now inflation rising up every month, there are growing murmurs of stagflation.

So, is India facing Stagflation?

    Although it appears so at the first glance, India is not yet facing stagflation. There are three broad reasons for it.

    One, although it is true that we are not growing as fast as we have in the past or as fast as we could, India is still growing at 5% and is expected to grow faster in the coming years. India’s growth hasn’t yet stalled and declined; in other words, year on year, our GDP has grown in absolute number, not declined.

   Two, it is true that retail inflation has been quite high in the past few months, yet the reason for this spike is temporary because it has been caused by a spurt in agricultural commodities after some unseasonal rains. With better food management, food inflation is expected to come down. The core inflation – that is inflation without taking into account food and fuel – is still benign.

    Lastly, retail inflation has been well within the RBI’s target level of 4% for most of the year. A sudden spike of a few months, which is likely to flatten out in the next few months, it is still early days before one claims that India has stagflation.

Sample Question:

With reference to the disinvestment, choose  the impact of “strategic sale “  on the economy

1.Raising revenue for the government.

2.Improved efficiency  of the PSU’s 

3.Deepening of Capital market

Select the correct answer using the code given below:

 a) 1 only

b) 2 only

c) 2 and 3 only

d) 1,2 and 3

Answer: d

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Topic: Global Gender Gap Index

Topic in Syllabus: Indian Geography

• The Global Gender Gap Index for the year 2020 was released by World Economic Forum.
• Iceland, Norway, and Finland occupy the top three spots in the Report. Yemen ranked at the last place (153^rd).
• India has ranked 112th among 153 countries, slipped four places from the previous year ranking.
• Bangladesh, Nepal, Sri Lanka and China are ranked at 50, 101 , 102 and 106 respectively. Pakistan is ranked at 151.
• It measures progress towards parity between men and women in –

1. Economy  
2. Education
3. Health
4. Political representation.

• The index lies between 0 and 1, with 1 denoting complete parity and 0, complete inequality.
• Key Findings – The largest gender disparity is in political empowerment.
• Only 25% of the total seats in parliaments around the world are occupied by women, and only 21% of the ministers are women.
• By following the current trends, the overall global gender gap will close in 99.5 years.
• It can potentially be closed 71.5 years in South Asia.
• Globally, the average distance completed to gender parity is at 68.6%, which is an improvement since last edition.
• India – Ranked 18th in political empowerment and 4th in the number of years a female or a male ruled a state.
• Ranked in the bottom-five in terms of women’s health and survival and economic participation.
• On health and survival, four large countries such as Pakistan, India, Vietnam and China fare badly with millions of women not getting the same access to health as men.
• It has closed two-thirds of its overall gender gap (score of 66.8%)

Other Gender Related Reports

• The Gender Parity Index is released by UNESCO.
• The Gender Inequality Index is released by UNDP.

Sample Question:

Consider the following statements:

1. India had the worst sex ratio in 1991 when it was 927.

2. India has a better gender ratio than Pakistan.

3. Bihar has the lowest number of females than males.

4. India saw a negative population growth in the year 1921.

Which of the following statements is/are correct? 

a) 2 only

b) 2,3 & 4 only

c) 1 & 4 only

d) All of the above

Answer: c

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Topic: G.N. Rao panel recommends three capitals for State

Topic in Syllabus: Indian Governance

Context:

G.N. Rao panel had given report to the government, which is a summary of the capital functions on the basis of the present requirements of the State and gathered opinion of the people, elected representatives and other stakeholders during their visits to the districts.

Panel Recommendations:

• -The Secretariat, the Chief Minister’s camp office, summer Assembly and a High Court (HC) Bench be set up in the Visakhapatnam metropolitan region.
• The State Legislature, a HC Bench and the Governor and Minister’s; quarters be set up in the Amaravati-Mangalagiri complexes.
• The High court and allied courts be situated in Kurnool.
• This is in line with the government’s proposal of setting up legislative, executive and judicial capitals in Amaravati, Visakhapatnam and Kurnool respectively.
• The expert committee has stated that its recommendations have been made as per the terms of the Sribagh Pact.
• Setting up four commissionerates comprising Visakhapatnam-Srikakulam-Vizianagaram (north coastal), East Godavari-West Godavari-Krishna (central coastal), Guntur-Prakasam-Nellore (south coastal) and Anantapur-Chittoor-Kadapa-Kurnool (Rayalaseema) regions for the sake of administrative convenience on the lines of the pattern followed in Karnataka.

Working of Committee:

• Looked at the regional disparities to be removed.
• Importance of decentralised administration for achieving development of all the regions.
• About 35,000 representations were received.

About Sribagh Pact:

– Sribagh Pact is an agreement made between the political leaders of Coastal Andhra and Rayalaseema regions during the separate Andhra movement in November 1937. The main aspect of the pact was that the Rayalseema region would be granted either the capital city or high court as a symbol of decentralization to overcome any doubts regarding the neglect of the region from the dominant coastal political leaders.

Three capital cities for Andhra Pradesh

Chief Minister of Andhra Pradesh hinted that the South African model of three capitals was best suited in his State and that his government would work towards this.

South African model:

• The administrative capital is in Pretoria
• -Its national legislature in Cape Town.
• -Its judicial capital in Bloemfontein.

Andhra Pradesh Idea:

• A distribution of executive, legislative and judicial governance across Visakhapatnam, Amaravati (the current capital) and Kurnool.
• Allow for Decentralised development of the State.
• It follows the recommendations of the expert committee appointed by the Home Affairs Ministry in 2014 to study alternatives for a new capital.
• Committee had recommended to focus on distributing locations of governance beyond the Vijayawada-Guntur-Tenali-Mangalagiri urban area, while utilising the time period of 10 years to continue functions from Hyderabad after bifurcation.

Challenges to idea:

• During development of Amravati as capital, farmers had given their lands, in land pooling scheme for residential and commercial plot. They are protesting against this idea.
• Considerable work has been completed in Amaravati to utilise the fledgling city as a functioning capital. It would become dysfunctional.
• Administratively the Legislature and the Secretariat should be in only one place.

Sample Question:

How many number of Thematic cities will develop in Amaravati?

[A] 7

[B] 8

[C] 9

[D] 10

Answer: c

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Topic: Global Competitiveness Index-2019

Topic in Syllabus: International Affairs

Context:

The latest Global Competitiveness Report paints a gloomy picture, yet it also shows that those countries with a holistic approach to socio-economic challenges, look set to get ahead in the race to the frontier.

Key highlights

• The GCI brought out by the World Economic Forum involved performance review of 141 countries
• The Global Competitiveness Report 2019 reveals an average across the 141 economies covered of 61 points. This is almost 40 points short of the “frontier”. It is a global competitiveness gap that is particularly concerning, given the world economy faces the prospect of a downturn. 
• The report’s survey of 13,000 business executives highlights deep uncertainty and lower confidence.
• The report states while the $10 trillion injection by central banks is unprecedented and has succeeded in averting a deeper recession, it is not enough to catalyse the allocation of resources towards productivity-enhancing investments in the private and public sectors.
• However,  some of this year’s better performers appear to be benefiting from global trade tensions through trade diversion, including Singapore (1st) and Viet Nam (67th), the most improved country in 2019.

India’s Ranking 

• India, which was ranked 68th in the annual Global Competitiveness Index compiled by Geneva-based World Economic Forum (WEF).
• India ranks high in terms of macroeconomic stability and market size, while its financial sector is relatively deep and stable despite the high delinquency rate, which contributes to weakening the soundness of its banking system.
• India is ranked high at 15th place in terms of corporate governance, while it is ranked second globally for shareholder governance, the WEF study showed. In terms of the market size, India is ranked third, while it has got the same rank for renewable energy regulation.
• Besides, India also punches above its development status when it comes to innovation, which is well ahead of most emerging economies and on par with several advanced economies
• But, these positive metrics contrast with major shortcomings in some of the basic enablers of competitiveness in case of India, the WEF said, while flagging limited ICT (information, communications and technology) adoption, poor health conditions and low healthy life expectancy.
• The WEF said the healthy life expectancy, where India has been ranked 109th out of total the 141 countries surveyed for the index, is one of the shortest outside Africa and significantly below the South Asian average.
• Besides, India needs to grow its skills base, while its product market efficiency is undermined by a lack of trade openness and the labour market is characterised by a lack of worker rights’ protections, insufficiently developed active labour market policies and critically low participation of women.
• With a ratio of female workers to male workers of 0.26, India has been ranked very low at 128th place. India is also ranked low at 118th in terms of meritocracy and incentivisation and at 107th place for skills.
• In the overall ranking, India is followed by some of its neighbours including Sri Lanka at 84th place, Bangladesh at 105th, Nepal at 108th and Pakistan at 110th place.
• The WEF said the drop of 10 places in India’s position to 68th place may look dramatic, but the decline in the country’s competitiveness score is relatively small. A number of similarly-placed economies including Colombia, South Africa and Turkey improved over the past year and hence have overtaken India.

Sample Question:

Consider the following statements

1. Future Skills programme aims to reskill 2 million professionals and students in the industry over a period of 5 years
2. TalentNext is an initiative of Infosys, which aims to enhance the quality of engineering education by preparing faculty and academic leaders to train students

Which of the given above statements is/are correct?

• (a) 1 only
• (b) 2 only
• (c) Both 1 and 2
• (d) Neither 1 nor 2

Ans: (a)

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Topic: Carbon Dots

Topic in Syllabus: Science & Tech

Context:

In an extraordinary waste-to-wealth feat, researchers from Assam have used the commonly found invasive plant water hyacinth to produce carbon nanoparticles.

Carbon Dots

The researchers harvested water hyacinth leaves, removed the chlorophyll, dried and powdered it.
The sieved powder underwent several treatments including heating at 150 degree Celsius to convert it to carbon dots.
When a nanoparticle is less than 10 nanometres call it a dot or nanodot.
Features of these dots

These carbon dots were able to give a green fluorescence under UV light.
These extremely tiny (less than 10 nanometres) particles can be used for detecting a commonly used herbicide — pretilachlor.
The nanoparticles were found to be selective and sensitive for the detection of the herbicide.
Some teams are exploring if its fibre can be used to make furniture.

Sample Question:
Consider the following statements:

1. Pretilachlor is a widely used insecticide used to kill pests and rodents for various crops and does not contribute to environmental pollution.
2.Carbon dots are activated carbon particles used in the cosmetic industry.
Which of the above statements is/are incorrect?

a) 1 only
b) 2 only
c) 1 & 2 only
d) Neither 1 nor 2
Answer: d

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Topic: Gandhi Legacy Bill

Topic in Syllabus: Indian History

Context:

An American Congressman John Lewis introduced a Bill in the US House of Representatives that aims to promote the legacy of Mahatma Gandhi and Martin Luther King Junior.

Gandhi Legacy Bill

• The Bill has been moved to mark the 150th birth anniversary of Gandhi and affirms the friendship between the US and India.
• The aim of this Bill is to affirm the friendships of the governments of the US and India and to establish a bilateral partnership, “for collaboration to advance the development and shared values, and for other purposes”.
• It proposes for the establishment of a Gandhi-King Scholarly Exchange initiative with an allocation of over $2 million for five years until 2025.

Who is John Lewis?

• In 1963, Lewis was 23-years-old when he was being dubbed one of the Big Six leaders of the Civil Rights Movement, during the years when the movement had reached its peak.
• He was influenced by Gandhi’s use of non-violent methods that he was employed to oppose the rule of the British Empire in India.
• In fact, King himself drew from Gandhi’s methods of using non-violent approaches of resistance during the Montgomery Bus Boycott 1955-56.

Lewis and King in India

• In 2009, Lewis was part of a cultural delegation that was sent to India by then US Secretary of State Hillary Clinton.
• The trip was undertaken to commemorate and retrace King and his wife’s visit to India between February-March 1959 to study the life and works of Mahatma Gandhi.

Sample Question:

The book ‘Unto This Last’ greatly captivated and transformed Gandhiji. So much so that he translated it into Gujarati. Who was its author?

(a) Ruskin Bond

(b) John Ruskin

(c) Leo Tolstoy

(d) Louis Fischer

Answer: b

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Topic: Section 144 of CrPC

Topic in Syllabus: Indian Governance

Context:

With protests against the Citizenship Amendment Act intensifying at several places across many states, several state governments have imposed Section 144 of the Criminal Procedure Code (CrPC) to curb the protests.

What is Section 144 of CrPC?

• Section 144 of Criminal Procedure Code (CrPC) is frequently used to prohibit assemblies of four or more individuals, or to order mobile phone companies to block voice, SMS, or Internet communications in one or more geographical areas.
• It empowers a district magistrate, a sub-divisional magistrate or any other executive magistrate specially empowered by the state government in this behalf to issue orders to prevent and address urgent cases of apprehended danger or nuisance.
  • The orders may be directed against a particular individual, or to persons residing in a particular place or area, or to the public generally when frequenting or visiting a particular place or area.
• No order passed under Section 144 can remain in force for more than two months from the date of the order.
• The state government can extend this, but not more than six months.

Issues related to Section 144

• The term cases of apprehended danger or nuisance are too broad and wide enough to give absolute power to a magistrate.
• The immediate remedy against such an order is a revision application to the magistrate himself.
• An aggrieved individual can approach the High Court by filing a writ petition (article 226) if his fundamental rights are at stake. This however is a time taking process.

How have courts ruled on Section 144?

• Dr Ram Manohar Lohiya case 1967, the Supreme Court held that “no democracy can exist if ‘public order’ is freely allowed to be disturbed by a section of the citizens”.
• Madhu Limaye vs Sub-Divisional Magistrate case 1970, a seven-judge bench headed by the then Chief Justice of India M Hidayatullah upheld the constitutionality of section 144.
  • The court said that “law may be abused” is no reason to strike it down.
  • It further ruled that the restrictions imposed through Section 144 cannot be held to be violative of the right to freedom of speech and expression.
  • Imposition of Section 144 falls under the “reasonable restrictions” under Article 19(2) of the Constitution.
• In 2012, the Supreme Court criticised the government for imposing Section 144 against a sleeping crowd in Ramlila Maidan.
  • The court held that such a provision can be used only in grave circumstances for maintenance of public peace. The emergency must be sudden and the consequences sufficiently grave.

Sample Question:

Consider the following statements regarding Section 144 of CrPC:

1. This order can be passed against a particular individual or general public. The order can be passed even ex-parte.
2. As held by the Supreme Court, mere apprehension of danger is not a sufficient ground to curb citizens’ rights by invoking Section 144 CrPC.

Which of the above statements is/are Correct?

1. 1 only
2. 2 only
3. Both
4. None

Answer: c

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Topic: Operation Twist

Topic in Syllabus: Indian Economy

Context:

The Reserve Bank of India has announced that it will carry out US-style ‘Operation Twist’ to bring down interest rates.

Key Points

• RBI will conduct simultaneous purchase and sale of government securities under Open Market Operations (OMO) for ₹10,000 crore each.
• It will purchase the longer-term maturities (i.e government bonds maturing in 2029), and simultaneously sell the shorter duration ones (i.e. short-term bonds maturing in 2020).
• The eligible participants can bid or submit offers in electronic format on RBI’s Core Banking Solution (E-Kuber).

‘Operation Twist’

• ‘Operation Twist’ is when the central bank uses the proceeds from the sale of short-term securities to buy long-term government debt papers, leading to easing of interest rates on the long term papers.
• Operation Twist first appeared in 1961 as a way to strengthen the U.S. dollar and stimulate cash flow into the economy.
• In June 2012, Operation Twist was so effective that the yield on the 10-year U.S. Treasury dropped to a 200-year low.

Open Market Operations

• Open Market Operations (OMO) is one of the quantitative (to regulate or control the total volume of money) monetary policy tools which is employed by the central bank of a country to control the money supply in the economy.
• OMOs are conducted by the RBI by way of sale or purchase of government securities (g-secs) to adjust money supply conditions.
• The central bank sells g-secs to remove liquidity from the system and buys back g-secs to infuse liquidity into the system.
• These operations are often conducted on a day-to-day basis in a manner that balances inflation while helping banks continue to lend.
• RBI carries out the OMO through commercial banks and does not directly deal with the public.
• The RBI uses OMO along with other monetary policy tools such as repo rate, cash reserve ratio and statutory liquidity ratio to adjust the quantum and price of money in the system.

Benefits

• This simultaneous purchase and sale will bring down interest on long term loans which can lead to increase in economic spending.
• OMOs are primarily done to maintain ample liquidity in the system, which reflects that the RBI is keen that banks should transmit lower rates to borrowers.
• The action of Operation Twist by the RBI is encouraging for the market. This step may become a driving factor for long-term economic activity and the addition of new investment stock.

Sample Question:

Consider the following sentences regarding Open Market Operation-

1.Open market operations is the sale and purchase of government securities and treasury bills by commercial banks of the country.

2.The objective of OMO is to regulate the money supply in the economy.

Select the correct answer using the code below.

a) Only 1.

b) Only 2.

c) Both 1 and 2.

d) Neither 1 nor 2.

Answer: b

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