THE POLITY

1. LAUNCH OF TWO FRONTLINE WARSHIPS BY THE INDIAN NAVY

THE CONTEXT: Defence Minister launches the frontline warship of Indian Navy ‘Udaygiri’, a Project-17A Frigate, at Mazgaon Docks Limited, in Mumbai on May 17, 2022.

THE EXPLANATION:

• The Indo-Pacific region is important for the economy of the whole world and India being a responsible maritime stakeholder in the region, it is the primary objective of our Navy to keep the Indo-Pacific open, safe and secure said the Defence Minister while noting that global security, border disputes and maritime dominance have led nations around the world to modernize their militaries.
• If a country wants to safeguard its national interests, it should project its military prowess in areas far beyond the mainland. If a country has aspirations to become a regional or global power, it is necessary to develop a strong Naval force. Government is making all efforts in this direction. We want to make a strong, secure and prosperous India, which is recognized as a global power.
• He was speaking at the launch of two frontline warships under construction at Mazagon Docks Limited (MDL) in Mumbai.
• The ships include ‘Surat’ the fourth and last ship of Project-15B destroyers and ‘Udaygiri’, the third ship of Project-17A stealth frigates.
• Speaking at the launch, Navy Chief Adm. R. Hari Kumar said India’s expanding strategic reach, based on the vision of SAGAR is a driver for the Navy’s continued acquisition of assets with long sea legs, increased capabilities and greater endurance.
• Udayagiri and Surat are shining examples of India’s growing indigenous capability. The warships will be among the most technologically advanced missile carriers in the world, that will cater to the present as well as future requirements. In the times to come, we will not only fulfill our own needs but will also meet the shipbuilding requirements of the world. We will soon realise the Prime Minister’s vision of ‘Make in India, Make for the World’, Home Minister said.
• To support the ‘Make in India’ initiative, 80% Acceptance of Necessity (AoN) on cost basis have been awarded to Indian vendors, amounting to investment of nearly ₹1,75,000 Crore back into the Indian economy. Indigenous shipbuilding projects, such as these, are also catalysts for employment generation and skill development. “Thus, the Navy’s budget has a significant ‘plough-back’ into the economy, which signifies our impetus towards ‘Aatmanirbharta’.
• The four destroyers under Project-15B at a project cost of about ₹29,643.74 Crore are a follow-on to the Kolkata class (Project 15A) destroyers. They are christened after major cities from all four corners of the country — Visakhapatnam, Mormugao, Imphal and Surat. While INS Visakhapatnam has been commissioned, two other ships Mormugao and Imphal have been launched with the former now undergoing sea trials.
• The Project-17A class is a follow-on to the P17 Frigates (Shivalik Class) with improved stealth features, advanced weapons and sensors and platform management systems. A total of seven ships are being constructed, four at MDL and three at Garden Reach Ship Builders Limited (GRSE).

THE ECONOMIC DEVELOPMENT

2. WHAT IS STAGFLATION

THE CONTEXT: In the first quarter of the financial year 2021, the Indian economy contracted by 23.9 percent. In the current situation, with 6.07% the retail inflation has crossed the upper band of the parliamentary mandate in February.

THE EXPLANATION: 

• Stagflation is an economic state that occurs when high inflation, high unemployment and stagnant economic growth join hands together. The term was coined by Iain Macleod, MP in the United Kingdom in November 1965.
• Generally, when the economy of any country booms, people earn more and thus demand for goods and services increases, which further results in soaring prices and eventually rising inflation. On the other hand, when the economy is in the doldrums and demand is low, the prices of goods and services fall or stagnate.
• While in stagflation, the worst of both scenarios is experienced by the economy as the growth rate becomes stagnant with high unemployment and continuous high inflation.
• The situation occurs when a central bank creates money flow by printing more currency but puts supply on hold. The situation also rises when the central bank’s monetary or fiscal policies create credit.
• Along with this, the other policies also experience slow growth if taxes are increased by the government or interest rates are raised by the central bank, and in such a situation, the companies produce less.
• During the state of stagflation, there is increased financial risks and loss of income with high unemployment during the state of stagflation. It becomes a tough task to manage households as high prices limit spending on everyday necessities.
• The very slow growth of the economy continues to take place even in a state of stagflation. Further, there is no absolute cure to stagflation but economists suggest that higher production could help in the situation.

3. WHOLESALE PRICE RISE HITS RECORD HIGH OF 15.1% IN APRIL

THE CONTEXT: According to data released by the Ministry of Commerce and Industry THE INFLATION rate based on the Wholesale Price Index (WPI) surged to a record high of 15.1 percent in April, with the rise in prices of vegetables, fruits, milk, manufacturing, fuel and power.

THE EXPLANATION: 

• This is the highest WPI print in the 2011-12 series. Annual WPI inflation — inflation at the producer level — has remained in double digits for 13 months in a row, consistently edging upwards.
• According to data released last week, inflation at the retail level also surged to an eight-year high of 7.79 percent in April, with expectations now rising for another repo rate hike by the RBI in June of as much as 40 basis points.
• The heatwave this summer has led to a spike in prices of perishables such as fruits, vegetables and milk, which along with a spike in tea prices pushed up primary food inflation.
• Inflation for manufactured products rose to 10.85 percent in April mainly contributed by basic metals, chemicals and chemical products, textiles, machinery and equipment, and electrical equipment. Fuel inflation rose to 38.66 percent, led by high inflation in major categories of petrol, diesel, LPG and aviation turbine fuel. Crude petroleum and natural gas recorded inflation of 69.07 percent in April.
• The core-WPI inflation — the non-food, non-fuel component — rose to a four-month high of 11.1 percent in April, with producers forced to pass on the input price pressures. Inflation in food articles was 8.35 percent as prices of vegetables (23.24 percent), wheat (10.70 percent), fruits (10.89 percent) and potato (19.84 percent) recorded a sharp spike over the year-ago period.
• According to experts, the Russia-Ukraine conflict has aggravated the situation.
• “As the cost pressure of manufacturers is rising due to the rising input and transportation/logistics costs, they are increasingly passing on these into their output prices leading to higher inflation in manufactured products. Though this trend started well before the Russia-Ukraine conflict, it has got aggravated due to further spike in input cost especially of crude oil and raw materials.

THE ENVIRONMENT AND ECOLOGY

4. INDIA TOPPED AIR POLLUTION DEATH TOLL IN 2019

THE CONTEXT: Globally, air pollution alone contributes to 66.7 lakh deaths, according to the report, which updates a previous analysis from 2015.

THE EXPLANATION:

• Air pollution was responsible for 16.7 lakh deaths in India in 2019, or 17.8% of all deaths in the country that year.
• This is the largest number of air-pollution-related deaths of any country, according to a recent report on pollution and health published in The Lancet Planetary Health.
• Globally, air pollution alone contributes to 66.7 lakh deaths, according to the report, which updates a previous analysis from 2015. Overall, pollution was responsible for an estimated 90 lakh deaths in 2019 (equivalent to one in six deaths worldwide), a number that has remained unchanged since the 2015 analysis. Ambient air pollution was responsible for 45 lakh deaths, and hazardous chemical pollutants for 17 lakh, with 9 lakh deaths attributable to lead pollution.

POLLUTION IN INDIA

• The majority of the 16.7 lakh air pollution-related deaths in India – 9.8 lakh — were caused by PM 2.5 pollution, and another 6.1 lakh by household air pollution. Although the number of deaths from pollution sources associated with extreme poverty (such as indoor air pollution and water pollution) has decreased, these reductions are offset by increased deaths attributable to industrial pollution (such as ambient air pollution and chemical pollution).
• According to the report, air pollution is most severe in the Indo-Gangetic Plain. This area contains New Delhi and many of the most polluted cities. Burning of biomass in households was the single largest cause of air pollution deaths in India, followed by coal combustion and crop burning.
• The number of deaths remains high despite India’s considerable efforts against household air pollution, including through the Pradhan Mantri Ujjwala Yojana programme. India has developed a National Clean Air Programme, and in 2019 launched a Commission for Air Quality Management in the National Capital Region.
• However, India does not have a strong centralised administrative system to drive its air pollution control efforts and consequently improvements in overall air quality have been limited and uneven.
• In India, we need integrated surveillance platforms for health and exposure surveillance. Population exposure surveillance via biological and environmental monitoring can inform risk attributions within health programmes already in place to reduce the burden of maternal and child health as well as non-communicable diseases.
• Impacts from lead as shown in the report, that impacts children’s IQ, really drive home the point of irreversible long-term damage for multiple generations. Without surveillance at scale it is impossible to know what worked and what didn’t
• An estimated 9 lakh people die every year globally due to lead pollution and this number is likely to be an underestimate. Earlier the source of lead pollution was from leaded petrol which was replaced with unleaded petrol.
• However the other sources of lead exposure include unsound recycling of lead-acid batteries and e-waste without pollution controls, spices that are contaminated with lead, pottery glazed with lead salts and lead in paint and other consumer products.
• Globally more than 80 crore children (India alone contributes to 27.5 crore children) are estimated to have blood lead concentrations that exceed 5 µg/dL — which was, until 2021, the concentration for intervention established by the US Centers for Disease Control and Prevention. This concentration has now been reduced to 3.5 µg/dL

5. GREEN GROWTH CAN HELP AFRICAN COUNTRIES ADDRESS SOCIO-ECONOMIC INEQUALITIES

THE CONTEXT: According to a recently released report African countries need ‘Green Growth’ to address education and health-related inequalities that hinder socio-economic development on the continent and are likely to exacerbate the negative impacts of climate change.

THE EXPLANATION:

• Green growth has the potential to address these inequalities through the creation of decent jobs, better provision of basic services, improvement of air quality and enhancement of climate resilience.
• Climate action and inclusive green growth were particularly important at the current moment, as economies around the world had been ravaged by the COVID-19 pandemic.
• Africa Green Growth Readiness Assessment was launched May 11, 2022, during a side-event at the 15th session of the Conference of the Parties (COP15) of the United Nations Convention to Combat Desertification, underway in Abidjan from May 9-20.
• The report defined ‘green growth’ as a strategy to sustain the economy through building resilience and managing resources efficiently.
• African countries can achieve sustainable growth and development if they expand access to digital and physical infrastructure such as the internet and quality roads. This will require greater support and investment.
• North African countries have made the most progress towards achieving the United Nations-mandated sustainable development goals (SDG), while countries in Central Africa require the greatest support, according to the report.
• With the exception of Tunisia and Morocco, the greatest challenges the focus countries faced were related to access to sustainable services, such as energy and sanitation.
• The assessment found evidence that African leaders were actively championing the SDGs and simultaneously implementing the nationally determined contributions (NDC), a component of the 2015 Paris Agreement.
• All focus countries had developed national climate change or green growth strategies and in some cases complementary action plans. The governments of Rwanda, Kenya, Morocco, Senegal and Mozambique had adopted green growth and climate-resilient economic strategies.

THE SCIENCE AND TECHNOLOGY

6. WORLD MAY MISS NET-ZERO BY 2050, COURTESY COVID-19: INTERNATIONAL SCIENCE COUNCIL

THE CONTEXT: The COVID-19 pandemic may prevent the world from achieving net zero emissions by 2050, according to a report released by the International Science Council May 17, 2022.

THE EXPLANATION:

• Unprecedented and Unfinished – COVID-19 and Implications for National and Global Policy called for increased adoption of the One Health approach to minimize environmental impacts and future pandemic risks.
• The report also urged increased investment and knowledge sharing from high-income states, according to a press statement.
• It considered three potential scenarios through the year 2027, primarily determined by the evolution of the virus and the global uptake and coverage of effective vaccines.
• In the most likely scenario, COVID-19 will have worsened inequalities in health, economics, development, science and technology, and society. COVID-19 will have become an endemic disease worldwide and low-income states risk health system collapse and growing food insecurity. Mental health concerns will grow even further.
• In a more pessimistic scenario, the world faces high levels of harm to social well-being — with long-term school closures, unemployment and increased gender-based violence. Growing nationalism and polarisation will inhibit cooperation on global vaccinations and trade and give rise to conflict.
• Despite climate change’s intensification, many countries will reverse environmental reforms in an attempt to overcome COVID-19’s economic impact under this scenario.
• The report highlighted a need to address the challenges of disinformation and to strengthen diverse scientific advice systems to increase trust in science, thereby protecting societies from acute health risks and the breakdown of social cohesion.
• The document noted that much more needed to be done — particularly by policymakers — to avoid the worst-case scenarios in the future, especially for low- and middle-income countries.
• National and global policy considerations should address widening global inequalities not only in vaccine distribution but also related to inclusive governance, economic recovery and the digital and educational divide.
• The report concluded that the future course of the pandemic and its consequences that extend well beyond the health sector, will depend on policy decisions taken today, which have the potential to either shorten or prolong the crisis and mitigate or aggravate its impacts.

THE PRELIMS PRACTICE QUESTIONS

QUESTION FOR 18th MAY 2022

Q. Consider the following statements about the Wholesale Price Index (WPI):

1. It is used as a measure to understand inflation at the consumer level.
2. It is compiled by the Office of Economic Advisor.
3. It considers the price changes in both goods and services.

Which of the statements given above is/are correct?

a) 1 and 2 only

b) 2 only

c) 2 and 3 only

d) 1, 2 and 3

ANSWER FOR THE 17^th MAY

Answer: B

Explanation:

When repo rate is increased:

• Money supply in the economy will reduce.
• It will reduce inflation.
• Private consumption will reduce and people will focus on savings.
• Decrease in goods and products as businessmen and investors do not invest in business expansion due to costly credit.