. No.	Topic Name	Prelims/Mains
1.	Pradhan Mantri Aawas Yojna Grameen	Prelims & Mains
2.	Inflation	Prelims & Mains
3.	SCO	Prelims & Mains
4.	Eastern Economic Forum	Prelims & Mains

 

1 – Pradhan Mantri Aawas Yojna Grameen: 

GS II 

Topic  Government Schemes

 

·      Context:

 

·      The Union Ministry of Rural Development has developed a set of penalties that the State governments will have to pay for any future delays in the Pradhan Mantri Awas Yojana (Gramin), the government of Narendra Modi’s main rural household programme. The top four laggard States that are far behind their goals are BJP-ruled Assam, opposition-ruled West Bengal, Chhattisgarh, and Odisha.

 

·      Background:

 

·      The IAY (Indira Awaas Yojna) rural housing programme experienced design issues, a lack of openness, leaks, favouritism, and corruption at many levels.

 

·      With effect from April 1, 2016, IAY has been redesigned as Pradhan Mantri Awaas Yojana – Gramin (PMAY-G).

 

·      Regarding PMAY-G:

 

·      It is one of the government of India’s flagship programmes, and it is motivated by the admirable goal of delivering “Housing for All” by the year 2022.

 

·      The Ministry of Rural Development launched it.

 

·      It is a social welfare programme through which the government gives money to those who are homeless and have been identified using SECC 2011 data in order to help them build a decent dwelling for their own use.

·      In accordance with PMAY, the Central and State Governments have to split the cost of unit support 60:40 for plain areas and 90:10 for North Eastern and hilly states.

 

·      By 2022, 2.95 crore PMAY-G homes with all necessary amenities are expected to be completed.

 

·      Other qualities:

 

·      After proper verification by the Gram Sabha, beneficiaries are identified in accordance with the housing deprivation metrics and exclusion criteria established under the Socio-Economic Caste Census (SECC) 2011.

 

·      Through convergence with other programmes like the Swachh Bharat Mission, the PM Ujjwala Yojana for supplying LPG connections, and the unskilled wage component of 90–95 days under MGNREGA, the programme envisioned offering additional amenities to make it an aspirational house for the recipients.

 

·      Assistance for the building of restrooms in the sum of Rs. 12,000 through SBM-G, MGNREGS, or any other specific financial source.

 

·      assisting recipients who are prepared to do so in applying for loans from financial institutions for amounts up to Rs 70,000.

 

·      Challenges:

 

·      The statewide lockdown brought on by the COVID-19 outbreak has slowed the pace of rural house construction under the Pradhan Mantri Awas Yojana-Gramin.

 

·      Delays can also be attributed to beneficiary refusal, migration, beneficiaries’ deaths without legal heirs, and state or UT delays in allocating land to landless beneficiaries.

 

·      The lack of construction labour, supplies, and time to inspect the various stages of house construction all had an impact on implementation at the ground level.

 

·      Initiatives to guarantee the scheme’s smooth operation:

 

·      Source  The Hindu 

 

2 – Inflation:

 

GS II

 

Topic  Indian Economy

 

·      Context:

 

·      The National Statistical Office’s most recent retail inflation numbers serve as a grim reminder that policymakers’ biggest obstacle to steering Asia’s third-largest economy toward a more lasting recovery from the pandemic-induced recession continues to be increasing price increases. The Consumer Food Price Index, which tracks increases in food prices, increased at a significant 93 basis points faster rate in August than it did in July, moving from 6.69 percent to a provisional 7% annual rate of inflation. In contrast to the 0.50% and 0.46% rates of urban inflation, month-to-month fluctuations in food costs and overall inflation were noticeably higher for rural consumers, at 0.88% and 0.57% respectively. The fact that cereal costs, which are fundamental foods in every household, increased from the previous month’s 6.9% rate to 9.57% is especially concerning. The pace was a concerning 2.4% month over month. Despite the recent imposition of tariffs and other restrictions on the export of non-Basmati rice by the Centre, the outlook for inflation in this category of “heavyweight” foods remains far from encouraging. The kharif sowing of rice this year undershot last year’s acreage, and uneven rainfall distribution further complicated the crop’s production picture. In fact, the prices of eight out of the 12 food items that make up the CPI’s food and beverage category increased sequentially, with vegetables (up 13.2% annually and 2.5% monthly) and dairy (up 6.39 and 0.9% respectively) being two additional important foods that accelerated inflation.

·      The increase in costs of the majority of daily or commonly used products and services, such as food, clothing, housing, leisure, transportation, consumer staples, etc., is referred to as inflation. A basket of goods and services is used to calculate inflation by tracking the average price change over time. Deflation is the opposite and uncommon decline in this basket’s price index. The loss of the purchasing power of a unit of a nation’s currency is referred to as inflation. Percentage is used to express this.

 

·      Inflationary factors include:

 

·      High demand and low production or supply of certain goods creates a demand-supply imbalance, which raises prices as a result of increased consumption. Additionally, increased exports devalue the rupee. Additionally, inflation results from the overuse of money since it loses its purchasing value. People tend to spend more when they have more money, which increases demand.

·      Cost Pull inflation is brought on by a lack of production-related inputs, such as labour, land, and capital, as well as by hoarding-induced artificial scarcity. For instance, in May 2021, the price of Brent crude exceeded the $65 per barrel mark, more than doubling from the previous month. Vegetable oils are a significant import, and their price rose by 57% to a decade-high in April 2021. The cost of international freight is rising, and metal prices are close to their highest levels in ten years.

 

·      Source  The Hindu 

 

3 – SCO:

 

GS II

 

International Organizations

 

·      Context:

 

·      Prime Minister Narendra Modi will be in Samarkand, Uzbekistan, for the first Shanghai Cooperation Organization (SCO) meeting to be held in person since the COVID-19 epidemic.

·      A permanent multinational intergovernmental organisation is the SCO.

 

·      Keeping the peace, security, and stability in the area is the goal of this Eurasian political, economic, and military institution.

·      In 2001, it was founded. In 2003, the SCO Charter came into effect after being signed in 2002.

 

·      Genesis:

 

·      The Shanghai Five, which included Tajikistan, China, Kyrgyzstan, Kazakhstan, and Russia, existed prior to the establishment of the SCO in 2001.

·      The Shanghai Five (1996) was the result of several boundary delineation and demilitarisation negotiations between China and the four former Soviet republics to maintain peace along the boundaries.

·      The Shanghai Five became known as the SCO after Uzbekistan joined the group in 2001.

·      Pakistan and India joined in 2017.

·      It was reported that Iran would join the SCO as a full member on September 17, 2021.

 

·      The top SCO body, the Heads of State Council, decides how the organisation will operate internally, interact with other States and international organisations, and take into account global challenges.

 

·      The Heads of Government Council approves the budget and deliberates on matters relating to the interaction of economic sectors within the SCO.

·      The Council of Ministers of Foreign Affairs: Examines topics pertaining to daily operations.

·      To combat terrorism, separatism, and extremism, the Regional Anti-Terrorist Structure (RATS) was created.

 

·      Source  The Hindu 

 

4 – Eastern Economic Forum:

 

GS II

 

International Organizations

 

·      Context:

 

·      From September 5 to 8, Russia sponsored the seventh Eastern Economic Forum (EEF) in Vladivostok. The four-day conference provides business owners with a platform to grow their enterprises in Russia’s Far East (RFE).

 

·      About the “EEF”:

 

·      Vladimir Putin, the president of the Russian Federation, issued an executive order establishing the Eastern Economic Forum in 2015.

·      It encourages the growth of international collaboration in the Asia-Pacific region as well as the economic development of Russia’s Far East.

·      It occurs every year in the Russian city of Vladivostok.

·      It serves as a forum for the debate of important global economic issues, regional integration, the growth of new industrial and technology sectors, as well as the international difficulties that Russia and other countries are currently facing.

·      It has developed into a global forum for discussion of the approach to strengthening political, economic, and cultural connections between Russia and Asia Pacific over time.

 

·      Participants:

 

·      The Forum’s business agenda features numerous commercial discussions with important partner nations in the Asia-Pacific area as well as with ASEAN, a crucial organisation for Southeast Asian countries that are rapidly rising.

 

·      About the Far East:

 

·      Russia’s Far East is its most eastern region.

·      It shares borders with five nations—China, Japan, Mongolia, the United States, and the Democratic People’s Republic of Korea (DPRK)—and two oceans—the Pacific and the Arctic.

·       

·      More over a third of the country is comprised of the Far Eastern Federal District.

·      Natural resources such diamonds, stannary, borax minerals, 50 gold, tungsten, and fish and shellfish are abundant in the Far East.

·      Here are located around one-third of the nation’s coal reserves and hydro-engineering resources.

·      30% of Russia’s total forest area is made up of the forests in the region.

 

·      India’s Interest in the EEF:

 

·      Beyond the friendly relations and shared history, India also serves as a significant market for the Russian arms industry.

·      India and Russia formed a joint venture in March to produce the renowned Kalashnikov assault guns there.

·      India purchased the S-400 sophisticated air defence system from Russia in 2018.

·      India wants to increase the volume of trade between the two nations.

·      The discovery of hydrocarbon reserves along the Far Eastern coast of Russia is a subject of particular interest to India.

 

·      Source  The Hindu 

EDITORIAL ANALYSIS  16 SEPTEMBER 2022 THE HINDU:

 

STAGLATION:

 

 

·      Stagflation’s definition:

 

·      Stagflation is defined as a period of slow economic growth and relatively high unemployment, as well as rising prices (i.e., inflation). It is defined as an inflationary era followed by a decline in the gross domestic product (GDP).

 

·      History of Stagflation:

 

·      In the context of Keynesian economics, the Phillips Curve economic theory described macroeconomic policy as a trade-off between unemployment and inflation.

·      Every declared recession in the United States over the previous 50 years has seen consumer prices climb year over year.

·      The sole exception was during the financial crisis of 2008, and even then, price reductions were limited to energy expenses, while other consumer prices continued to rise.

·      In October 1973, the Organization of Petroleum Exporting Countries (OPEC) declared an embargo on Western nations. This caused the price of oil to spike over the world, rising the cost of commodities and increasing unemployment.

 

·      Inflation and Unemployment: What’s the Connection?

 

·      The Phillips curve, which attempted to prove a negative empirical relationship between unemployment and inflation, is strongly tied to stagflation.

 

·      According to the Philips curve, when unemployment is high, inflation is low, and when unemployment is low, inflation is high.

·      The apparent negative relationship between unemployment and inflation, according to Keynesian economists, is a natural phenomena caused by sticky pricing.

·      According to these economists, unemployment rises when wages do not decline quickly enough to keep up with changing economic conditions.

·      Workers are thought to be resistant to salary cutbacks, forcing businesses to fire specific employees in order to adjust to higher salaries rather than lower pay. Because there are fewer people working, this can have an influence on an economy’s overall output.

·      Economists felt that if prices climbed at a predetermined rate, people would be duped into accepting lower real pay (but greater nominal wages), ensuring that staff were employed and the economy remained at maximum capacity.

 

·      What causes stagflation?

 

·      Oil Prices:

 

·      In October 1973, the Organization of Petroleum Exporting Countries (OPEC) declared an embargo on Western nations. This caused the price of oil to spike over the world, rising the cost of commodities and increasing unemployment.

·      Critics of this theory point out that quick oil price spikes such as those seen in the 1970s did not coincide with following periods of inflation or recession.

 

·      Economic Policies That Aren’t Working:

 

·      Another viewpoint believes that inadequate economic policy is the cause of both stagnation and inflation. In an otherwise inflationary climate, stagflation may be induced through strict control of markets, products, and labour.

 

·      Other theories claim that monetary variables play a role in stagflation.

 

·      Stagflation vs. Inflation:

 

·      The fall of the gold standard, as well as the historical record of lengthy periods of simultaneously declining prices and low unemployment under robust commodity-backed currency regimes, are cited by proponents of monetary theories for stagflation.

·      This would imply that, as has been the case, inflation should be expected to persist during periods of economic stagnation under an unbacked fiat monetary system in place since the 1970s.

·      People just adjust their economic behaviour in response to or anticipation of monetary policy changes, according to these viewpoints. As a result of the expansionary monetary policy, prices in the economy grow without a corresponding decline in unemployment, and unemployment rates may rise or fall depending on actual economic events. This suggests that efforts to strengthen the economy during recessions may simply raise prices without promoting actual economic development.

 

·      There are two types of inflation: cost push and demand pull:

 

·      When the cost of production elements such as labour and materials grow rapidly, the cost of production rises as well. Any attempt to pass on these rising costs to customers is doomed to fail “”Cost push inflation” could lead to “demand annihilation” in severe circumstances.

 

·      To combat stagflation in India’s economy, take the following steps:

 

·      Reduced income and corporate taxes are the most effective policy measures since they reduce labour costs while increasing demand.

·      Similarly, GST should be reduced to keep price hikes to a minimum.

·      More grants-in-aid to state and municipal governments should be authorised by the federal government to encourage them to reduce state and local sales.

 

·      Pay control: A salary control strategy with government intervention should be implemented to limit wage growth. Limiting compensation increases can help to break the wage inflation cycle and strengthen the economy.

 

·      Supply-side reforms, such as privatisation and deregulation, can serve to increase aggregate supply and reduce production costs, hence reducing stagflation. The private sector must be pushed to invest more and increase supply through tax policy.

 

·      Inflation should be the primary macroeconomic objective. Lowering inflation may result in higher unemployment and slower economic growth in the short run. This unemployment might be targeted once the price level is under control.

 

·      Labor reforms: Frictions in the labour market should be reduced by reducing the time and cost of acquiring information about job prospects. Barriers to entry into a profession or unnecessarily high wages should be eliminated.

 

·      Indian scenario:

 

·      The Reserve Bank of India aspires for a retail inflation rate of 4%.

·      The Reserve Bank of India wants inflation to be within a 2% range of the target rate (4 per cent).

·      As a result, the Reserve Bank of India’s retail inflation “comfort zone” is between 2% and 4% “and 6% of the population.”

·      The current situation in India is termed as “cost push inflation.” Inflation is caused by rising raw material and commodity costs, according to this. As a result, the price of finished goods, transportation, storage, and all other economic operations rise, resulting in inflation.

·      This means that, while demand for products and services has remained stable, the price at which it may be met has increased.

EDITORIAL ANALYSIS  15 SEPTEMBER 2022 THE HINDU:

 

FINLAND TO JOIN NATO:

 

·      The North Atlantic Treaty Organization (NATO):

 

·      NATO is a military alliance. Twelve countries, including the United States, the United Kingdom, Canada, and France, created it in 1949.

·      If they are assaulted by armed forces, members agree to assist one another. Finland will boost the overall number of countries to 31.

·      Following WWII, NATO’s first purpose was to prevent Russian expansion in Europe.

·      Following the Soviet Union’s breakup in 1991, some of its former Eastern European allies joined NATO.

 

·      What does NATO membership involve, and how will it benefit the alliance?

 

·      Under NATO’s “Article 5” on collective defence, states that join the alliance are guaranteed security. If any NATO member is attacked, the clause practically guarantees NATO countries a military response and protection.

·      Finland and Sweden have expressed interest in joining NATO. It can take up to a year to become an official NATO member because all current member countries must agree. NATO Secretary General Jens Stoltenberg, on the other hand, has guaranteed the countries that they will be able to join NATO soon and that the organisation will provide complete security guarantees in the meanwhile.

·      Finland’s geographic location benefits it because if it joins, the length of Russia’s NATO borders will treble, bolstering NATO’s presence in the Baltic Sea.

 

·      What drives Finland’s interest in joining NATO?

·      The border between Finland and Russia is 1,340 kilometres (830 miles). As a result of Russia’s invasion of Ukraine, Finland is afraid about a Russian invasion of its territory. The country’s security and defence capabilities would be enhanced if it joined NATO.

 

·      “Finlandization”:

 

·      Finlandization is the process by which a powerful country persuades a smaller neighbouring country to stop criticising its foreign policy guidelines while maintaining its ostensible independence and democratic structure. During the Cold War, the phrase “to become like Finland” refers to the Soviet Union’s influence on Finnish politics.

·      The phrase is typically interpreted negatively. It originated during the late 1960s and early 1970s West German political discussions.

·      The expression alludes to a country’s commitment not to confront a more powerful neighbour in international policy while maintaining national sovereignty in Germany and other NATO countries.

·      It is most usually used to refer to Finland’s Cold War policy toward the Soviet Union, but it can also relate to more general international relations, such as Denmark’s stance toward Germany between 1871 and 1945, or the Swiss government’s actions against Nazi Germany until World War II ended.

·      “In the event that Finland or the Soviet Union becomes the object of an armed assault by Germany or any state linked with the latter (including, basically, the United States) through Finnish territory, Finland will fight to repel the attack,” says Article 1 of the treaty.

·      The Agreement of Friendship, Cooperation, and Mutual Assistance signed by Finland and the Soviet Union in April 1948 created the neutrality policy.

 

·      Significance:

 

·      It was protected by the pact from being attacked or absorbed by the Soviet Union, as the Baltic and eastern European states had been. It allowed the country to pursue democracy and capitalism while staying neutral in the Great Powers’ conflict.

 

·      How does Russia feel about NATO?

 

·      NATO offered Ukraine a path to membership in 2008. Ukraine made membership a major priority after Russia invaded Crimea in 2014.

·      However, due to Russia’s long-standing antagonism, this has not happened.

·      Russia believes that by admitting new members from Eastern Europe, NATO is encroaching on its political influence, and that adding Ukraine will drive NATO into its backyard.

 

·      What does Russia currently expect from NATO and the US?

 

·      Russia has presented two draught agreements in which it asks the US and NATO for specific, legally binding security assurances:

·      The draught encourages NATO to halt its eastward expansion, expressly rejecting ex-Soviet states like Ukraine potential membership. It would also make it illegal for the US to build bases or collaborate militarily with former Soviet states.

·      It would prevent both signatories from deploying military assets outside their national borders that could pose a threat to the national security of the other.

 

·      From India’s perspective, NATO is:

 

·      NATO membership is not being proposed. India’s refusal to join any military alliance has a long history.

·      Innovative solutions are required given India’s history as a pioneer of the Non-Aligned Movement (NAM) and its plans to join the P5—the Permanent UN Security Council members. The government looks to have the will, ability, and opportunity to do so. India has been a member of the BRICS since its inception, as well as the SCO since 2017, extending its non-aligned status.

·      India’s continued expansion of its space and nuclear programmes reflects the country’s progress toward becoming a major power in a volatile region of the world. India has also been classified as a “nuclear power.”

·      A conversation between India and NATO would simply mean frequent contact with a military alliance whose members are mostly long-term allies of India. It makes little sense for India to avoid interaction with NATO, which is currently debating a role in Asia’s oceans, if it wants to entice a wary Russia into Indo-Pacific talks.

 

·      Issues:

 

·      Russia, the Middle East, and China are all hot topics among NATO members. Meanwhile, tensions have escalated between NATO members such as Greece and Turkey. Outside of Europe, NATO’s most recent incursions — in Afghanistan, Iraq, and Libya — have failed to impress.

·      India has not been offered membership in NATO, and it is not interested. The issue at hand is the possibility of reaching an agreement. To play any role in the Indo-Pacific, Europe and NATO need partners like India, Australia, and Japan. India, on its part, understands that no single country can guarantee Indo-Pacific peace and stability.

·      India’s enthusiasm for the Quad demonstrates a recognition of the value of forming coalitions.

·      China has always recognised Europe’s significance and has spent much in its development. Delhi’s continued refusal to interact with a major European entity like NATO will be a glaring example of strategic self-denial.

 

·      Next Steps:

 

·      A continual dialogue between India and NATO might lead to successful collaboration in a number of areas, including terrorism, altering geopolitics, the changing nature of armed conflict, the role of rising military technologies, and new military doctrines.

·      Each member has a lot to offer in terms of boosting India’s national capabilities on a bilateral basis.