1. Mild moderation
GS 3- Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment
- Consumer Price Index (CPI) which measures retail inflation was estimated to have moderated in November to 6.93%, from the previous month’s 7.61%.
- On the face of it, the moderation in price gains ought to be welcome news.
What is Consumer Price Index (Cpi)?
- When we talk about the rate of inflation, it often refers to the rate of inflation based on the consumer price index (CPI).
- The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
- It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living.
- To measure inflation, we estimate how much CPI has increased in terms of percentage change over the same period the previous year.
- If prices have fallen, it is known as deflation (negative inflation). The Central Bank (RBI) pays very close attention to this figure in its role of maintaining price stability in the economy.
- The CPI is one of the most frequently used statistics for identifying periods of inflation or deflation.
- Simply put, CPI specifically identifies periods of deflation or inflation for consumers in their day-to-day living expenses.
Factors Impacting Retail Inflation
- A key driver for inflation is the monsoons. A good monsoon normally results in a better Kharif crop. A higher Kharif production is dependent on the quantum of the monsoons. In fact, the good monsoon was largely instrumental in the sharp fall in CPI inflation since July 2016. The spread of monsoon and the timely onset of monsoon also have an impact on CPI inflation.
- The base effect is an important factor driving the CPI inflation. The base effect is the distortion in a monthly inflation figure that results from abnormally high or low levels of inflation in the year-ago month. A base effect can make it difficult to accurately assess inflation levels over time. It diminishes over time if inflation levels are relatively constant.
- Perishables are another important determinant of CPI inflation. If the product cannot be sold within the stipulated time, they have to be disposed off through fire-sales. We have seen fire sales of vegetables in many Mandis across India and that largely explains why vegetables have also shown negative inflation in the last 6 months.
- Fuel has a weight of 8% in the overall CPI inflation and hence shifts in fuel costs tend to impact CPI inflation. But the bigger impact is indirect. Fuel becomes an important input for transportation and that is an important constituent of the overall cost structure in the economy.
- Supply bottlenecks are a very important component of CPI inflation. Supply bottlenecks refer to the capacity of the economy to bring food from farm to fork. Traditionally, India has suffered from problems like poor road infrastructure, poor transport facilities, outdated warehousing and cold storage facilities etc. All these contribute to the retail inflation which is why the government is seriously working towards de-bottle necking them.
- A key determinant of CPI inflation will be the direction in which oil dividends flow.
- Imported inflation may be hard to fathom but it is an outcome of a weak rupee. Since India runs a trade deficit of approximately $13 billion per month, a weak rupee can result in imported inflation.
- Government taxes have a very important role to play in the level of inflation. When the landed cost of oil was sharply falling due to weak crude prices, the government increased excise duty on petrol and diesel consistently to prop up its revenues.
- The above factors were all supply driven factors. There is also a demand pull factor with respect to CPI inflation. When the government puts more money in the hands of people through measures like One Rank One Pension and 7th Pay Commission, which can be inflationary. More income leads to more demand among sections of the society that have a high propensity to consume. Similarly, the NREGA and other rural employment guarantee programs have also contributed to CPI inflation.
- To conclude, the retail inflation is likely to continue to be driven by food prices and fuel prices. Food prices will continue to depend on the vagaries of monsoon just as fuel will continue to depend on the vagaries of global equations. For now, the bias seems to be towards lower retail inflation in the months to come.
Components in Food and Beverages Basket
- The reason behind the modern in retail inflation is slowing in price gains in the food and beverages basket, which with a weight of almost 46 is the single biggest index constituent and driver of retail inflation.
- Increased market arrivals of vegetables — the third-largest weight within the basket — led to a sharp deceleration in price gains for this key food item.
- Inflation for vegetables slid 688 basis points to 15.63% last month, from 22.51% in October.
- Cereals, the food category with the largest weight, saw inflation slow to 2.32%, from 3.39%, reflecting the bumper kharif harvests and confirming the trend that the central bank had spoken of.
- And though the prices of other food categories too softened in November, out of the basket of 12 items, inflation still remained in the double digits in the case of six, excluding vegetables.
- Key protein sources including pulses, eggs and meat and fish continued to register worryingly high levels of inflation that surely cannot bode well for the wider population’s nutritional well-being.
Other Components in CPI
- Disturbingly, inflation in the key transport and communication category that includes petrol and diesel eased to 11.06%.
- Oil marketing companies are continuing to raise pump prices of these crucial transportation fuels.
- From April’s pandemic-induced lows, as crude oil extends its recovery, it is hard to foresee any further appreciable softening in food prices in December given the high costs of transporting farm produce from the agrarian hinterland.
- This development will put the RBI’s forecast for average fiscal third-quarter inflation of 6.8% in risk.
- RBI's November survey of households’ inflation expectations also offers little room for comfort.
- Many households are expecting general prices to rise over the ‘next three months’ and ‘one year ahead’ horizons than the number of respondents concerned about such a price trend in the September survey.
- Policymakers must be careful against easing vigilance on prices while considering growth-supportive measures.
- Price stability, for all the growing calls to downplay its centrality in the RBI’s policy mandate, must remain the monetary authority’s primary target: unchecked inflation poses manifold risks to the nascent economic recovery.
- Inflation, if unchecked, can hamper the developing economic recovery.
2. Law and disorder – Disproportionate Attention to the Supreme Court Hampers Justice
GS 2- Judiciary
- Several inadequacies in the justice delivery system lie hidden as disproportionate attention is given to the Supreme Court
- Today, the Supreme Court finds itself in a predicament as a justice delivery system.
- The citizens of the country expect the institution and its constituents to be ideal, and the challenge of the Supreme Court is to come to terms with that reality. However, it is not the Supreme Court alone that matters in the justice delivery system.
A few important inadequacies have been discussed below.
Spending On Judiciarying
- Most often, the issue of spending on judiciary is equated with a call for increasing the salaries of judges and providing better court infrastructure. Such perceptions are unfortunate.
- India has one of the most comprehensive legal aid programmes in the world, the Legal Services Authority Act of 1987 - Under this law, all women, irrespective of their financial status, are entitled to free legal aid.
- Scheduled Castes and Scheduled Tribes and children too are entitled to free legal aid.
- This means that a significant proportion of the population falls — or is supposed to fall — under a free legal aid regime. However, in reality, this law is a dead letter. There has been little effort on the part of successive governments to provide a task force of carefully selected, well-trained and reasonably paid advocates to provide these services.
- In comparison, the system of legal aid in the U.K. identifies and funds several independent solicitor offices to provide such services.
- If support is withdrawn, many solicitor offices that provide these invaluable services would collapse and with that, the rule of law. India is yet to put in place anything similar to this.
Poor Judge-Population Ratio
- The judge-population ratio provides one of the most important yardsticks to measure the health of the legal system.
- The U.S. has about 100 judges per million population. Canada has about 75 and the U.K. has about 50. India, on the other hand, has only 19 judges per million population.
- Of these, at any given point, at least one-fourth is always vacant.
- While much is written on vacancies to the Supreme Court and the High Courts, hardly any attention is focused on this gaping inadequacy in lower courts which is where the common man first comes into contact (or at least should) with the justice delivery system.
- These inadequacies are far more important to the common man than the issues relating to the apex court that are frequently highlighted in the public space.
- In All India Judges Association v. Union of India (2001), the Supreme Court had directed the Government of India to increase the judge-population ratio to at least 50 per million population within five years from the date of the judgment. This has not been implemented.
Access to Justice
- Though ‘access to justice’ has not been specifically spelt out as a fundamental right in the Constitution, it has always been treated as such by Indian courts.
- In Anita Kushwaha v. Pushpa Sadan (2016), the Supreme Court held unambiguously that if “life” implies not only life in the physical sense but a bundle of rights that make life worth living, there is no justice or other basis for holding that denial of “access to justice” will not affect the quality of human life.
- It was for the first time that the Supreme Court had attempted a near-exhaustive definition of what “access to justice” actually means.
- Further, the court pointed out four important components of access to justice.
- The SC pointed out the need for adjudicatory mechanisms - It said that the mechanism must be conveniently accessible in terms of distance and that the process of adjudication must be speedy and affordable to the disputants.
- The state in all its glorious manifestations — the executive, judiciary and the legislature need to draw out a national policy and road map for clearing backlogs and making these concepts real.
- A disproportionate amount of attention that is given to the functioning of the Supreme Court, important as it is, distracts from the hard realities of the justice delivery system of India.
- Even if the apex court achieves the distinction of being “ideal” in the near future, a fine mind alone is of little avail if the rest of the body lies disabled, as the justice delivery system is today.
3. From Digital India to Digital Bharat: Inclusive Access to Digital Products
GS 3- Issues relating to the development
Recently the central government announced a scheme namely PMWANI. This scheme is for access to Wifi. But the country is divided into India and Bharat, this is the problem which can divide the impacts of this scheme.
Pm Wani (Prime Minister's Wifi Access Network Interface)
- In the scheme the establishment of public Wi-Fi networks across the country.
- This access would be provided through Public Data Offices (PDOs).
- Public Data Offices (PDOs) will be established on the lines of Public Call Offices (PCOs).
- These PDOs will establish, operate, and maintain only the WANI compliant Wi-Fi access points, so that to deliver broadband services to its subscribers.
- An application will be developed by the government which will register the users on to the network.
- The application will also help users to discover WANI-compliant Wi-Fi hotspots in nearby areas.
- As well as a central registry will be set-up.
- This registry will maintain details of all app providers, PDOAs and PDOs.
- Centre for Development of Telematics (C-DoT) will be handling the body of the registry.
- A customer who wants to access the network from a PDO's premise can do so only after an eKYC authentication,
- Internet will be provided by these PDOs either on their own or will lease from some other Internet Service Provider (ISP).
- PDO Aggregators (PDOAs) will set up.
- These aggregators will perform the function of authorisation and accounting of the numerous PDOs.
Data On Internet Access
- The NITI Aayog chief executive officer had said that India can create $1 trillion of economic value with the help of digital technology by 2025.
- As per the Telecom Regulatory Authority of India (TRAI) data, about 54% of India’s population has access to the Internet.
- According to the 75th round of the National Statistical Organisation survey, only 20% of the population can use the Internet.
- As well as according to India Internet 2019 report, rural India has half the Internet penetration as urban, and twice as many users who access the Internet less than once a week.
- India Internet report also shows that 99% of all users in India access the Internet on mobile, and about 88% are connected on the 4G network.
- So, it a situation where everyone is connected to a limited network
- If we consider the Umang App (Unified Mobile Application for New age Governance), which allows access to 2,084 services, across 194 government departments, such as education, health, finance, social security, the etc situation is not appropriate.
- With each move towards digitization, we are fearing to leave behind a large part of our population to suffer in digital poverty.
- So, it is clear that the focus is on last-mile delivery is the need of the hour.
- This last-mile delivery is aim to which the government is trying to achieve with PMWANI.
- This wifi access will also help to reduce the pressure on the mobile Internet in India.
Main Points of the Scheme
This scheme is providing three main aspects:
- The Public Data Office(PDO)
Anyone can become PDO.
If we consider the scheme, it is clear that with Internet infrastructure, the government also sees this as a way to generate revenue for individuals and small shopkeepers.
An important aspect is that PDOs will not require registration of any kind.
So this will ease the regulatory burden on them.
- The PDO Aggregator
He is the aggregator who will buy bandwidth from the Internet service provider (ISPs) and telecom companies.
And after that, he will sell it to PDOs.
His next work will be to account for data used by all PDOs.
- The app provider
The app provider will create an app through which users can access and discover WiFi access points.
According to the Report of Trai On Public Wifi
- Interoperability: With this, the user will be required to log in only once and stay connected across access points.
- Multiple payment options: These options will allow the user to pay both online and offline.
- This is mentioned in the report how the products should start from low denominations, starting with ?
- As well as the requirement of authentication through a one time password for each instance of access may be cumbersome.
- As well as automatic authentication through stored e know your customer(KYC) should be encouraged.
Aiding to Bharat
- The new scheme has the potential to change the fortunes of Bharat Net as well.
- Bharat Net scheme envisions broadband connectivity in all villages in India.
- But this project has missed multiple deadlines, and even where the infrastructure has been created.
- As well as usage data is not enough to incentivise ISPs to use BharatNet infra.
- One of the reasons for the lack of demand is the deficit in digital literacy in India as well as lack of last-mile availability.
- Another aspect is decentralisation, which depends on how people interact with technology in other aspects of their life.
- The PMWANI seems to fit within this framework because it seeks to make accessing the Internet.
- According to a large scale study conducted at public WiFi spots in 15 airports across the United States, Germany, Australia, and India discovered that two-thirds of users leak private information whilst accessing the Internet.
- As well as TRAI report recommends ‘community interest’ data be stored locally.
- This report also raises questions about data protection in a scenario where the country currently does not have a data protection law.
- So with the PMWANI, the state is expanding the reach of digital transformation to those who have been excluded till now.
- The scheme will be a game changer because it has the potential to move Digital India to Digital Bharat.