THE GIST of Editorial for UPSC Exams : 02 May 2020 (Ominous contraction: On core sector output (The Hindu))

Ominous contraction: On core sector output (The Hindu)

Mains Paper 3:Economy 
Prelims level: Coal sector 
Mains level: Effect of COVID-19 pandemic fall in India’s core sector 

Context:

• The latest data on core sector output is signalling that considerable economic pain lies ahead in the wake of the COVID-19 pandemic and the nationwide lockdown that commenced on March 25. 

Highlights of the data released by the Government: 

• The provisional figures released by the Commerce Ministry show that production at all but one of the eight industries comprising the core sector shrank in March from a year earlier.
• It resulting in the sharpest contraction in the index since the new series began in April 2012. 
• The output contracted by as much as 6.5% in a month when most economic activities ground to a halt only in the last seven days. 
• The output at petroleum refineries slid only by a marginal 0.5% as a bulk of the transportation sector was idled only in the last week of March, the 7.2% and 13% contractions in electricity and steel production, respectively, reflect the underlying stress in the economy, most crucially on the demand side. 
• With all non-essential industries and commercial establishments ordered shut as part of the lockdown, demand for electricity declined by more than 9% in March, according to data from the National Load Despatch Centre. 

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Positive figure:

• Coal, the only sector to post a positive figure in March as output expanded 4%, also presents a far from reassuring picture as growth slowed sharply from February’s 11.2% and was less than half the 9.1% pace seen in March 2019. 
• With demand for coal from user sectors spanning thermal generators and the key process industries of steel and cement unlikely to revive any time soon, production of the crucial commodity is very likely to shrink in April. 
• With the construction sector hit hard by the lockdown and likely to face serious labour supply issues even after the economy gradually reopens, cement may see production shrink in the first month of the new fiscal year by an even greater extent than the 25% drop seen in March. 

Way forward:

• The fall of oil market with global crude prices tumbling is also certain to undermine the industries in the energy sector. April’s overall core output appears headed for an even sharper contraction. 
• The eight major industries having a weight of 40.3% in the broader Index of Industrial Production, it is certain to drag industrial output as a whole into negative territory. 
• The Centre may be left with little option but to massively lift public spending on infrastructure once the lockdown eases in order to revive the reeling economy.

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General Studies Pre. Cum Mains Study Materials

Prelims Questions:

Q.1)With reference to the Fall Armyworm, consider the following statements:
1. It is an insect native to northern India. 
2. The moth can fly up to 100 km per night and the female moth can lay up to a total of 1,000 eggs in her lifetime. 
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer...................

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Mains Questions:
Q.1)Steepest fall in core sector output in at least 8 years portends protracted economic pain. Critically comment with regard of the falling core sector output.