THE GIST of Editorial for UPSC Exams : 12 June 2020 (A slow turn (Indian Express))

A slow turn (Indian Express)

Mains Paper 3: Economy
Prelims level: CMIE data
Mains level: Economic growth and development process

Context:

• Going by leading indicators, economic activity in India appears to have picked up, although marginally as the restrictions have been eased.
• Activity remains well below levels observed in the pre-COVID period.
• The pace of contraction in some of the economic indicators has moderated from the lows observed in April.

Data from the consumption side:

• On the consumption side, data from GSTN shows that while e-way bills (both intra-state and inter-state) generated continue to contract, the pace of contraction has eased.
• The disaggregated data indicates a greater pickup in intra-state e-way bills as compared to inter-state bills.
• It suggests that perhaps inter-state restrictions continue to hurt the flow of goods.
• Over the course of the coming weeks, as restrictions are eased further, household consumption will rise as pent-up demand is satiated.

Data from the production side:

• On the production side, labour market data also suggests a gradual resumption of economic activity.
• As per CMIE data, t..............................

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Other Sectors:

• A similar trend is observed in electricity generation, and railway revenue (freight traffic).
• While both continue to contract, the pace of contraction has eased, indicative of a resumption in some industrial and commercial activities.
• The RBI data also shows a spurt in transactions — the average value of IMPS transactions rose by 28 per cent in June, after contracting in May and April, while UPI growth is back to pre-COVID levels.
• Data volatility is likely to increase as the effects of the lockdown, and the response of households and firms to the health and economic uncertainty, play out over the coming weeks and months.

Concern:

• However, it is possible that as in previous episodes such as demonetisation and GST, the formal sector gains at the expense of the informal sector.

Conclusion:

• The official GDP estimates, which tend to capture the formal sector more accurately, may end up masking the pain in large parts of the informal economy.

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Prelims Questions:

Q1.  With reference to the Inter-Parliamentary Alliance on China, consider the following statements:
1. It is a new cross-parliamentary alliance to help counter what the threat posed by China’s growing influence to global trade, security and human rights.
2. The list of participating nations includes the US, Germany, UK, Japan, Australia, Canada, Sweden, Norway, as well as members of the European parliament.

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:
Q1.  What are the major ............................................?