{"id":5413,"date":"2020-01-07T16:15:37","date_gmt":"2020-01-07T10:45:37","guid":{"rendered":"https:\/\/triumphias.com\/blog\/?p=5413"},"modified":"2020-01-07T16:15:37","modified_gmt":"2020-01-07T10:45:37","slug":"inclusive-growth-in-indian-economy-and-issues-arising-from-it","status":"publish","type":"post","link":"https:\/\/triumphias.com\/blog\/inclusive-growth-in-indian-economy-and-issues-arising-from-it\/","title":{"rendered":"Inclusive growth in Indian economy and issues arising from it"},"content":{"rendered":"<p><strong>Relevance: Mains: G.S paper III: Economy<\/strong><\/p>\n<p><strong>Context:<\/strong><\/p>\n<ul>\n<li>That windfall could come under threat if crude prices go up with increased US-Iran geopolitical tensions and the Modi government \u2014 unwisely, if at all \u2014 cuts duties or forces oil companies to absorb part of the burden.<\/li>\n<\/ul>\n<p><strong>Evolving the uncertainty:<\/strong><\/p>\n<ul>\n<li>Heightened uncertainty in West Asia following the US airstrike killing Iran\u2019s top military commander has thrown the spotlight again on oil.<br \/>\n\u2022 In the last three months, Brent crude prices have risen from about $ 58 to almost $ 69 per barrel.<br \/>\n\u2022 US and Russia have displaced Saudi Arabia as the world\u2019s largest crude producers today, with the former\u2019s output especially more than doubling from roughly 5.5 million to 12.9 million barrels per day in the last decade.<br \/>\n\u2022 As a result, the Persian Gulf region\u2019s control over global supplies isn\u2019t as much as during the 2003 or 1991 Iraq War.<br \/>\n\u2022 But that\u2019s hardly any consolation for India, which cannot, for purely geographical reasons, source crude beyond a point from the likes of the US, Venezuela and Russia.<br \/>\n\u2022 The Narendra Modi government\u2019s first term was marked by falling international oil prices.<br \/>\n\u2022 It did not, wisely, pass these on fully to consumers and, instead, netted a yearly revenue windfall of some Rs 150,000 crore by raising excise duties on petrol and diesel.<\/li>\n<\/ul>\n<p><strong>Effects from this windfall:<\/strong><\/p>\n<ul>\n<li>That windfall could come under threat if crude prices go up with increased US-Iran geopolitical tensions and the Modi government unwisely, if at all cuts duties or forces oil companies to absorb part of the burden.<br \/>\n\u2022 Rising oil prices can also impact India\u2019s balance of payments and the rupee (the domestic currency shed 44 paise against the dollar on Friday), further adding to inflationary pressures.<br \/>\n\u2022 There is a third component that contributed to benign inflation during the Modi government\u2019s first term: Low food prices. Annual consumer food inflation crossed single digits in November, which was for the first time in nearly six years.<br \/>\n\u2022 Many commodities \u2014 from onion, potato, pulses, and milk to maize and soyabean \u2014 have seen prices rising or at least correcting from lows.<br \/>\n\u2022 The reasons for it are partly weather-induced (excess rains during September-October) and partly structural (farmers reducing production in response to the earlier sustained low realizations). Either way, benign food, and fuel inflation can no longer be taken for granted.<br \/>\n\u2022 The return of inflation, on top of pressure on government revenues, leaves very little space for both monetary and fiscal policy.<br \/>\n\u2022 The focus has to necessarily shift to structural reforms that have been put off for too long.<br \/>\n\u2022 The existing system of open-ended procurement of wheat and paddy at minimum support prices has to go.<\/li>\n<\/ul>\n<p><strong>Conclusion:<\/strong><\/p>\n<ul>\n<li>To must super-subsidized physical sales of grain or urea. These should be replaced by direct cash transfers targeting vulnerable consumers and smallholder farmers.<br \/>\n\u2022 The resources thus freed, along with those raised through privatization (inclusive of excess land parcels held by government departments\/enterprises), can fund much-needed public investment without creating fiscal or inflationary pressures.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Relevance: Mains: G.S paper III: Economy Context: That windfall could come under threat if crude prices go up with increased<\/p>\n","protected":false},"author":1,"featured_media":3299,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[123,42,43],"tags":[392],"class_list":["post-5413","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs","category-general-studies-iii-technology-economic-development-bio-diversity-environment-security-and-disaster-management","category-indian-economy","tag-union-public-service-commission-upsc"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/5413","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/comments?post=5413"}],"version-history":[{"count":1,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/5413\/revisions"}],"predecessor-version":[{"id":5414,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/5413\/revisions\/5414"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media\/3299"}],"wp:attachment":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media?parent=5413"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/categories?post=5413"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/tags?post=5413"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}