Contents
- Inflation may not burn a hole in the pocket this year
- Gandhian economic model could help deal with crisis
- Continue India’s tryst with Nehruvian ideology
- Engineering education needs changes but remains popular
INFLATION MAY NOT BURN A HOLE IN THE POCKET THIS YEAR
Focus: GS-III Indian Economy
What is RBI’s outlook on the inflation front?
- The Reserve Bank of India’s monetary policy committee (MPC) has maintained an uncertain outlook on inflation because of problems with data collection, partly caused by the lockdown imposed to check the spread of COVID-19.
- Information on price movements across different sectors, food items and commodities are sketchy at best.
- MPC has, therefore, chosen to adopt a wait-and-watch approach rather than provide a concrete forecast of inflation for the weeks ahead.
Why have prices of vegetables crashed?
- A major reason for this slump was the lack of demand from hotels and restaurants.
- Additionally, a good crop has increased the supply of onions and tomatoes that has resulted in the prices of these vegetables getting pushed further downwards.
Will supply disruptions not have an effect on inflation?
- The nationwide lockdown since 25 March and mobility curbs have disrupted supply chains across the country.
- This disruption means frequent mismatch between supply and demand across different regions that can have an inflationary impulse.
- But ultimately, supply chains tend to repair themselves
- So, any inflationary impulse due to supply disruption will be temporary.
What about fiscal and monetary expansion?
- Conventional wisdom has it that fiscal and monetary expansions tend to create inflation.
- However, the current situation is different as any such expansion is unlikely to cause a significant rise in demand that could lead to inflation.
Will moderate prices prevail through 2020?
- There are few instances of prices rising when wages have dropped.
- Real estate prices are moderating, especially in the commercial property space, as companies test the practice of their employees working from home.
- These factors suggest low levels of inflation for a major part of the year that can open up further monetary space.
- The supply-demand mismatch can cause temporary inflationary spikes in the next two months, but this will happen occasionally.
Inflation
- An increase in general level of prices which is sustained over a period of time.
- It is inflation only if prices of most goods have gone up.
- Consequently, the purchasing power of the currency falls.
- In layman terms it is just price rise. But implications are quite wider especially in developing economies as it has the capability to topple governments leading to political instability.
-Source: Livemint
GANDHIAN ECONOMIC MODEL COULD HELP DEAL WITH CRISIS
Focus: GS-III Indian Economy
Introduction
In a post-covid world, economic ideas must have an ethical quotient.
Gandhian economic model
- Core Gandhian ideals include swadeshi, self-reliance at the individual and village community levels, an abhorrence of mass production and mindless industrialization, a dislike for the amoral extremes of capitalism and communism, and a reduction of mutual antagonisms between the rich and poor.
- He believed that wealth must be held in trust by the rich on behalf of the poor.
How is it different from Marxism?
- Unlike Marx, who saw the interests of workers and capitalists as irreconcilable, Gandhi sought a new convergence of interests.
- Marx saw labour handicapped as it did not own the means and tools of production; Gandhi’s charkha visualized the opposite reality.
- A worker can and should be able to provide for his or her basic needs through his or her own tools and ability to earn a living.
Relevance with the current scenario
- Today, as we adopt work-from-home norms and refocus on basics, we find that digital technology has enabled what Gandhi envisioned: empowerment at the individual and village level.
- As the world de-globalizes partially, countries are going for self-sufficiency; local supply chains are less likely to be disrupted by global events.
- Gandhi was right to take a dim view of both capitalism and communism. Today, the middle path is looking increasingly attractive.
How is this being realised?
- Many entrepreneurs are developing and offering software for free, even as they use other means to make money off their inventions (consider Linux, Google Docs, etc).
- The “Collaborative Commons” will drive a lot of innovation in the future.
- One should not be surprised if the discoverer of a COVID-19 vaccine offers it for a very low licensing fee, or even free.
- Even at the macro level, high income inequalities and growth without jobs are forcing economists to think whether an obsession with gross domestic product (GDP) is healthy. The quality of growth matters.
- An understanding of who benefits or loses from globalization is becoming a critical issue for policy-makers everywhere.
A counter-point
- If today Gandhian virtues are looking distinctly achievable, we have to acknowledge that this has happened only because we went in the opposite direction and saw both its benefits and costs.
- Today’s digital economy and remote-working would not have been possible if we had remained village republics and millions had not congregated in cities to earn and innovate.
- Nor would food and energy have been available in plenty without opting for polluting technologies.
Introduction to Marxism
- Marxism is the name for a set of political and economic ideas.
- The core ideas are that the world is divided into classes, the workers and the richer capitalists who exploit the workers, there is a class conflict that should ultimately result in socialism (workers own means of production), and then communism (stateless, classless society).
- Marxism says that people in the world are organized into different groups, or classes, based on what they do for work.
- Most people are called “workers” because they work in factories, offices, or farms for money. They belong to the “working class” (or “proletariat”).
- Another group, who are not as big as the working class, are “capitalists” (or “bourgeoisie”). They own the factories, land, and buildings that the workers have to work in.
- Marxists believe that if the working class makes itself the ruling class, and destroys the basis for class society (private property, or what Marx called “Bourgeois Property”), there will be a “classless society.”
- In a Marxist society, no social classes are in conflict, and there is no government anymore. The state will no longer be needed. There would be no countries. The world will have no borders. Workers will organize production of goods and services based on what people need, not based on profits.
-Source: Livemint
CONTINUE INDIA’S TRYST WITH NEHRUVIAN IDEOLOGY
Focus: GS-I History
Introduction
- Fifty-six years after Jawaharlal Nehru left the world stage — his anniversary is today, May 27 — demagogic attempts are still being made to dub Nehruvian ideology as myopic.
- In the discussion on the dilution of Article 370 of the Indian Constitution in both Houses of Parliament, Nehru was criticized.
- Pertinently, one needs to understand the historical context and the point in time of Kashmir’s integration with India.
A dedication to integration
- Mehr Chand Mahajan who served as the Prime Minister of Jammu and Kashmir in 1947-48 received a late-night call from Deputy Prime Minister Sardar Patel On October 24, 1947 was asked to come over to Delhi by the Deputy Prime Minister Sardar Patel.
- The letter drafted by Nehru addressed to Sheikh Abdullah was sent to Patel for his perusal.
- This then led to the initiation of administrative proceedings in the Constitutional Assembly.
- Article 370 was deemed temporary by both Nehru and Patel, but given Kashmir’s geography and its implications for India’s national security, that Constitutional provision was an urgent necessity.
Approaches of Nehru, Patel
- Nehru’s sincere commitment to secularism, evinced in his espousal of the principles of religious equality, is being criticised either as “pseudo-secularism” that is biased in favour of the minorities or as an impractical exercise in futility given how the majority’s religion is compared to the minorities.
- Granville Austin’s observation is relevant here: “Nehru and Patel were the focus of power in the Constituent Assembly, when they were divided on an issue, as in the case of property clause, factions could line up behind them and the debate would be lengthy. But when they settled their differences, the factions among the rank and file would do little else but shake hands and make the decision unanimous.”
- Patel’s view on secularism is moderate and as chairman of the advisory committee on fundamental rights, he had to review the report of the sub-committee on minorities in the Constituent Assembly.
- It is a historical fact that Hindu traditionalist leaders like Madan Mohan Malviya and Lala Lajpat Rai favoured the idea of an Indian nation built around the majority (Hindu) community to which Nehru was strongly opposed.
Need for science and logic
- Nehru believed that “education is meant to free the shackles of the human mind and not to imprison it in pre-set ideas and beliefs.”
- His motto, namely cultivating scientific temper and nurturing the spirit of tolerance are the foundations of his concept of secularism.
- Nehru had dreamt for a modern India to have an exalted position on the world stage, rising above sectarian politics and divisive forces.
- An effective democracy and the nurturing of unity and solidarity are the need of the day for our nation.
- Nehruvian ideology continues to remain essential even today to fight against the dark forces of communalism and to kindle the light of social harmony.
-Source: The Hindu
ENGINEERING EDUCATION NEEDS CHANGES BUT REMAINS POPULAR
Focus: GS-II Social Justice
Current status of Engineering Education in India
- Engineering Education in India is evolving in the right direction as new & attractive streams like mechatronics engineering, nano-engineering, space engineering, agricultural engineering, biomedical engineering, etc are encouraging innovation.
- However, despite a vast number of engineering colleges, engineers produced specially from most of the private colleges are unemployed and are not able to meet the rapidly changing technological and business requirements of the industry in India and abroad.
- Engineering subjects taught are either outdated or not updated as per fast growing industry requirements of sustainable development, automation, artificial intelligence, and machine learning skills.
- However, the prestigious IITs, NITs, IIITs and BITS are in sync with the evolving technology and are training good engineers for both developing and developed countries.
Demand for Science and Engineering
- By pursuing engineering/sciences, you do not just become an engineer/technocrat /scientist, but your thinking perspective also broadens to such an extent that you always outshine your contemporaries from other fields, and constantly scale newer heights of success.
- It can also be said that nowadays, students are more fascinated by a career that can provide them with instant fame and money.
Engineering education in India
- India is one of the largest producers of engineers in the world.
- Indian colleges grant nearly a million engineering degrees annually, flooding the job market with a huge supply of engineers, with skills that have very little demand.
- A critique of engineering education in India suggests that much of it is theoretical with little exposure to industry.
- Engineering Education in India is bucketed into groups like “chemical engineering” or “mechanical engineering”, with limited opportunities for multi-disciplinary learning or real-world problem solving.
- Engineering principles learned in college are rarely applied in the world of software or product development.
- Surveys reveal that a majority of students confess that they never wanted to pursue engineering but did so because of parental pressure.
-Source: Hindustan Times
