[DAY 10] 60 DAY RAPID REVISION (RaRe) SERIES for UPSC Prelims 2022 – ECONOMICS, CURRENT AFFAIRS & CSAT; Test Series, Videos & Notes!

Solution (a)

Basic Info:

Purchasing Power Parity (PPP)
It is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries. It compares different currencies of the countries through a “basket of goods” approach.

The USA has highest GDP in market exchange terms. When PPP is used to compare, China is the world’s largest economy based on PPP.

Solution (b)

Basic Info:

Gini Coefficient
In economics, it (sometimes expressed as a Gini ratio or a normalized Gini index) is a measure of statistical dispersion intended to represent the income or wealth distribution of a nation’s residents and is the most commonly used measure of income inequality.

It is used to gauge the rich-poor income or wealth divide.

It measures inequality of a distribution — be it of income or wealth — within nations or States.

An increasing trend of Gini Coefficient indicates that income inequality is rising independent of absolute incomes of the population.

 It can be used to compare income distribution of a country over time as well.

 Its value varies anywhere from zero to 1; zero indicating perfect equality and one indicating the perfect inequality.

Solution (d)

Basic Info:

The Poverty Line: There are many ways of measuring poverty. One way is to determine it by the monetary value (per capita expenditure) of the minimum calorie intake.

It was estimated at 2,400 calories for a rural person and 2,100 for a person in the urban area. Based on this, in 2011-12, the poverty line was defined for rural areas as consumption worth Rs 816 per person a month and for urban areas it was Rs 1,000.

Though the government uses Monthly Per Capita Expenditure (MPCE) as a proxy for the income of households to identify the poor, various economists state that there are some problems with this mechanism: 

One is that it groups all the poor together and does not differentiate between the very poor and the other poor.  This mechanism takes into account expenditure on food and only a few
selected items as a proxy for income.

This mechanism is helpful in identifying the poor as a group to be taken care of by the government, but it would be difficult to identify who among the poor need help the most.

The existing mechanism for determining the Poverty Line also does not take into consideration social factors that trigger and perpetuate poverty such as illiteracy, ill health, lack of access to resources, discrimination or lack of civil and political freedoms.

Solution (c)

Basic Info:

– The term “marginal productivity” refers to the extra output gained by adding one unit of labor, all other inputs are held constant.

– Disguised Unemployment is a kind of unemployment in which there are people who are visibly employed but are actually unemployed. Disguised unemployment exists where part of the labor force is either left without work or is working in a redundant manner where additional worker’s productivity is essentially zero. It is unemployment that does not affect aggregate output. An economy demonstrates disguised unemployment when productivity is low and too many workers are filling too few jobs.

Solution (a)

Basic Info:

Poverty Line Calculation: Poverty estimation in India is now carried out by NITI Aayog’s task force through the calculation of poverty line based on the data captured by the National Sample Survey Office under the Ministry of Statistics and Programme Implementation (MOSPI).

Poverty line estimation in India is based on the consumption expenditure and not on the income levels because of the following reasons:

Variation in Income: Income of self-employed people, daily wage laborers etc. is highly variable both temporally and spatially, while consumption pattern are comparatively much stable.

Additional Income: Even in the case of regular wage earners, there are additional side incomes in many cases, which is difficult to take into account.

Data Collection: In case of consumption based poverty line, sample based surveys use a reference period (say 30 days) in which households are asked about their consumption of last 30 days and is taken as the representative of general consumption.
Whereas tracing the general pattern of income is not possible.

Solution (c)

Statement Analysis:

Solution (b)

Basic Info:

– The economic capital framework provides a methodology for determining the appropriate level of risk provisions and profit distribution to be made under Section 47 of the RBI Act, 1934. As per this provision, the central bank is required to pay balance of its profits to the central government after making provision for bad and doubtful debts, depreciation in assets, and contributions to staff.

– RBI formed a committee under the chairmanship of Bimal Jalan to review the provisions under the Economic Capital Framework. Recently, based on the recommendations of the committee, the RBI Central Board has decided to increase its net transfer to the government.

Solution (c)

Basic Info:

Solution (c)

Basic Info:

Underemployment is a kind of employment where people are apparently working but all of them are made to work less than their potential.

This kind of underemployment is hidden in contrast to someone who does not have a job and is clearly visible as unemployed. Hence, it is also called disguised unemployment.

There are more people in agriculture than is necessary. So, even if a few people move out, production will not be affected. In other words, workers in the agricultural sector are underemployed.

Solution (b)

Basic Info:

In economics, the Phillips curve is a concept which describes that rates of unemployment and rates of inflation in an economy are inversely related. 

Higher the rate of inflation, lower is the rate of unemployment. 

Solution (c)

Basic Info:

According to United Nations Population Fund (UNFPA), demographic dividend means, “the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and 65 and older)”.

Demographic dividend occurs when the proportion of working people in the total population is high 

Demographic dividend takes place when a country undergoes a demographic transition from a rural agrarian economy with high fertility rates to an urban industrialized economy with low fertility and mortality rates

Demographic Dividend in India:

Since 2018, India’s working-age population (people between 15 and 64 years of age) has grown larger than the dependant population — children aged 14 or below as well as people above 65 years of age. This bulge in the working-age population is going to last till 2055, or 37 years from its beginning.

This transition happens largely because of a decrease in the total fertility rate (TFR, which is the number of births per woman) after the increase in life expectancy gets stabilised.

Solution (c)

Basic Info:

Pareto optimality is the state at which resources in a given system are optimized in a way that one dimension cannot improve without a second worsening.

Using Pareto optimality, one can assess how engineered systems can best meet multiple criteria. In this context, it can be used to understand how a construction project balances environmental, social, and economic factors. 

Solution (c)

Basic Info:

Inequality-adjusted Human Development Index (IHDI): The IHDI indicates percentage loss in HDI due to inequality.

The Inequality-adjusted Human Development Index (IHDI) takes into account not only the average achievements of a country on health, education, and income, but also how those achievements are distributed among its citizens by “discounting” each dimension’s average value according to its level of inequality.

The IHDI is distribution-sensitive average level of human development.

Two countries with different distributions of achievements can have the same average HDI value.

Under perfect equality the IHDI is equal to the HDI, but falls below the HDI when inequality rises.

The difference between the IHDI and HDI is the human development cost of inequality, also termed – the overall loss to human development due to inequality.

The IHDI allows a direct link to inequalities in dimensions, it can inform policies towards inequality reduction.

It leads to a better understanding of inequalities across populations and their contribution to the overall human development cost.

Solution (b)

Basic Info:

Pre-Independence Poverty Estimation:

Dadabhai Naoroji through his book, “Poverty and Unbritish Rule in India” made the earliest estimation of poverty line (₹16 to ₹35 per capita per year).
The poverty line proposed by him was based on the cost of a subsistence or minimum basic diet (rice or flour, dal, mutton, vegetables, ghee, vegetable oil, and salt).

In 1938, the National Planning Committee was set up by Subhash Chandra Bose under the chairmanship of Jawaharlal Nehru for the purpose of drawing up an economic plan with the fundamental aim to ensure an adequate standard of living for the masses.

The Bombay Plan (1944) proponents had suggested a poverty line of ₹75 per capita per year.
The Bombay Plan was a set of a proposal of a small group of influential business leaders in Bombay for the development of the post-independence economy of India.

Post-Independence Poverty Estimation:

Planning Commission Expert Group (1962), working group constituted by the Planning Commission formulated the separate poverty lines for rural and urban areas (₹20 and ₹25 per capita per year respectively).

VM Dandekar and N Rath (1971), made the first systematic assessment of poverty in India, based on National Sample Survey (NSS) data.

Unlike previous scholars who had considered subsistence living or basic minimum needs criteria as the measure of poverty line, VM Dandekar and N Rath were of the view that poverty line must be derived from the expenditure that was adequate to provide 2250 calories per day in both rural and urban areas.

Expenditure based Poverty line estimation, generated a debate on minimum calorie consumption norms.

Alagh Committee (1979): Task force constituted by the Planning Commission under the chairmanship of YK Alagh, constructed a poverty line for rural and urban areas on the basis of nutritional requirements and related consumption expenditure.

Poverty estimates for subsequent years were to be calculated by adjusting the price level for inflation.

Lakdawala Committee (1993): Task Force chaired by DT Lakdawala, based on the assumption that the basket of goods and services used to calculate Consumer Price Index-Industrial Workers (CPI-IW) and Consumer Price Index- Agricultural Labourers (CPI-AL).

It reflected upon the consumption patterns of the poor.

Solution (c)

Basic Info:

Rangarajan Committee

The committee was set up in the backdrop of national outrage over the Planning Commission’s suggested poverty line of ₹22 a day for rural areas.

Objectives:

• To review international poverty estimation methods and indicate whether based on these, a particular method for empirical poverty estimation can be developed in India.
• To recommend how these estimates of poverty can be linked to eligibility and entitlements under the various schemes of the Government of India.

Rangarajan committee estimated that the number of poor were 19% higher in rural areas and 41% more in urban areas than what was estimated using Tendulkar committee formula.

Rangarajan committee missed the opportunity to go beyond the expenditure-based poverty rates and examine the possibility of a wider multi-dimensional view of deprivation.

Solution (b)

Basic Info:

The scheme was introduced as a social measure that guarantees “the right to work”. The key tenet of this social measure and labour law is that the local government will have to legally provide at least 100 days of wage employment in rural India to enhance their quality of life.

Key objectives:

Generation of paid rural employment of not less than 100 days for each worker who volunteers for unskilled labour.

Proactively ensuring social inclusion by strengthening livelihood base of rural poor.

Creation of durable assets in rural areas such as wells, ponds, roads and canals.

Reduce urban migration from rural areas.

Create rural infrastructure by using untapped rural labour.

The following are the eligibility criteria for receiving the benefits under MGNREGA scheme:

Must be Citizen of India to seek NREGA benefits.

Job seeker has completed 18 years of age at the time of application.

The applicant must be part of a local household (i.e. application must be made with local Gram Panchayat).

Applicant must volunteer for unskilled labour.

The Ministry of Rural Development (MRD), Govt of India is monitoring the entire implementation of this scheme in association with state governments.

Right to get unemployment allowance in case employment is not provided within fifteen days of submitting the application or from the date when work is sought.

Social Audit of MGNREGA works is mandatory, which lends to accountability and transparency.

The Gram Sabha is the principal forum for wage seekers to raise their voices and make demands.

It is the Gram Sabha and the Gram Panchayat which approves the shelf of works under MGNREGA and fix their priority.

Solution (d) 

Basic Info:

Unemployment in India is caused by a range of factors: 

1. Slow growth in agricultural and industrial productivity. 
2. Slow expansion of manufacturing sector
3. Concentration of investment in capital goods industry.

One of the most important objectives of economic planning in India was to create employment opportunities for the rising labour force. To meet this goal several initiatives were undertaken – expansion of heavy industries, cottage and small industries, agriculture and related activities etc.

Capital Goods refer to products that are used in the production of other products but are not incorporated into the new product. These include machine tools, industrial machinery, process plant equipment, construction & mining equipment, electrical equipment, textile machinery, printing & packaging machinery etc.

Solution (c)

Basic Info:

Deendayal Antyodaya Yojana-National Rural Livelihood Mission (DAY-NRLM)  is a centrally sponsored programme, launched by the Ministry of Rural Development in June 2011.  

It aims to eliminate rural poverty through the promotion of multiple livelihoods and improved access to financial services for the rural poor households across the country. 

The Mission aims at creating efficient and effective institutional platforms of the rural poor enabling them to increase household income through sustainable livelihood enhancements and improved access to financial services. In November 2015, the program was renamed Deendayal Antayodaya Yojana (DAY-NRLM).

NRLM has set out with an agenda to cover 7 Crore rural poor households, across 600 districts, 6000 blocks, 2.5 lakh Gram Panchayats and 6 lakh villages in the country through self-managed Self Help Groups (SHGs) and federated institutions and support them for livelihoods collectives in a period of 8-10 years.

In addition, the poor would be facilitated to achieve increased access to their rights, entitlements and public services, diversified risk and better social indicators of empowerment. NRLM believes in harnessing the innate capabilities of the poor and complements them with capacities (information, knowledge, skills, tools, finance and collectivization) to participate in the growing economy of the country.

Solution (c)

Basic Info:

It was the MDGs that started the campaign to end global poverty and hunger, while SDGs aim to realise it comprehensively by way of setting goals.

It is the SDGs that emphasise the importance of data. Big Data analytics has been extensively used in the SDGs goal setting as well as goal tracking process. It was not seen in the case of MDGs.

Peace building as an integral part of ending poverty and hunger was recognised by only SDGs.

Solution (a)

Basic info:

The Ministry of Skill Development and Entrepreneurship (MSDE) has launched Pradhan Mantri Kaushal Vikas Yojana (PMKVY) 3.0, in a bid to empower India’s youth with employable skills by making over 300 skill courses available to them

Coverage: Launched in 717 districts, 28 States/eight UTs, PMKVY 3.0 is a step towards ‘Athmanirbhar Bharat

It  will be implemented in a more decentralized structure with greater responsibilities and support from States/UTs and Districts.

District Skill Committees (DSCs), under the guidance of State Skill Development Missions (SSDM), shall play a key role in addressing the skill gap and assessing demand at the district level.

Solution (d)

Statement Analysis:

Context- Delhi Government employed this bio decomposer to discourage stubble burning.

Solution (c)

Statement Analysis:

Context- E-Shram portal was launched recently

Solution (a)

Statement Analysis:

Context – The scheme was launched by KVIC

Solution (b)

Statement Analysis:

Context – The Indian Coast Guard (ICG) had seized two tonnes of sea cucumber, a banned marine species, in the Gulf of Mannar and Palk Bay areas in Tamil Nadu.

Solution (a)

It is an agricultural festival, observed to welcome the new rice of the season. It is observed on the fifth day of the lunar fortnight of the month of Bhadrapada or Bhaadra (August–September), the day after the Ganesh Chaturthi festival. It is celebrated in Western Odisha and adjoining areas of Simdega in Jharkhand.

Context – The festival was in news

Solution (b)

Let X be the distance

Time taken to travel at 9 kmph=X/9 kmph

Time taken to travel at 10kmph=X/10 kmph

So, X/9=X/10+32/60

X/9-X/10 = 32/60

10X-9X/90= 32/60

X (1/90) =32/60 = 32*90/60 = 96/2

X=48 km

Solution (d)

Let the speed of the stream be x km/hr

Speed downstream =(15+x)km/hr

Speed upstream =(15−x)km/hr

Distance travelled downstream=30km

Distance travelled upstream=30km

Time upstream= Distance upstream​/ Speed upstream

Time upstream=30/15-x

Time downstream= Distance downstream​/Speed downstream

Time downstream=30​/15+x

Total time taken 4.5hrs

Let the speed of the stream be x km/hr

4.5=30/(15+x)+ 30/(15-x)

4.5= 30(15-x)+ 30(15+x)/(225-x2)
4.5 = 900/(225-x2)

225-x2=200

x2=25

x=5 kmph

Hence the correct option is (b).

Solution (b)

Let the distance between X and Y be 36 km (LCM of 3, 6,9,12) and v = 1 km/hr. 

Time taken in 1st journey = Distance/Speed = 36/3v = 12/1 = 12 hrs 

Time taken in 2nd journey = 36/6v = 12/2 = 6 hrs 

Time taken in 3rd Journey = 36/9v = 12/3 = 4 hrs 

Time taken in 4th Journey = 36/12v = 12/4 = 3 hrs 

Now, total distance = 36 × 4 = 144 kms 

Average Speed = Total Distance/Total Time = 144 / (12 + 6 + 4 + 3) = 144/25 (this value lies between 5 and 6)

So, the average speed of the car for the entire journey lies between 4v and 6v. 

Option(b) is the right answer.

Solution (c)

Distance between places A and B = 33 km 

Speed of X = 3 km/hr 

So, Distance covered by X in 5 hours = 15 km 

Speed of Y in 1st hour = 2 km/hr So, Distance covered by Y in 1st hour = 2 km 

Similarly, Distance covered by Y in 2nd hour = 2.5 km 

Distance covered by Y in 3rd hour = 3 km 

Distance covered by Y in 4th hour = 3.5 km 

Distance covered by Y in 5th hour = 4 km 

So, the total distance covered by Y in 5 hours = 2 + 2.5 + 3 + 3.5 + 4 = 15 km

At 5 hours, both have covered 15 kilometres towards each other ( 15*2=30 kms). 

They will meet between 5th and 6th hour as they have just 1.5 kms (33-30 = 3= 3/2 = 1.5kms) to cover and their speeds are greater than the distance that needs to be covered( A=3 kmph and B=4.5kmph).

Solution (c)

Refer to the following lines from the first paragraph of the passage, “At the same time, the process did not lose sight of the social responsibilities of the financial sector. However, for fulfilling such objectives, rather than using administrative fiat or coercion, attempts were made to provide operational flexibility and incentives so that the desired and are attended through broad interplay of market forces.”

This makes it clear that option c is correct.