Mains Paper 3: Economy
Prelims level: Venezuela
Mains level: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth
• The international community has had its attention focused on other issues, the Venezuelan catastrophe has deepened. If current trends continue, it will only get worse.
• A day’s work at the median wage now buys 1.7 eggs or a kilogram of yuca, the cheapest available calorie.
• A kilogram of local cheese costs 18 days of median-wage work; a kilogram of meat costs almost a month, depending on the cut.
• Prices have been rising at hyperinflationary rates for 13 straight months and inflation is on track to surpass the 1,000,000% mark this month.
• Output continues to fall like a stone: Opec reports that in October 2018, production was down 37% year-on-year, or almost 700,000 barrels a day.
Analysing the situation
• According to Alianza Salud, a coalition of NGOs, new malaria cases in 2018 have shot up by a factor of 12 since 2012.
• It bringing the total to over 600,000, which is 54% of all cases in the Americas.
• Large swaths of Venezuela’s territory have been ceded to criminal organizations, including terrorist groups such as Colombia’s Farc and ELN, which collude with the National Guard in the production of gold and coltan, as well as running illegal drug trade.
• Venezuelans have been leaving in droves, creating a refugee crisis of Syrian proportions, the biggest ever in the Americas. Going by Facebook reports, which says 3.3 million
• Venezuelan users were abroad, my research team at the Center for International Development at Harvard University estimates that there must be at least 5.5 million, overall.
• Of those tweeting only from Venezuela in 2017, by November, over 10% had left the country.
• Colombia, Ecuador and Peru, despite their valiant efforts, are facing increasing difficulties in coping with the refugee flow.
• It is patently obvious that Venezuela’s problems will not be solved unless and until there was a regime change.
• After all, both the regime and the economic collapse are the consequences of the elimination of basic rights.
• Venezuelans cannot invest and produce to satisfy their needs, because economic rights have been taken away; and they cannot change wrongheaded policies, because their political rights have been taken away.
• A turnaround will require the re-empowerment of Venezuelans.
• It will require coordination between the Venezuelan democratic forces and the international community.
• 10 January marks the end of President Nicolás Maduro’s term, which started with his election in 2013.
• His election to a second term in May was a sham.
• The major opposition parties and their candidates were prevented from running, and the US, Canada, the EU, Japan and major Latin American countries, among many others, refused to recognize the outcome.
• That means they do not recognize the legitimacy of Maduro’s presidency after 10 January.
• The logical solution is for the national assembly, elected in December 2015 with a two-thirds opposition majority, to resolve the constitutional impasse by designating a new interim government and a new military high command that can organize the return to democracy, and end
• They are wary of doing so, because they fear that they will be ignored at best, or, at worst, jailed, exiled, or tortured to death, and thrown out of a 10th-floor window, as happened in October to Fernando Albán, a Caracas city councillor.
• Unless the armed forces respect the national assembly’s decisions, they will be hard to enforce.
• The Venezuelans have been doing their homework and
laying the organizational groundwork for change.
• Political parties, trade unions, universities, NGOs, and the Catholic Church have come together in an initiative called Venezuela Libre.
• They have organized congresses in each of Venezuela’s 24 states, attended by over 12,000 delegates, and, on 26 November, they held a national event to issue a manifesto delineating a path back to democracy.
• In addition, they have been working on a detailed economic plan, amply discussed with the international community, to overcome the crisis and restore growth.
• This is an excellent opportunity for the international community to move toward a coordinated solution.
• A clear message should be sent to the Venezuelan armed forces that the national assembly’s decisions must be respected.
• A solution to the Venezuelan catastrophe is not only desirable, but also possible. The world cannot afford to let this opportunity slip. 10 January can become a new beginning.
Q.1) Which of the following are among the main objectives of social forestry?
1. Providing jobs for unskilled workers
2. Reclamation of wastelands
3. Creation of recreational forests
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Q.1) What lessons we can learn for recent collapse in Venezuela’s economy?