Mains Paper 3: Economy
Prelims level: GDP growth
Mains level: Issues related to the Indian Economy
• Recently, released April-June quarter GDP numbers fell below the estimates with growth at 20.1%.
• While GVA grew by 18.8%. The higher GDP growth was driven by high indirect tax collections mainly GST.
In sectoral activity arena:
• Manufacturing GVA revival was the most robust.
• While Mining and Electricity growth was moderate.
• Due to all-time highs in outputs of cereals, pluses and oilseeds, Agriculture grew at 4.5%.
• As forecasted, the service sector remained vulnerable.
• Among them, trade, hotels and communication are the worst performers.
• At the same time, even though construction revival is lower than excepted, it has strong residential demand.
Demand and Expenditure Side:
• Private consumption was contracted from 26.2% to 19.3%.
• The private investment stands at 55.3%.
• While Govt consumption was lower by 4.8%, the net exports are still in deficit with a gap much lower than in the 1st quarter.
• This is due to high exports and subdued imports which were aided by weak domestic demand.
Overall and Sector-Specific activity:
• The deepest gaps persist in the services segment most starkly in the construction and trade+ groups that are below threshold levels.
• Despite the rising recovery, the aggregate GVA still remains below 8%.
• The set of high-frequency economic signals suggest a strong recovery in July and August.
• It is expected that India’s 2021-22 GDP growth will be 9.5-10%.
• The vaccination pace increases significantly.
• The three potential growth drivers consumption, investment and exports will be effectively sustained by policy initiatives over the next couple of years.
What needs to be done?
• The govt spending needs to be higher because the April-July data suggests that the Centre has significant room to increase spending.
• Along with it, govt needs speedy and effective implementation of the National Monetization Plan which will open up further fiscal space to increase spending.
• Though the corporate balance sheets have improved significantly and operations have become more efficient.
• The mid-andsmall-sized entities need time to restore now.
• The need is to increase the flow of credit to these stressed segments to supplement state spending.
• India needs to fill the gaps in global inventories which are low currently and needs to scale up its exports and embed markets shares.
• Due to Global central banks speculated loose monetary policy, the RBI needs to shift to a neutral monetary policy stance with a gradual increase in interest rates.
• To keep intact, the need of the hour for India is to raise its potential growth whereby economic recovery does not rapidly close the output gap and preventing a inflationary pressure surge.
• India has a limited window of opportunity to leverage the ongoing realignment of global supply chains and progressively onboard all sectors.
• The need of the hour is for effective coordination with states and data-driven policy mechanisms to enable a stable and steady environment and high growth in the near future.
Q.1) With reference to Partners for Law in Development (PLD) report on Child Marriage Prosecutions in India, consider the following statements:
1. Legal prosecution of child marriages was twice as much against elopement or self-arranged marriages by girls with such cases accounting for 65% (54 out of a total 83 cases) of the total cases studied.
2. Only 30% of the cases were those of arranged child marriages, and a mere 5% were forced child marriages.
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