Daily Current Affairs : 15th and 16th June 2022

Daily Current Affairs for UPSC CSE

Topics Covered

1. WPI Inflation
2. Agnipath Scheme
3. PLFS
4. St. Petersburg International Economic Forum
5. Facts for Prelims

1 . Wholesale Price Inflation

Context : Inflation in India’s wholesale prices quickened to a new record high of 15.9% in May, from April’s 15.1%, official data released on Tuesday show. This is the 14th month in a row that WPI inflation has stayed above the 10% mark. Inflation in May 2021 was 13.1%.

What Is a Wholesale Price Index (WPI)?

• A wholesale price index (WPI) is an index that measures and tracks the changes in the price of goods in the stages before the retail level. This refers to goods that are sold in bulk and traded between entities or businesses (instead of between consumers).
• Usually expressed as a ratio or percentage, the WPI shows the included goods’ average price change; it is often seen as one indicator of a country’s level of inflation.
• In India WPI is also known as the headline inflation rate .

Who publishes WPI in India and what does it show?

• The WPI is published by the Economic Adviser in the Ministry of Commerce and Industry.
• Analysts use the numbers to track the supply and demand dynamics in industry, manufacturing and construction.
• In India, Office of Economic Advisor (OEA), Department of Industrial Policy and Promotion, Ministry of Commerce and Industry calculates the WPI.
• An upward surge in the WPI indicates inflationary pressure in the economy and vice versa.
• The quantum of rise in the WPI month after-month is used to measure the level of wholesale inflation in the economy.

What is the difference between WPI and CPI inflation?

• While WPI keeps track of the wholesale price of goods, the CPI measures the average price that households pay for a basket of different goods and services.
• Even as the WPI is used as a key measure of inflation in some economies, the RBI no longer uses it for policy purposes, including setting repo rates.
• The central bank currently uses CPI or retail inflation as a key measure of inflation to set the monetary and credit policy.

Base year of calculation

• With an aim to align the index with the base year of other important economic indicators
• such as GDP and IIP, the base year was updated to 2011-12 from 2004-05 for the new series of Wholesale Price Index (WPI), effective from April 2017.

Calculation of Wholesale Price Index?

• The monthly WPI number shows the average price changes of goods usually expressed in ratios or percentages.
• The index is based on the wholesale prices of a few relevant commodities available.
• The commodities are chosen based on their significance in the region. These represent different strata of the economy and are expected to provide a comprehensive WPI value.
• The advanced base year 2011-12 adopted recently uses 697 items.

Major components of WPI

• The index basket of the WPI covers commodities falling under the three major groups namely Primary Articles, Fuel and Power and Manufactured products
• The prices tracked are ex- factory price for manufactured products, mandi price for agricultural commodities and ex-mines prices for minerals.
• Weights given to each commodity covered in the WPI basket is based on the value of production adjusted for net imports.
  • Primary articles is a major component of WPI, further subdivided into Food Articles and Non-Food Articles.
  • Food Articles include items such as Cereals, Paddy, Wheat, Pulses, Vegetables, Fruits, Milk, Eggs, Meat & Fish, etc.
  • Non-Food Articles include Oil Seeds, Minerals and Crude Petroleum
  • The next major basket in WPI is Fuel & Power, which tracks price movements in Petrol, Diesel and LPG
  • The biggest basket is Manufactured Goods. It spans across a variety of manufactured products such as Textiles, Apparels, Paper, Chemicals, Plastic, Cement, Metals, and more.
  • Manufactured Goods basket also includes manufactured food products such as Sugar, Tobacco Products, Vegetable and Animal Oils, and Fats.
• WPI has a sub-index called WPI Food Index, which is a combination of the Food Articles from the Primary Articles basket, and the food products from the Manufactured Products basket.
• WPI basket does not cover services

Main uses of WPI

• To provide estimates of inflation at the wholesale transaction level for the economy as a whole. This helps in timely intervention by the Government to check inflation in particular, in essential commodities, before the price increase spill over to retail prices.
• WPI is used as deflator for many sectors of the economy including for estimating GDP by Central Statistical Organisation (CSO).
• WPI is also used for indexation by users in business contracts.
• Global investors also track WPI as one of the key macro indicators for their investment decisions

WPI Based Inflation

• Inflation is the rate of increase in prices over a given period of time.
• Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.
• There are certain limitations in using WPI as a measure for inflation, as WPI does not consider the price of services, and it does not reflect the consumer price situation in the country.
• WPI provides estimates of inflation at the wholesale transaction level for the economy overall.
• It also helps in timely intervention by the government to monitor inflation before the price hike spills over to retail prices. 
• The WPI-based inflation is used by the government in preparation of fiscal, trade, and other economic policies.
• Business organisations, policymakers, accountants, and statisticians use WPI as an indexing tool to formulate price adjustment clauses.
• Rise in WPI indicates inflationary pressure in the economy, and vice versa.
• The extent of rise in WPI is used to measure the level of wholesale inflation in the economy.

2 . Agnipath Scheme

Context : The government unveiled its new Agnipath scheme for recruiting soldiers across the three services. The new defence recruitment reform, which has been cleared by the Cabinet Committee on Security, will come into effect immediately, and the soldiers recruited under the scheme will be called Agniveers.

What is the Agnipath scheme?

• Under the new scheme, around 45,000 to 50,000 soldiers will be recruited annually, and most will leave the service in just four years.
• Of the total annual recruits, only 25 per cent will be allowed to continue for another 15 years under permanent commission.
• The move will make the permanent force levels much leaner for the over 13-lakh strong armed forces in the country.
• This will, in turn, considerably reduce the defence pension bill, which has been a major concern for governments for many years.

What is the eligibility criteria?

• The new system is only for personnel below officer ranks (those who do not join the forces as commissioned officers).
• Under the Agnipath scheme, aspirants between the ages of 17.5 years and 21 years will be eligible to apply. The recruitment standards will remain the same, and recruitment will be done twice a year through rallies.

Salary Training & Benefits

• Once selected, the aspirants will go through training for six months and then will be deployed for three and a half years.
• During this period, they will get a starting salary of Rs 30,000, along with additional benefits which will go up to Rs 40,000 by the end of the four-year service.
• Importantly, during this period, 30 per cent of their salary will be set aside under a Seva Nidhi programme, and the government will contribute an equal amount every month, and it will also accrue interest.
• At the end of the four-year period, each soldier will get Rs 11.71 lakh as a lump sum amount, which will be tax-free.
• They will also get a Rs 48 lakh life insurance cover for the four years.
• In case of death, the payout will be over Rs 1 crore, including pay for the unserved tenure.
• However, after four years, only 25 per cent of the batch will be recruited back into their respective services, for a period of 15 years.
• For those who are re-selected, the initial four-year period will not be considered for retirement benefits.
• They will not be eligible for pension or gratuity.

Recruitment Rally

• Recruitment will begin within 90 days under the scheme which will bring “all India, all class” recruitment to the services.
• This is especially significant for the Army, where the regiment system has region and caste bases, and with time that will be eliminated to allow anybody from any caste, region, class or religious background to become part of existing regiments.

How will the scheme benefit the armed forces and the recruits?

• The average age in the forces is 32 years today, which will go down to 26 in six to seven years, the scheme envisions.
• It will create “future-ready” soldiers and profile of the Armed Forces will be youthful as the wider Indian population.” A youthful armed forces will allow them to be easily trained for new technologies.
• It will increase employment opportunities and because of the skills and experience acquired during the four-year service such soldiers will get employment in various fields.
• This will also lead to availability of a higher-skilled workforce to the economy which will be helpful in productivity gain and overall GDP growth
• Government will help rehabilitate soldiers who leave the services after four years. They will be provided with skill certificates and bridge courses. The impetus will be to create entrepreneurs.
• It would offer a three-year degree programme to these enlistees in order to make them employable once out of service.
• Govt will reserve 10% of vacancies in the Central Armed Police Forces (CAPFs) and the Assam Rifles to Agniveers. The Defence Minister also approved of a proposal to earmark 10% of vacancies in Coast Guard, defence civilian jobs and in the defence PSUs for Agniveers provided they meet the eligibility criteria.

Arguments against the Scheme

• Apprehensions about Agnipath are vast and varied. Scores of veterans have flayed the scheme as an effort to scrimp and save on revenue expenditure at the expense of the forces’ operational efficiency or fighting capabilities.
• Four years is too short a time for a conscript to acquire the skills essential for operating sophisticated systems in the technology-intensive Navy and Air Force. For the Army, which has a regimental system, it is feared to impair the unit’s cohesiveness as the soldier on a short-term contract could remain ‘risk-averse’.
• There are also apprehensions about this path leading to the militarisation of society. Some say that it’s unfair to the potential recruit as well, as the absence of a continued employment guarantee at the expiry of four years when he’s still in his 20s and without the skillsets or credentials required to make the cut in the civilian/corporate world, could be demoralising. Agnipath cuts at the root of social security and dignity that have lured rural Indian youth to the military fatigue, argue the scheme’s detractors.

3 . Periodic Labour Force Survey

Context : Periodic Labour Force Survey (PLFS) for 2020-21 was released by the Ministry of Statistics and Programme Implementation.

Details of the Survey report

• The unemployment rate saw a decrease of 0.6% and fell to 4.2% in 2020-21, compared with 4.8% in 2019-20. This means that only 4.2% of adults who looked for jobs could not get any work in rural and urban areas of the country in 2020-21
• Rural areas recorded an unemployment rate of 3.3% and urban areas 6.7%.
• The National Statistical Office (NSO) uses “rotational panel sampling design” in urban areas to assess the labour force participation rate (LFPR), worker population ratio (WPR) and the unemployment rate, and visits select households in urban areas four times. There was, however, no revisit for the rural samples.
• The sample size for the first visit during July 2020-June 2021 in rural and urban areas was 12,800 first-stage sampling units (FSU) in 7,024 villages and 5,776 urban frame survey blocks.
• Migrants are defined in the survey as a household member whose last usual place of residence, at any time in the past, was different from the present place of enumeration. The migration rate, according to the survey, is 28.9%. The migration rate among women was 48% and 47.8% in rural and urban areas, respectively.
• Experts point out that a second visit to the households in rural areas could have provided a bigger and larger picture of unemployment, which did not happen in the survey.
• “Overall, the report suggests shifting the government’s policy directions as it has become more rural-centric. Creation of rural jobs other than in the agricultural sector and MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) could be priorities for the government at the Union and State levels

About Periodic Labour Force Survey

• Considering the importance of availability of labour force data at more frequent time intervals, National Statistical Office (NSO) launched Periodic Labour Force Survey (PLFS) on April 2017.
• PLFS provides Annual reports as well as quarterly bulletins

Objectives

• The objective of PLFS is primarily twofold:
  • to estimate the key employment and unemployment indicators (viz. Worker Population Ratio, Labour Force Participation Rate, Unemployment Rate) in the short time interval of three months for the urban areas only in the Current Weekly Status (CWS)
  • to estimate employment and unemployment indicators in both usual status  (principal activity status + subsidiary economic activity status) and CWS in both rural and urban areas annually
    • Principal activity status– The activity status on which a person spent relatively long time(major time criterion) during 365 days preceding the date of survey, was considered the usual principal activity status of the person.
    • Subsidiary economic activity status– The activity status in which a person in addition to his/her usual principal status, performs some economic activity for 30 days or more for the reference period of 365 days preceding the date of survey, was considered the subsidiary economic status of the person.

Conceptual Framework of Key Employment and Unemployment Indicators

ThePeriodic Labour Force Survey (PLFS) gives estimates of Key employment and unemployment Indicators like the Labour Force Participation Rates (LFPR), Worker Population Ratio (WPR), Unemployment Rate (UR), etc. These indicators are defined as follows:

• Labour Force Participation Rate (LFPR): LFPR is defined as the percentage of persons in labour force (i.e. working or seeking or available for work) in the population.
• Worker Population Ratio (WPR): WPR is defined as the percentage of employed persons in the population.
• Unemployment Rate (UR): UR is defined as the percentage of persons unemployed among the persons in the labour force.
• Activity Status- Usual Status: The activity status of a person is determined on thebasis of the activities pursued by the person during the specified reference period. When the activity status is determined on the basis of the reference period of last 365 days preceding the date of survey, it is known as the usual activity status of the person.
• Activity Status- Current Weekly Status (CWS): The activity status determined on the basis of a reference period of last 7 days preceding the date of survey is known as the current weekly status (CWS) of the person.

4 . St. Petersburg International Economic Forum (SPIEF)

Context : The Indian delegation for St. Petersburg International Economic Forum (SPIEF) is to be led by Minister of Health and Family Welfare and Chemical and Fertilisers Mansukh Mandaviya and the focus will be on fertilizer and potash supplies as India rushes to ensure uninterrupted fertilizer supply in the kharif season.

About St. Petersburg International Economic Forum (SPIEF)

• The St. Petersburg International Economic Forum  is an annual Russian business event for the economic sector, which has been held in St. Petersburg since 1997, and under the auspices of the Russian President since 2005
• Each year, more than 10,000 people from over 120 different countries take part. The Forum brings together the chief executives of major Russian and international companies, heads of state, political leaders, prime ministers, deputy prime ministers, departmental ministers, and governors.
• The key purpose of the Forum is to provide practical solutions for businesses and governments, helping to overcome the geographic and information barriers between Russia and other countries.
• The forum was historically intended for Russia to attract foreign direct investment, discuss economic policy and project a global image that Russia was open for business after the dissolution of the Soviet Union.
• The SPIEF forum has often been described as the ‘Russian Davos’; ie. the Russian analogue of the World Economic Forum that is usually held in Davos, Switzerland.

2022 Forum

• It will be the 25th edition of the SPIEF. Egypt will be the guest country this year. In 2017, India’s Prime Minister Narendra Modi was the chief guest at the meet.
• Since the 2022 Russian invasion of Ukraine, leading politicians and business executives from the Western world and their allies (included within the Unfriendly Countries List) were notably absent from SPIEF events. In response, SPIEF forums have adjusted their focus to highlight leading politicians and business executives from various countries such as the People’s Republic of China, India, Turkey, Iran, Egypt, United Arab Emirates, Serbia, Belarus, Armenia, Kazakhstan, Cuba, Nicaragua and the Central African Republic. In addition, delegations from disputed polities such as the Taliban, Donetsk People’s Republic and Palestine were among the notables present at the 2022 forum

5 . Facts for Prelims

Hate Speech / Section 295

• India does not have a formal legal framework for dealing with hate speech. However, a cluster of provisions, loosely termed hate speech laws, are invoked. These are primarily laws to deal with offences against religions.
• Section 295A defines and prescribes a punishment for deliberate and malicious acts, intended to outrage religious feelings of any class by insulting its religion or religious beliefs. Whoever, with deliberate and malicious intention of outraging the religious feelings of any class of citizens of India by words, either spoken or written, or by signs or by visible representations or otherwise, insults or attempts to insult the religion or the religious beliefs of that class, shall be punished with imprisonment of either description for a term which may extend to [three years], or with fine, or with both,” the IPC section reads.
• Section 295A is one of the key provisions in the IPC chapter to penalise religious offences.
• The chapter includes offences to penalise damage or defilement of a place of worship with intent to insult the religion (Section 295); trespassing in a place of sepulture (Section 297); uttering, words, etc, with deliberate intent to wound the religious feelings of any person (Section 298); and disturbing a religious assembly (Section 296).
• The state often invokes Section 295A along with Section 153A of the Indian Penal Code, which penalises promoting enmity between different groups on grounds of religion, race, place of birth, residence, language, etc, and doing acts prejudicial to maintenance of harmony and Section 505 of the IPC that punishes statements conducing to public mischief.
• In cases where such speech is online, Section 66A of the Information Technology Act that punishes sending offensive messages through communication services is added. In a landmark verdict in 2015, the Supreme Court struck down Section 66A as unconstitutional on the ground that the provision was “vague” and a “violation of free speech”. However, the provision continues to be invoked.
• The broad, vague terms in the laws are often invoked in its misuse. Lower conviction rates for these provisions indicate that the process — where a police officer can arrest without a warrant — is often the punishment. Critics have pointed out that these laws are intended for the state to step in and restore “public order” rather than protect free speech.
• Section 295A was brought in 1927.

ILO

• The International Labour Organization (ILO) is a United Nations agency whose mandate is to advance social and economic justice through setting international labour standards.
• Founded in October 1919 under the League of Nations, it is the first and oldest specialised agency of the UN.
• The ILO has 187 member states: 186 out of 193 UN member states plus the Cook Islands.
• It is headquartered in Geneva, Switzerland, with around 40 field offices around the world, and employs some 3,381 staff across 107 nations, of whom 1,698 work in technical cooperation programmes and projects
• The ILO’s labour standards are aimed at ensuring accessible, productive, and sustainable work worldwide in conditions of freedom, equity, security and dignity.
• They are set forth in 189 conventions and treaties, of which eight are classified as fundamental according to the 1998 Declaration on Fundamental Principles and Rights at Work; together they protect freedom of association and the effective recognition of the right to collective bargaining, the elimination of forced or compulsory labour, the abolition of child labour, and the elimination of discrimination in respect of employment and occupation. The ILO is a major contributor to international labour law.
• Within the UN system the organization has a unique tripartite structure: all standards, policies, and programmes require discussion and approval from the representatives of governments, employers, and workers.
• This framework is maintained in the ILO’s three main bodies: The International Labour Conference, which meets annually to formulate international labour standards; the Governing Body, which serves as the executive council and decides the agency’s policy and budget; and the International Labour Office, the permanent secretariat that administers the organization and implements activities.