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This Spotlight is a part of our Mission Nikaalo Prelims-2023.

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Evening 04 PM  – Daily Mini Tests

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8th May 2023

Constitutionalism, Liberty, Rule of Law, Equality and Liberalism

Constitutionalism refers to the act that defines that a country or state should be governed by specific rules or the ruling document, i.e., the Constitution. A constitution is a ruling document within a country that defines the specific rules and behaviours to govern and run the country. The ideas of Constitutionalism and the Constitution are of the people and for the people. They work in favour of the people to ensure the protection of their human rights. It is a philosophy that restricts the government to some extent to run the country properly.

Importance of Constitutionalism

Constitutionalism is the basic structure on which the governance of a country or state strictly depends. Its importance cannot be ignored in any aspect. Some key points are mentioned below:

• It is a set of norms that prevents the state from abusing its power
• It ensures that the people have liberty and get justice which is crucial for a democratic country such as India
• It ensures proper governance within the country or state as it puts restrictions on the overuse of state power, thereby protecting the rights of the democracy
• It helps in the better development and welfare in the developing countries as it denotes equal rights for all
• It ensures that the state is based on specific rules and guidelines, which states every person has the right to human dignity.

Elements of Constitutionalism

It implies the following elements which characterise the Constitution in India.

• Sovereignty

It initiates that the government is free from any bias from any particular authority. In short, it ensures the government is of the people, by the people, for the people. 

• Supremacy of the Constitution and Rule of Law

It denotes the country is run through rules, not authority or powers. No one can decide the governance except the laws and regulations which have been already stated.

• Political Democracy

In a democracy, individual rights and equality should be protected. It declares equal rights to all the individuals within the country.

• Representative-limited Government 

It declares the representatives are selected through a proper election process by the people. They elect representatives for their welfare, so they should be accountable and answerable to the general public for their actions.

• Separation of Power 

It divides the whole power into three branches, i.e., Executive, Legislative, and Judiciary. This helps keep checks and balances in each area separately and in a better way.

• Civilian Control of the Military Force

It denotes that the Civilian government should control the Military force in such a way that the Military cannot have any way to interfere in the democratic decision-making process of the country.

• Police Governed by Law and Judicial Control

It ensures the Police power should be judged by the Law and Judicial control. Police have no right to harm the dignity of the people.

• An Independent Judiciary

The independence of the Judiciary system ensures the freedom of the democratic power in India. It means that the government is free to run the country if the laws support it.

Liberalism

Liberalism is a political and philosophical ideology to establish individual freedom, consent and equality. Different liberals adopt a vast range of views based on their understanding of this ideology. Individual rights, including civil and human rights, come first among these views.

It also supports freedom and liberty of speech, religious conscience and press, defining secularism and democracy. 

Liberalism in India

Liberalism in India developed through several phases as follows:

• It started with an ancient theory that stressed earthly life and materialism.
• Then, it evolved through social reforms and political independence in the middle and late 19^th century.
• It now emphasises economic and social freedom with minimal Government intervention.

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Dear Aspirants,

This Spotlight is a part of our Mission Nikaalo Prelims-2023.

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5th May 2023

Current affairs Developments in Economics

Refer to the economics current affairs compilation.

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Dear Aspirants,

This Spotlight is a part of our Mission Nikaalo Prelims-2023.

You can check the broad timetable of Nikaalo Prelims here

Session Details

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4th May 2023

Cropping Pattern in India

Back to Basics: Cropping Pattern mean the proportion of area under different crops at a point of time, changes in this distribution overtime and factors determining these changes.

Cropping pattern in India is determined mainly by rainfall, climate, temperature and soil type.

Technology also plays a pivotal role in determining crop pattern. Example, the adoption of High Yield Varieties Seeds along with fertilisers in the mid 1960’s in the regions of Punjab, Haryana and Western Uttar Pradesh increased wheat production significantly.

The multiplicity of cropping systems has been one of the main features of Indian agriculture. This may be attributed to following two major factors:

1. Rainfed agriculture still accounts for over 92.8 million hectares or 65 percent of the cropped area. A large diversity of cropping systems exists under rainfed and dryland areas with an overriding practice of intercropping, due to greater risks involved in cultivating larger area under a particular crop.
2. Due to prevailing socio-economic situations (such as; dependency of large population on agriculture, small land-holding size, very high population pressure on land resource etc.), improving household food security has been an issue of supreme importance to many million farmers of India, who constitute 56.15 million marginal (<1.0 hectare), 17.92 million small (1.0-2.0 hectare) and 13.25 million semi-medium (2.0-4.0 hectare) farm holdings, making together 90 percent of 97.15 million operational holdings.
3. An important consequence of this has been that crop production in India remained to be considered, by and large, a subsistence rather than commercial activity.

What are the types of cropping System?

Different types of cropping systems are adopted on farms depending on the resources and technology available. The different & basic types of cropping System is explained below:

Mono-cropping: If only one crop is grown in the land season after season, it is referred to as Monocropping. Example: Wheat will be planted year after year in the same field. 

Crop Rotation: In this method, the type of crops grown in the field is changed each season or each year. farmers also change from crops to fallow. Example: Maize will be planted in the first year and beans in the second year. This Crop rotation system is a key principle of agriculture conservation as it improves the soil structure and fertility. It also helps to control weeds, pests, and diseases.

Sequential Cropping: This system involves growing two crops in the same field, one after the other in the same year. Example: Planting maize during long rains, then beans during the short rains. 

Inter-cropping: Growing two or more crops in the same field at the same time is called Intercropping. Examples: Planting alternating rows of maize and beans, or growing a cover crop in between the rows. 

Mixed Intercropping: In this method, seeds of two crops are distributed or dibbling the seeds without any row arrangement. This method is called mixed intercropping. This method is easy to sow but makes weeding, fertilization, and harvesting difficult. 

Multiple-Cropping: In this cropping system, farmers grow two or more crops on farmland in one year with intensive input management practices. It includes inter-cropping, mixed-cropping, and sequence cropping.

Row Intercropping: In this method, both the main crop and the intercrop in rows are planted. The row intercropping makes weeding and harvesting easier than with mixed intercropping.

Stir Cropping: This type of cropping involves planting broad strips of several crops in the field. Each strip will be 3–9 m wide. On slopes, the strips are laid out along the contour to prevent erosion. The farmer can rotate crops by planting each strip with a different crop in the next year. Example: Alternating strips of maize, soybean, and finger millet are planted. 

Relay Cropping: In this method, one crop is planted and another crop, usually a cover crop, is planted in the same field before harvesting the first. It avoids competition between the main crop and the intercrop. Relay cropping uses the field for a long time since the cover crop usually continues to grow after the main crop is harvested.

In Indian agriculture, three types of Cropping System is used. They are:

• Mono-Cropping

• Inter-cropping

• Multiple-Cropping

Factors Determining Cropping Pattern in India

Cropping Pattern in India

30 most important cropping patterns in India

Specific Issues Related to the Cropping Pattern

Crop Pattern	Region/State	Issues Related to Crop Pattern
Rice-Wheat	UP, Punjab, Haryana, Bihar, West Bengal, Madhya Pradesh.	Over the years there is stagnation in the production and productivity loses. The main reasons for stagnation are: Over Mining of Nutrients from the soil. Declining Ground Water Table. Increase Pest Attacks and Diseases. Shortages of Labour. Inappropriate use of Fertilizers.
Rice-Rice	Irrigated and Humid coastal system of Orrisa, Tamil Nadu, Andhra Pradesh, Karnataka and Kerala.	The major issues in sustaining the productivity of rice-rice system are: Deterioration in soil physical conditions. Micronutrient deficiency. Poor efficiency of nitrogen use. Imbalance in use of nutrients. Non-availability of appropriate trans planter to mitigate labour shortage during the critical period of transplanting.
Rice- Groundnut	Tamil Nadu, Andhra Pradesh, Karnataka, Orrisa and Maharashtra.	The major issues in the pattern are: Excessive Rainfall and Water Logging. Non-availability of quality seeds. Limited expansion of Rabi Groundnut in Rice grown areas.
Rice-Pulses	Chhattisgarh, Orrisa and Bihar.	Factors limiting Productivity are: Droughts and Erratic Rainfall distribution. Lack of Irrigation. Low coverage under HYV Seeds. Weed Attacks. Little attention to pest attacks and diseases. Marginalisation of land and Removal of Tribal from their own land.
Maize-Wheat	UP, Rajasthan, MP and Bihar	The Reason for Poor Yields are: Sowing Timing. Poor Weed Management. Poor Plant Varieties. Poor use of organic and inorganic fertilizers. Large area under Rain Fed Agriculture.
Sugarcane-Wheat	UP, Punjab and Haryana accounts for 68% of the area under sugarcane. The other states which cover the crops are; Karnataka and MP.	Problems in Sugarcane-Wheat system are: Late Planting. Imbalance and inadequate use of nutrients. Poor nitrogen use efficiency in sugarcane. Build-up of Trianthema partu lacastrum and Cyprus rotundus in sugarcane. The stubble of sugarcane pose tillage problem for succeeding crops and need to be managed properly.
Cotton-Wheat	Punjab, Haryana, West UP, Andhra Pradesh, Karnataka, Tamil Nadu.	Problems in Cotton-Wheat system are: Delay Planting. Stubbles of cotton create the problem of tillage operations and poor tilth for wheat. Cotton Pest like Boll Worm and White Fly. Poor nitrogen use efficiency in cotton.
Soya bean-Wheat	Maharashtra, MP and Rajasthan	Constraints limiting the soybean production and productivity are: A relatively recent introduction of soybean as a crop. Limited genetic diversity. Short growing period available in Indian latitudes. Hindered agronomy/availability of inputs at the farm level. Rainfed nature of crop and water scarcity at critical stage of plant growth. Insect pests and diseases, Quality improvement problems. Inadequate mechanization and partial adoption of technology by farmers have been identified.
Legume Based Cropping Systems (Pulses-Oilseeds)	MP, Gujarat, Maharashtra, Andhra Pradesh and Karnataka.	The major issues in Legume based system are: Lack of technological advancement. Loses due to erratic weather and waterlogging. Diseases and Pests. Low harvest index, flower drop, indeterminate growth habit and very poor response to fertilizers and water in most of the grain legumes. Nutrient needs of the system have to be worked out considering N-fixation capacity of legume crops.

Horticulture Crops in India

India has made a good place for itself on the Horticulture Map of the World with a total annual production of horticultural crops touching over 1490 million tones during 1999-00.

The horticultural crops cover about 9 percent of the total area contributing about 24.5 percent of the gross agricultural output in the country. However, the productivity of fruits and vegetables grown in the country is low as compared to developed countries.

Vegetable Crops

Vegetable crops in India are grown from the sea level to the snowline. The entire country can broadly be divided into six vegetable growing zones:

Low productivity is the main feature of vegetable cultivation in India as farm yields of most of the vegetables in India are much lower than the average yield of the world and developed countries.

The productivity gap is more conspicuous in tomato, cabbage, onion, chilli and peas. The preponderance of hybrid varieties and protected cultivation are mainly responsible for high productivity in the developed countries.

Constraints in vegetable production:

1. Lack of planning in Production

2. Non-availability of seeds of improved varieties.

3. High cost of basic production elements

4. Inadequate plant protection measures and non-availability of resistant varieties.

5. Weak marketing facilities

6. Transportation limits

7. Post-harvest losses

8. Abiotic stresses.

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Dear Aspirants,

This Spotlight is a part of our Mission Nikaalo Prelims-2023.

You can check the broad timetable of Nikaalo Prelims here

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3rd May 2023

External Sectors of India 

All economic activities of an economy which take place in foreign currency fall in the external sector such as balanced of payment, export, import, foreign investment, external debt, current account, capital account, exchange rates etc.

FOREX RESERVES

Foreign exchange reserves are assets denominated in a foreign currency that are held on reserve by a central bank. These may include foreign currencies, bonds, treasury bills and other government securities.

Forex Reserves Consist of:	• Bank deposits • Gold • Special drawing rights (SDRS) • Reserve tranche position (RTP) • Foreign currency assets (FCA) • Government securities
SDR	• SDR is an international reserve asset, created by the IMF in 1969. • Value of the SDR is based on a basket of five currencies- Dollar, Euro, Renminbi, Yen, and Pound Sterling. • It is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members.

EXCHANGE RATE

Exchange rate is Price at which one currency is converted into or exchanged for another currency.

Various Exchange rates mechanism:

FIXED EXCHANGE RATE	FLOATING EXCHANGE RATE	MANAGED FLOATING RATE
Complete intervention of Authority (government or central bank) in determination of the currency exchange rate.	Market forces(demand and supply) determine the value of currency No role of authority	Exchange rate is largely determined by market forces. In crisis, central banks may intervene to stabilize the exchange rate

NEER vs REER

Nominal Effective Exchange Rate (NEER)	Real Effective Exchange Rate (REER)
Weighted average of bilateral nominal exchange rates of the home currency in terms of foreign currencies	Weighted average of nominal exchange rates, adjusted for inflation.
It is the exchange rate of one currency against a basket of currencies, weighted according to trade with each country (not adjusted for inflation).	Is calculated on the basis of NEER. Captures inflation differentials between country and its major trading partners and reflects the degree of external competitiveness

CURRENCY CONVERTIBILITY

Currency convertibility is the ease with which the currency of a country can be freely converted into any other foreign currency or gold at market determined exchange rate.

Partial Convertibility:	• Portion allowed by the government which can be converted into foreign currency with least restrictions. • Union Budget for 1992-93, introduced it on current account under Liberalized Exchange Rate Management System (LERMS) • Also known as Dual exchange system. • Presently partial convertibility still operational on capital account.
Full Convertibility:	• Freedom to convert domestic currency into any foreign currency and vice versa without any regulatory intervention. • Dual exchange rate system got automatically abolished and LERMS was now based upon the open market exchange. • In 1994, the Government of India declared full convertibility of Rupee on Current account.
Tarapore Committee I (1997) and II (2006):	• Constituted by the RBI for suggesting a roadmap on full convertibility of Rupee on Capital Account.

Advantages of capital account convertibility:

• Availability of large funds
• Reduction in cost of capital.
• Greater financial competitiveness.
• Increase in FII/FPI flow.

BALANCE OF PAYMENT

A systematic record of all economic transactions between the residents of one country with the residents of the other country in a financial year.

It consists of balance of trade, balance of current account and capital account.

Balance of trade: Difference between the monetary value of a nation’s exports and imports over a certain time period.

Balance of payments divides transactions in two accounts:

Current account

Capital account

Current Account Invisible Visible Goods(+) Services [+) Income 1. Dividend 2. Interest 3. Profit Transfer [+] 1. Gift 2. Donation 3. Remittance

Capital account [+] Investment [+] 1.Sovereign 2.Commercial NRI account [+] 1. Gift 2.Donation 3.Remittance Loan (+) 1 FDI 2. FII/FPI

	CURRENT ACCOUNT	CAPITAL ACCOUNT
Meaning	• Records imports and exports of visible and invisibles • Short term implication transactions • Covers only earnings and spending. • Excludes any borrowings and lending.	• Shows capital expenditure and income for country • Long term implication transactions • Only includes borrowings and lending by a country
Components	• Visible trade(Export and Import of goods-Merchandise transactions ) • Invisible trade(Export and Import of services) • Unilateral transactions	• Direct Investment (FDI) • Portfolio Investment (FPI) • Loans / External commercial borrowing (ECB) • Non-resident’s investment in Bank, Insurance, Pension schemes. • RBI’s foreign exchange reserve
Deficit (CAD)	• If the value of the goods and services imported exceeds the value of those exported. • Current Account deficit = Trade gap(export – import) + Net current transfers (foreign aid) + Net factor income (Interest, Dividend)	• When more money is flowing out of a country to acquire assets and rights abroad
Surplus	• If the value of the goods and services exported exceeds the value of those imported.	• Money is flowing into the country, but these inflows reflect changes in the ownership of national assets by way of sale or borrowing.
Convertibility	• Current account convertibility relates to the removal of restrictions on payments relating to the international exchange of goals, services and factor incomes.	• Capital account convertibility refers to a liberalization of a country’s capital transactions such as loans and investment.
Current status	• Allowed Full convertibility	• Only Partial convertibility

EXTERNAL DEBT

Part of a country s debt which has been borrowed from foreign creditors which includes private commercial banks, international financial institutions such as the World Bank, International Monetary Fund (IMF), and sovereign governments.

Types of external debts:

Short term debt: Maturity period 1 year or less

Long term debt: Maturity period more than 1 year

Sovereign debt : Bonds issued by the national government in any foreign currency to generate funds to meet its financial expenses.

Schemes- Socio economic Development, Poverty and Planning

Refer to the schemes compilation.

Dear Aspirants,

This Spotlight is a part of our Mission Nikaalo Prelims-2023.

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1st May 2023

Inflation

Inflation is mainly caused either by demand Pull factors or Cost Push factors. Apart from demand and supply factors, Inflation sometimes is also caused by structural bottlenecks and policies of the government and the central banks. Therefore, the major causes of Inflation are:

• Demand Pull Factors (when Aggregate Demand exceeds Aggregate Supply at Full employment level).
• Cost Push Factors (when Aggregate supply increases due to increase in the cost of production while Aggregate demand remains the same).
• Structural Bottlenecks (Agriculture Prices fluctuations, Weak Infrastructure etc.)
• Monetary Policy Intervention by the Central Banks.
• Expansionary Fiscal Policy by the Government.

Demand and Supply factors can be further sub divided into the following:

Inflationary Gap: the Inflationary gap is a situation which arises when Aggregate demand in an economy exceeds the Aggregate supply at the full employment level.

Deflationary Gap: Deflationary Gap is a situation which arises when Aggregate demand in the economy falls short of Aggregate Supply at the full employment level.

Stagflation:  The falling growth along with rising prices makes cost push inflation more dangerous than the demand-pull inflation. The situation of rising prices along with falling growth and employment is called as stagflation.

Hyperinflation: Hyperinflation is a situation when inflation rises at an extremely faster rate. The rate of inflation can increase from 50 times to 300 times. The major causes of the hyperinflation are; government issuing too much currency to finance its deficits; wars and political instabilities and unexpected increase in people’s anticipation of future inflation.

Structural Inflation

• Structuralist Inflation is another form of Inflation mostly prevalent in the Developing and Low-Income Countries.
• The Structural school argues that inflation in the developing countries are mainly due to the weak structure of their economies.

Deflation: Deflation is when the overall price level in the economy falls for a period of time.Deflation is when, for instance, the price of a basket of goods has fallen from Rs 100 to Rs 80. It’s the reduction in overall prices of goods.

Disinflation: Disinflation is a situation in which the rate of inflation falls over a period of time. Remember the difference; disinflation is when the inflation rate is falling from say 5% to 3%.

Headline versus Core Inflation

The headline inflation measure demonstrates overall inflation in the economy. Conversely, the core inflation measures exclude the prices of highly volatile food and fuel components from the inflation index.

Core inflation excludes the highly volatile food and fuel components and therefore represents the underlying trend inflation. 

Banking and Monetary Policy

What is monetary policy?

Broadly speaking, there are two types of methods of controlling credit.

Measure of Money Supply in India

M1	M2	M3	M4
It is also known as Narrow Money.	It is a broader concept of the money supply.	It is also known as Broad Money.	M4 includes all items of M3 along with total deposits of post office saving accounts.
M1= C+DD+OD C= Currency with Public. DD= Demand Deposit with the public in the Banks. OD= Other Deposits held by the public with RBI.	M2= M1 + Saving deposits with the post office saving banks. M1 is distinguished from M2 because the post office saving deposits are not as liquid as Bank deposits.	M3 = M1+ Time Deposits with the Bank. Time deposits serve as a store of wealth and represent a saving of the people and are not as liquid as they cannot be withdrawn through cheques or ATMs as compared to money deposited in Demand deposits.	M4= M3+Total Deposits with Post Office Saving Organisations. M4 however, excludes National Saving Certificates of Post Offices.
It is the most liquid form of the money supply.		M3 is the most popular and essential measure of the money supply. The monetary committee headed by late Prof Sukhamoy Chakravarty recommended its use for monetary planning in the economy. M3 is also called Aggregate Monetary Resource

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This Spotlight is a part of our Mission Nikaalo Prelims-2023.

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1st May 2023

Patterns of Economic Indicators

An economic indicator is a statistic about an economic activity. Economic indicators allow analysis of economic performance and predictions of future performance. One application of economic indicators is the study of business cycles.

NATIONAL INCOME

• National Income is the total value of all final goods and services produced by the country in certain year. The growth of National Income helps to know the progress of the country.
• In other words, the total amount of income accruing to a country from economic activities in a year’s time is known as national income.
• National Income includes payments made to all resources in the form of wages, interest, rent and profits.

NATIONAL INCOME ACCOUNTING (NIA)

• National Income Accounting is a method or technique used to measure the economic activity in the national economy as a whole.
• It is the bookkeeping system which measures the level of economic activity in a given time period
• NIA sets rules and definition to measure aggregate economic activity and tries to summarise the performance of the economy

Indicators: GDP

• Gross Domestic Product is the market value of all the goods and services produced within the domestic territory of a country during a specified time period, usually one year.
• Accounting Year = Fiscal Year; for India it is 1st of April to 31st of March (next year)
• Will include the income generated by MNCs in India

Domestic Territory = Political frontiers of the country including its territorial waters+ Embassies/Consulates + Military Establishments of the country abroad + Ships/Aircrafts/Fishing Vessels/Oil Rigs belonging to the residents of the country

GDP does not include :

• Capital goods (e.g. machinery) are included in GDP, but intermediate goods (e.g. raw materials) are not.
• Intermediate goods and services are not included to avoid double counting.
• Same good can be final (you consuming milk ) or intermediate (milk in the restaurant) depending on the usage.

GROWTH RATE &GDP DEFLATOR

• Growth Rate (%) = [GDP (Present year – Last Year) / Last Year] x 100
• But, quantitatively the production may not have improved (From 1 kg garlics to 2 kg garlics), and only because of inflation in the prices (₹ 10/kg garlic to ₹ 100/kg) the growth rate may be appear high.
• Therefore (to remove the inflation impact on growth rate), we must select a base year, and convert the current prices to constant prices.
• The ratio of these GDPs is called ‘GDP deflator’, it presents a picture of inflation like CPI and WPI but, unlike CPI & WPI it’s not based on a fixed basket of commodities.
• These figures are revised as the new data arrives / previous data is cross verified & corrected.

GDP AND NATIONAL INCOME

Gross National Income (GNI)

• According to OECDà GNI as GDP + NET receipts from abroad (wages, interest, profit, rent) plus net taxes & subsidies receivable from abroad. Here, ‘Wages and salaries’ from abroad = ‘Guest’ workers who reside abroad for less than 12 months and whose centre of economic interest remains in their home country

National Disposable Income

• National Disposable Income= NNP + Other Current Transfers from rest of the world (remittances, gift, donations etc.)National Disposable Income gives an idea of what is the maximum amount of goods and services the domestic economy has at its disposal.

Personal Disposable Income

• Personal Income – Personal Tax Payments (e.g. income tax) – Non-tax Payments (e.g. fines)

Fiscal Policy

What is Fiscal Policy? Fiscal Policy deals with the revenue and expenditure policy of the Govt. The word fiscal has been derived from the word ‘fisk’ which means public treasury or Govt funds.

Objectives of Fiscal Policy

The following are the objectives of the Fiscal Policy:

1. Higher Economic Growth
2. Price Stability
3. Reduction in Inequality

What are the components of Fiscal Policy?

There are three components of the Fiscal Policy of India:

1. Government Receipts
2. Government Expenditure
3. Public Debt

Government Receipts

The categorisation of the government receipts is given below:

1. Revenue Receipt
   • Tax Revenue
     • Direct Tax
     • Indirect Tax
   • Non-Tax Revenue
     • Fees
     • License and Permits
     • Fines and Penalties, etc
2. Capital Receipt
   • Loans Recovery
   • Disinvestments
   • Borrowing and other liabilities

Government Expenditure

There are two classifications of public expenditure:

1. Revenue Expenditure – It is a recurring expenditure:
   • Interest Payments
   • Defence Expenses
   • Salaries to Central Government employees, etc are examples of  revenue expenditure
2. Capital Expenditure – It is a non-recurring expenditure
   • Loans repayments
   • Loans to public enterprises, etc.

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