Current Affairs 2nd September 2022

1.    GDP DEFLATOR

  • News: The Indian economy grew 13.5% in the June quarter, much lower than the central bank’s forecast of 16.2%. While a low base has made interpreting the data difficult, another factor may have led to a distortion: the government’s deflation method.
  • About GDP Price Deflator:
    • The GDP (gross domestic product) price deflator, also known as the GDP deflator or the implicit price deflator, measures the changes in prices for all the goods and services produced in an economy.
    • The GDP price deflator measures the changes in prices for all the goods and services produced in an economy.
    • Using the GDP price deflator helps economists compare the levels of real economic activity from one year to another.
    • Gross domestic product (GDP) represents the total output of goods and services. However, as GDP rises and falls, the metric doesn’t factor in the impact of inflation or rising prices into its results.
    • The GDP price deflator addresses this by showing the effect of price changes on GDP, first by establishing a base year, and, second, by comparing current prices to prices in the base year.
    • The GDP price deflator helps identify how much prices have inflated over a specific time period. This is important because, as we saw in our previous example, comparing GDP from two different years can give a deceptive result if there’s a change in the price level between the two years.
  • Definition of Nominal and Real GDP:
    • Nominal GDP reflects the raw numbers in current dollars unadjusted for inflation.
    • Real GDP adjusts the numbers by fixing the currency value, thus eliminating any distortion caused by inflation or deflation.
  • Details of latest figures:
    • The statistics ministry first calculates economic output at “current prices”, which are price levels that we see in everyday life.
    • But some of this growth may be just because of inflation. So, the ministry also reports an adjusted “real” GDP by stripping off the impact of inflation to arrive at “GDP at constant prices”.
    • For example, the GDP at current prices in Q1 was ₹64.95 trillion, up 26.7% year-on-year.
    • After adjusting for inflation, real GDP came out to be ₹36.85 trillion, a growth of 13.5%.
    • The big difference was due to high inflation during the quarter: wholesale prices were up 15.7% and retail prices 7.3%.
  • How India uses deflators for GDP:
    • There are two ways: single deflation and double deflation.
    • Single deflation uses a common price deflator to adjust both input and output prices, while double deflation uses two different deflators for them.
    • India uses a mix: double deflation for agri-culture, and mining and quarrying; and single deflation for other sectors. This is a unique method used in India.

2.    UYGHURS

  • News: China’s detention in special camps of Uyghurs claimed to be an educational exercise aimed at instilling Chinese values and reducing the risk of Islamist radicalism among people who profess Islam, has been taken grim note of by the United Nations’ human rights office, which said it may “constitute international crimes, in particular crimes against humanity.”
  • About Uyghurs:
    • There are about 12 million Uyghurs, mostly Muslim, living in Xinjiang, which is officially known as the Xinjiang Uyghur Autonomous Region (XUAR).
    • The Uyghurs speak their own language, which is similar to Turkish, and see themselves as culturally and ethnically close to Central Asian nations. They make up less than half of the Xinjiang population.
  • About Xinjiang:
    • Xinjiang lies in the north-west of China and is the country’s largest region. Like Tibet, it is autonomous, meaning – in theory – it has some powers of self-governance. But in practice, both regions are subjected to major restrictions by the central government.
    • Xinjiang is a mostly desert region and produces about a fifth of the world’s cotton. Human rights groups have voiced concerns that much of that cotton export is picked by forced labour, and in 2021 some Western brands removed Xinjiang cotton from their supply chains, leading to a backlash against the brands from Chinese celebrities and netizens.
    • In December 2020, research seen by the BBC showed that up to half a million people were being forced to pick cotton in Xinjiang. There is evidence that new factories have been built within the grounds of the re-education camps.
    • The region is also rich in oil and natural gas and because of its proximity to Central Asia and Europe is seen by Beijing as an important trade link.
    • In the early 20th Century, the Uyghurs briefly declared independence for the region but it was brought under the complete control of China’s new Communist government in 1949.

3.    INDIA’S UNEMPLOYMENT RATE

  • News: India’s unemployment rate surged to a one-year high of 8.3% in August as employment sequentially fell by 2 million to 394.6 million, according to data from the Centre for Monitoring Indian Economy (CMIE).
  • Details:
    • During July, the unemployment rate was at 6.8% and the employment was 397 million.
    • The urban unemployment rate is usually higher at about 8% than the rural unemployment rate, which is usually around 7%.
    • The unemployment rate in rural India rose from 6.1% in July to 7.7% in August. More importantly, the employment rate fell from 37.6% to 37.3%.
  • Types of Unemployment:
    • Frictional Unemployment: This type of unemployment is usually short-lived. It is also the least problematic, from an economic standpoint. It occurs when people voluntarily change jobs. After a person leaves a company, it naturally takes time to find another job. Similarly, graduates just starting to look for jobs to enter the workforce add to frictional unemployment.
    • Cyclical Unemployment: Cyclical unemployment is the variation in the number of unemployed workers over the course of economic upturns and downturns, such as those related to changes in oil prices. Unemployment rises during recessionary periods and declines during periods of economic growth.
    • Structural Unemployment: Structural unemployment comes about through a technological change in the structure of the economy in which labor markets operate. Technological changes can lead to unemployment among workers displaced from jobs that are no longer needed. Examples of such changes include the replacement of horse-drawn transport by automobiles and the automation of manufacturing.
    • Institutional Unemployment: Institutional unemployment results from long term or permanent institutional factors and incentives in the economy.

4.    CURRENCY INTERVENTION

  • News: Russia is considering a plan to buy as much as $70 billion in yuan and other “friendly” currencies this year to slow the ruble’s surge, before shifting to a longer-term strategy of selling its holdings of the Chinese currency to fund investment.
  • About Currency Intervention:
    • Currency intervention occurs when a central bank purchases or sells the country’s own currency in the foreign exchange market to influence its value.
    • When a country’s central bank enters into those foreign exchanges and trades its own currency, that is currency intervention.
    • By trading large amounts of its own currency, these central banks can influence the money’s value.
    • At some point, a central bank may feel like its currency is appreciating (gaining value) or depreciating (losing value) too quickly. This may be cause for it to conduct currency intervention to slow the movement.
    • Currency intervention can be used to influence movement in either direction, but currency interventions often aim to keep the value of a domestic currency lower relative to foreign currencies. Higher currency valuations cause exports to be less competitive, because the price of products is then higher when purchased in a foreign currency. On the other hand, a lower currency valuation lowers the relative cost of a country’s exports, which can help increase exports and spur economic growth.

5.    SALTWATER CROCODILE

  • News: A record number of around 3,700 baby saltwater crocodiles have broken out of eggshells to make their way to the water bodies of the Bhitarkanika National Park in Odisha, an official said. They emerged from as many as 122 nesting sites that were spotted in the wildlife sanctuary in Kendrapara district in comparison to 84 the previous year.
  • About Saltwater Crocodile:
    • The saltwater crocodile (Crocodylus porosus) is a crocodilian native to saltwater habitats and brackish wetlands from India’s east coast across Southeast Asia and the Sundaic region to northern Australia and Micronesia.
    • It has been listed as Least Concern on the IUCN Red List since 1996.
    • It was hunted for its skin throughout its range up to the 1970s, and is threatened by illegal killing and habitat loss. It is regarded as dangerous to humans.
    • The saltwater crocodile is the largest living reptile and crocodilian known.
    • Males grow to a length of up to 6 m (20 ft), rarely exceeding 6.3 m (21 ft) or a weight of 1,000–1,300 kg (2,200–2,900 lb). Females are much smaller and rarely surpass 3 m (10 ft).
    • It is also known as the estuarine crocodile, Indo-Pacific crocodile, marine crocodile, sea crocodile or informally as saltie.
    • It is capable of prevailing over almost any animal that enters its territory, including other apex predators such as sharks, varieties of freshwater and saltwater fish including pelagic species, invertebrates such as crustaceans, various amphibians, reptiles, birds, and mammals, including humans.
  • About Bhitarkanika National Park:
    • Bhitarkanika National Park is a 145 km2 (56 sq mi) large national park in northeast Kendrapara district in Odisha in eastern India.
    • It was designated on 16 September 1998 and obtained the status of a Ramsar site on 19 August 2002. The area is also been designated as second Ramsar site of the State after the Chilika Lake.
    • It is surrounded by Bhitarkanika Wildlife Sanctuary, which spread over 672 km2 (259 sq mi). Gahirmatha Beach and Marine Sanctuary are to the east, separating swamp region and mangroves from the Bay of Bengal.
    • The national park and wildlife sanctuary is inundated by the rivers Brahmani, Baitarani, Dhamra, Pathsala. It hosts many mangrove species, and is the second largest mangrove ecosystem in India.
    • The national park is home to Saltwater crocodile (Crocodylus porosus), Indian python, king cobra, black ibis, darters and many other species of flora and fauna.
    • Mangroves are salt-tolerant, complex, and dynamic eco-systems that occur in tropical and subtropical intertidal regions.
    • Bhitarkanika is one such location of rich, lush green vibrant ecosystem lying in the estuarine region of Brahmani – Baitarani in the North-Eastern corner of Kendrapara district of Odisha.

6.    NEW NAVAL ENSIGN

  • News: Prime Minister Narendra Modi presided over the commissioning ceremony which was held at the Cochin Shipyard Limited in Kochi on Friday morning where he also unveiled the new Naval Ensign or Nishaan.
  • Details:
    • The erstwhile St George’s Cross in the ensign has been removed “doing away with the colonial past and befitting the rich Indian maritime heritage” as stated by the government earlier.
    • It now includes the crest of the Indian Navy on a navy blue background encompassed in an octagon representing the royal seal or Mudra of Chhatrapati Shivaji Maharaj.
    • PM Modi dedicated the new ensign to Chhatrapati Shivaji Maharaj.
    • The Naval Ensign is a flag that naval ships or formations carry to denote nationality. The previous Indian Naval Ensign consisted of a St George’s Cross – a red cross with a white background. In one corner of the cross, the Flag of India is placed since Indian Independence, instead of the Union Jack.
    • The Indian Naval Ensign has undergone changes multiple times since Independence.
    • It was only in 2001 that St George’s Cross was taken out and the Indian Navy’s crest was added to the opposite corner of the ensign.
    • The cross was put back again in 2004 with the addition of the Emblem of India at the intersection of the cross.
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