Topic 1 : Managing growth
Introduction: The GDP growth estimates released by the National Statistical Office at the end of February had shown that the Indian economy grew at 8.4 per cent in the third quarter, surpassing the most optimistic projections.
GDP and GVA growth rate in FY 2023-24 as per NSO
- NSO implied that the economy had grown at an average of 8.2 per cent in the first three quarters (April-December) of the year.
- For the full year, the NSO had projected the economy to grow at 7.6 per cent.
- However, excluding net taxes on products, growth in gross value added by all sectors in the economy had slowed down from 8.2 per cent in the first quarter to 7.7 per cent in the second quarter and further to 6.5 per cent in the third quarter.
- This raised questions over the underlying momentum in the economy.
A new RBI study on the GVA growth rate
- A study on the state of the economy prepared by economists at the Reserve Bank of India suggests that the growth momentum remains healthy.
- The study pegs growth for the fourth quarter (January-March) at 7.2 per cent.
- This is higher than the 5.9 per cent growth implied in the NSO’s estimates.
- A higher growth would, in turn, mean that the economy is likely to grow at closer to 8 per cent in 2023-24, higher than the NSO’s assessment.
- Further, the study projects growth for the next year (2024-25) at 7.4 per cent, higher than the RBI’s forecast of 7 per cent presented in the last monetary policy committee’s meeting. This is good news.
Subdued private consumption are still a cause of concern
- Despite this healthy momentum, private consumption remains subdued, growing at just around 3 per cent.
- There are pointers to a continuing unevenness in demand across various consumption segments.
- For instance, there are indications of the FMCG sector witnessing moderate growth, even as premium consumer businesses remain robust.
- This, as the study also points out, implies that there are “significant per capita income shifts underway”.
- On investment activity, while capital expenditure by governments, in both Centre and states, has been steady, and bank and corporate balance sheets are healthy, there are questions over a broad-based revival in private capex.
- More so, when the capacity utilisation rates in several segments have reached levels at which new investments are called for.
A peculiar case of inflation
- The study notes the divergence between food and core inflation.
- Food inflation had edged upwards to 8.66 per cent in February, while core inflation had moderated to 3.4 per cent as per estimates.
- Inflation remained elevated in cereals, eggs, vegetables and pulses, while it eased across various non-food and non-fuel segments.
- This poses a dilemma for monetary policy at a time when the global economy is losing steam.
Conclusion: According to the report, the momentum in global growth slowed down in the first quarter of 2024, the global supply chain pressures index saw an uptick, and geopolitical risks remain heightened. This uncertain economic environment requires deft policy management.
Topic 2 : Delhi to Begusarai
Introduction: For more than a decade, studies and reports have shone unflattering light on the quality of air Indians are exposed to. A recent study has shown that the problem of bad air quality has reached small tier cities in India.
World Air Quality Report 2023
- The World Air Quality Report 2023, published by the Swiss organization IQAir, highlights significant findings on global air pollution levels.
- India ranks as the third-worst country globally for air quality, with an average annual PM2.5 concentration of 54.4 micrograms per cubic meter, trailing behind Bangladesh and Pakistan.
- Bangladesh is listed as the world’s most polluted country, with an average PM2.5 concentration of 79.9 micrograms per cubic meter; Pakistan follows, with a concentration of 73.7.
- For the fourth consecutive year, Delhi has been identified as the most polluted capital city globally.
- Begusarai in Bihar is named the world’s most polluted metropolitan area.
- Among the top 11 most polluted cities worldwide, 10 are in India, with Lahore, Pakistan, being the exception.
- Approximately 96% of India’s population is exposed to PM2.5 levels exceeding the WHO’s annual guideline by more than seven times.
Attention must be given to small cities in India
- The challenge has largely been framed in terms of a crisis of big city governance.
- Delhi’s difficulties in bringing down particulate matter (PM) to manageable levels have, in particular, posed difficult questions to planners and civic agencies.
- The Swiss pollution monitoring body IQAir’s latest report shows that the problem continues to be intractable in India’s capital.
- Despite a slew of measures in the last two years, Delhi’s PM 2.5 levels have worsened to 92.7 micrograms per cubic metre in 2023 from 89 micrograms per cubic metre in 2022.
- But the report also speaks of a larger emergency which, though acknowledged in policy circles, doesn’t always get adequate attention.
- The Swiss agency’s analysis shows that unhealthy air is a bane not only for people in Tier 2 cities such as Guwahati or Patna, it has assumed crisis proportions in relatively smaller urban centres such as Rohtak in Haryana, Meerut in Uttar Pradesh and Begusarai in Bihar — the last is the worst ranked according to IQAir.
The report lacks information about the polluting factors of India’s small cities
- Delhi’s air quality derives from the city’s geography, the transport-related choices of its residents, industrial and construction activities and pollution in the city’s neighbourhood, especially crop stubble burning.
- A knowledge base on pollutants in some Tier 2 cities — Guwahati, for instance — is also building up steadily.
- However, air quality data generation has not kept pace with urbanisation in the country.
- There is scarcely any information on the pollution sources in most of the 83 Indian cities that are on IQAir’s list.
- Begusarai, for instance, reported a relatively less worrying PM 2.5 load of 20 micrograms per cubic metre in 2022.
- An immediate imperative, following the Swiss agency’s report, would be to find out how the city’s pollution burden shot up six times in less than a year.
How to tackle air pollution in India?
- Some mitigation measures should not be difficult to put in place.
- State pollution bodies, for instance, would do well to address their chronic staff shortage that hampers monitoring.
- The truism about India’s air pollution — over half of India’s PM 2.5 load is a cocktail of noxious gases — also offers cues.
- Pollutants from agriculture, industry, power plants, transport and households travel across cities and states.
- The National Clean Air Programme, therefore, rightly emphasises targeted interventions in airsheds — localities in cities or contiguous small urban and rural centres — whose geography or meteorology constrains them from dispersing pollutants.
- Such solutions require coordination between local, state and Central agencies.
Conclusion: A new report shows that small Indian cities are as vulnerable to air pollution as metros -- it should be a wake-up call. As the growth stories of India is shifting to the small towns, so is the pollution also. A coordination between local, state, and Central agencies is required to tackle the air pollution problem in India.