Q1. Amidst rising concerns over soaring food prices, analyze the measures taken by the government to enhance vigilance and control the inflationary pressures on essential commodities. Evaluate the effectiveness of these measures in addressing the challenges posed by food price volatility in the Indian economy. (15 marks, 250 words)
Topic- Inflation:
Introduction:
The Indian economy has been grappling with the issue of soaring food prices, leading to inflationary pressures on essential commodities. This has raised concerns among policymakers, consumers, and the government alike. To address these challenges, the government of India has taken various measures to enhance vigilance and control inflationary pressures on essential commodities.
Body :
- Rising Food Inflation
- Implication of High Food Inflation in India
- Measures Taken by Government to Control Price Rise
- Effectiveness of These Measures
- Way Forward
Conclusion :
The measures taken by the government of India have been effective in addressing the challenges posed by food price volatility in the Indian economy. However, the government needs to continue monitoring the situation closely and take timely action to prevent excessive price increases. Overall, the government’s efforts to enhance vigilance and control inflationary pressures on essential commodities have been commendable, and they have helped in maintaining price stability and promoting economic growth in the Indian economy.
UPSC Syllabus Inflation:
Why was this question asked?
Q. There is also a point of view that agriculture produce market committees (APMCs) set up under the state acts have not only impeded the development of agriculture but also have been the cause of food inflation in India. Critically examine. [UPSC 2012]
Introduction
The Indian economy has been grappling with the issue of soaring food prices, leading to inflationary pressures on essential commodities. This has raised concerns among policymakers, consumers, and the government alike. To address these challenges, the government of India has taken various measures to enhance vigilance and control inflationary pressures on essential commodities.
Body Status :
Rising Food Inflation
- Consumer food price index inflation remained stubbornly sticky and elevated – at 9.5% in December 2023.
- The long-term trend for food inflation in India has followed a U-shaped path over the past two decades, with a clear reversal of a declining trend starting in the early 2000s.
- High international prices of food commodities, such as edible oils, have contributed to food inflation in India, as the country imports 60% of its edible oils demand
- Domestic supply disruptions, such as excessive heat in summer and uneven rainfall, have affected the farm sector, reducing supply and causing prices of some major products to rise.
- An increase in the prices of services has also contributed to the rise in retail inflation in India due to supply chain disruptions
- High minimum support prices for a few agricultural products have distorted the agri-market development in India, leading to skewed food inflation.
- Poor development of the agri-processing industry has led to high wastages contributing to high food inflation.
Implication of High Food Inflation in India
- According to a report by the Food and Agriculture Organization (FAO), an estimated 74% of the population in India cannot afford a healthy diet.
- High inflation can hinder economic growth by reducing consumer confidence and affecting investment decisions.
- High food inflation can lead to food insecurity for a significant portion of the population, particularly for the poor and vulnerable sections.
- Poor nutrition due to high food prices can have long-term health implications, affecting overall human development and well-being.
- Persistent food inflation can lead to social unrest and political instability, as it directly impacts the daily lives of citizens.
Measures Taken by Government to Control Price Rise
- The government has set up 140 new price monitoring centers to keep a close watch on wholesale and retail prices of essential commodities. Prices are being monitored at 550 centers on a daily basis, which helps in insulating consumers from price rise.
- The government has banned exports of wheat, broken rice, non-basmati white rice, and onions to control domestic prices and ensure adequate supply. It has also created buffer stocks of essential commodities to ensure a steady supply in the market. [ECA]
- The government intervenes in the market by selling essential commodities at subsidized prices to control prices. For example, the government sells Bharat Dal at Rs 60 per kg and Bharat Atta at Rs 27.50 per kg to provide relief to the common man.
- The government has reduced import duties on edible oils and pulses to boost domestic supply and control price rise.
- The government has taken measures to protect consumers from unfair trade practices. It has set up consumer courts at the national, state, and district levels to resolve consumer disputes.
- Digitization and Aadhaar seeding of PDS beneficiaries are being undertaken to reduce leakages and improve targeting.
- Initiatives such as the Pradhan Mantri Fasal Bima Yojana (PMFBY) and the Soil Health Card scheme aim to improve farm yields and income stability for farmers.
Effectiveness of These Measures
- The government’s vigilance measures have had a mixed impact on inflation, with food inflation remaining high in some periods.
- While interventions such as buffer stock management have helped stabilize prices, other factors such as supply chain disruptions and global price trends have also influenced inflation.
- Despite efforts to enhance monitoring, challenges in the supply chain continue to affect the availability and affordability of essential commodities.
- Issues such as transportation bottlenecks, storage constraints, and seasonal fluctuations in supply remain major challenges.
- Implementation challenges, such as coordination issues between central and state governments, have hindered the effectiveness of some measures.
Way Forward
- The government should continue to enhance monitoring and surveillance of food prices to identify and address instances of hoarding and speculation
- development of the agri-processing market is needed to improve productivity and reduce post-harvest losses.
- Changes in MSP regime to improve the production of nutri-cereals as well as prevent distorted foodgrains production
- Implementing recommendation of Dalwai committee about creating demand driven agri-market.
- Farm mechanization, Agri-credit improvement and reducing wastages and leakages by strengthening PDS is also needed.
Conclusion
The measures taken by the government of India have been effective in addressing the challenges posed by food price volatility in the Indian economy. However, the government needs to continue monitoring the situation closely and take timely action to prevent excessive price increases. Overall, the government’s efforts to enhance vigilance and control inflationary pressures on essential commodities have been commendable, and they have helped in maintaining price stability and promoting economic growth in the Indian economy.
Q2. Analyze the role of the Competition Commission of India (CCI) in regulating Artificial Intelligence (AI) in the Indian economy, and evaluate these measures in addressing the challenges posed by AI in terms of competition, efficiency, and innovation. (15 marks, 250 words)
Topic- Artificial Intelligence (AI):
Introduction
Artificial Intelligence (AI) is transforming the Indian economy by rewriting norms and changing the way we interact with the world. The impact of AI is likely to be significant, affecting every facet of life, and has the potential to be the start of the next technological revolution. With this transformation, there are calls for governmental regulation, and the Competition Commission of India (CCI) is at the forefront of regulating AI in the Indian economy. The CCI has the jurisdiction to regulate deceptive and unfair business practices and enforce the laws and regulations governing consumer protection, competition, and efficiency in the AI sector.
Body
- CCI and its role
- Regulation of AI by CCI
- Global Best Practices and Studies
- Challenges
- Way Forward
Conclusion
The effectiveness of the CCI’s measures will be crucial in ensuring a level playing field for all stakeholders and promoting responsible AI deployment. Continued engagement, collaboration, and proactive enforcement will be key to addressing the evolving challenges and opportunities in the AI landscape. The CCI’s role in regulating AI is a testament to its commitment to protecting consumer interests and promoting a dynamic and competitive market environment in the Indian economy.
UPSC Syllabus Artificial Intelligence (AI):
Why was this question asked?
Q. The World Bank and the IMF, collectively known as the Bretton Woods Institutions, are the two inter-governmental pillars supporting the structure of the world’s economic and financial order. Superficially, the World Bank and the IMF exhibit many common characteristics, yet their role, functions and mandate are distinctly different. Elucidate. [UPSC 2013]
Introduction:
Artificial Intelligence (AI) is transforming the Indian economy by rewriting norms and changing the way we interact with the world. The impact of AI is likely to be significant, affecting every facet of life, and has the potential to be the start of the next technological revolution. With this transformation, there are calls for governmental regulation, and the Competition Commission of India (CCI) is at the forefront of regulating AI in the Indian economy. The CCI has the jurisdiction to regulate deceptive and unfair business practices and enforce the laws and regulations governing consumer protection, competition, and efficiency in the AI sector.
Body
CCI and its role
- The CCI is tasked with enforcing the Competition Act, 2002, to prevent activities that may have an adverse effect on competition in India.
- The CCI enforces competition laws to prevent anticompetitive behavior in the AI sector, such as abuse of dominance and cartelization.
- It investigates mergers and acquisitions involving AI companies to prevent market monopolization and maintain competition.
- Addressing collusive practices and price-fixing agreements in AI-driven markets to ensure fair competition.
- Monitoring AI applications to prevent unfair practices that could harm consumer choice and market competition.
- Collaborating with other regulatory bodies to ensure a coordinated approach to AI regulation and enforcement.
Regulation of AI by CCI
- The CCI has issued guidelines and frameworks to address competition concerns arising from AI adoption.
- Accurate definition of relevant markets, particularly in AI-impacted sectors, has been emphasized by the CCI.
- Vigilance in identifying and penalizing anti-competitive practices facilitated by AI, such as price fixing and market allocation, is a priority for the CCI.
- The CCI has directed Google in the Google search bias case to ensure that its search algorithms do not discriminate against certain websites.
- Steps to enhance capacity to deal with complex competition issues related to AI, including training programs and collaboration with experts, are being undertaken by the CCI.
Global Best Practices and Studies
- The EU-U.S. Trade and Technology Council (TTC)’s Working Group of AI Standards released a Joint Roadmap on Evaluation and Measurement in December 2022.
- The Global Partnership on Artificial Intelligence (GPAI), a multistakeholder initiative housed at the OECD, aims to bridge the gap between theory and practice on AI.
- Standardization work is also ongoing within the International Organization for Standardization (ISO), such as the Standardization in the area of Artificial Intelligence
- The government of India has taken steps to regulate AI, with a pro-innovation approach and the development of policies and guidelines that acknowledge the potential risks and benefits of AI.
- India is also a member of the Global Partnership on Artificial Intelligence (GPAI) and is working on developing draft Indian standards for AI
Challenges
- The complex nature of AI technology requires specialized expertise, which may be lacking within the CCI.
- AI’s reliance on data raises concerns about data privacy and protection, which fall outside the CCI’s purview.
- The rapid evolution of AI technology makes it challenging for regulatory frameworks to keep pace with new developments.
- AI operates across borders, posing enforcement and coordination challenges with international regulatory bodies.
- Striking a balance between regulating AI to ensure fair competition and fostering innovation is a delicate task for the CCI.
Way Forward
- Collaborating with other regulatory bodies and industry stakeholders to develop comprehensive regulatory frameworks for AI.
- Investing in building capacity to understand and regulate AI-driven markets effectively.
- Developing flexible and adaptable regulatory frameworks to accommodate AI’s rapidly evolving nature.
- The CCI should work with other Indian agencies, such as the Ministry of Electronics and Information Technology and the Bureau of Indian Standards, to develop policies and guidelines that acknowledge the potential risks and benefits of AI.
- Actively engaging with industry stakeholders and experts to develop regulations that balance competition and innovation.
Conclusion
The effectiveness of the CCI’s measures will be crucial in ensuring a level playing field for all stakeholders and promoting responsible AI deployment. Continued engagement, collaboration, and proactive enforcement will be key to addressing the evolving challenges and opportunities in the AI landscape. The CCI’s role in regulating AI is a testament to its commitment to protecting consumer interests and promoting a dynamic and competitive market environment in the Indian economy.