Current Affairs – 1 December 2021

Economy Grows 

Indian Express

GS 3: Economy


  • Recently, the government released the economic growth data for the second quarter — July, August and September — of the current financial year.


  • India’s GDP (measures economic activity from the demand side by looking at the expenditures made by different sections of the society) was 8.4% more than it was in the same quarter last year.
  • India’s GVA (measures economic activity from the supply side by looking at the value added by different sectors of the economy) was 8.5% more than it was in the same quarter last year.
  • Indian economy, much like most other economies, suffered a massive contraction in the last financial year (2020-21), it is better to avoid looking at growth rates and instead look at absolute levels of economic activity.
  • Doing so allows for a better understanding of where the economy stands vis-a-vis the pre-Covid level.

Private Consumption:

  • It accounts for 55% of all GDP and is the biggest engine of growth.
  • This year, it grew by 8.6% over Q2 of last year.
  • But this growth was inadequate because in Q2 last year, private consumption expenditure contracted by more than 11%.
  • Private consumption in Q2 this year was significantly lower than it was in the same quarter two years ago. In simple terms, people spent less this year than they did in the same quarter two years ago.


  • It is the second biggest engine of GDP growth, accounting for 33% of all GDP.
  • In Q2, it grew handsomely by 11%, easily overhauling the contraction of 8.6% last year.
  • In fact, firms made more investments in this Q2 than in any Q2 over the last five years.
  • This shows that firms were optimistic about India’s economic recovery.

Government’s expenditures

  • Barring last year which was an exceptional year, it is the lowest in five years.
  • This shows that at a time when private demand is struggling to recover, the government has not been able to plug the gap.

Takeaways from the GVA data:

GDP = (GVA) + (Taxes earned by the government) — (Subsidies provided by the government)

  • GVA tells us about the overall health of the economy and it also tells us which sectors are struggling and which are leading the recovery.
  • Again, absolute data is the better way to assess growth this year. While the GVA in all sectors is better than it was in Q2 of last year.
  • Four key sectors that play a great part in creating fresh jobs are still below the levels achieved in 2019 or before.
  • These are Mining & Quarrying; Construction and Services such as trade, hotels; and all the financial services.
  • Lower GVA levels would imply lower incomes for those employed in these sectors as well as lower employment opportunities in them.

Growth rate:

  • The Indian economy clocked a healthy growth rate of 8.4% in July-September, the second quarter of financial year 2021-22, primarily on the back of a low base but aided by increased vaccination and an uptick in agriculture, public administration and defence services sectors.
  • The RBI had projected a growth rate of 7.9% in Q2 this year.
  • In absolute terms, the GDP at constant prices at Rs 35.73 lakh crore was 0.33% higher than the pre-pandemic levels of Q2, 2019-20, indicating the economy has recovered the ground lost due to Covid-19. Barring construction, all industry segments posted a higher output level than Q2, 2019-20.
  • While higher vaccine coverage and fuel duty cuts are likely to boost confidence and spur demand, economists flagged concerns over a durable recovery once the base effect starts waning in the third quarter onward, rising higher prices.
  • The uptick in exports in Q2 was encouraging. However, going ahead this will remain contingent upon global recovery.

Policy implications:

  • It is indeed a matter of relief to Indians that the economy is recovering from the recession it went into in Q2 of 2020.
  • However, two data points put the recovery in perspective. One, India’s recovery is still fledgling. A V-shaped recovery would have required the Q2 GDP and GVA to be much higher. It may take another two years to cross those levels.
  • Two, if we consider the first two quarters (or the first half) of the current financial year, then both GVA and GDP are around 3.5% and 4.5%, respectively, lower than the first half-year of 2019.
  • The key policy concern from GDP data is the threat to future business investments if private consumption remains weak or constrained. If the latter does not recover fast, the former will likely lose momentum because inventories of unsold goods will build up.
  • Typically, when such a mismatch happens, it is expected for governments to spend aggressively and boost overall demand. That doesn’t seem to be happening at present and this will likely slow down the recovery.
  • What the GVA data shows is that several contact-intensive services are struggling to recover levels set in the pre-Covid years. With the threat of another variant — Omicron— it is imperative to ensure sustained policy relief to such sectors.


Cyclone Alert: Jawad

DTE and India Today

GS 1: Geographical phenomenon


  • The India Meteorological Department (IMD) has generated its first alert for the formation of Cyclone Jawad.
  • The cyclone is likely to reach the Andhra Pradesh-Odisha coasts on the morning of December 4, 2021.


  • Tropical cyclones are formed only over warm ocean waters near the equator. When warm, moist air over the ocean rises upward from near the surface, a cyclone is formed.
  • When the air rises up and away from the ocean surface, it creates an area of lower air pressure below.
  • It causes the air from surrounding areas with higher pressure to move towards the low-pressure area which further leads to warming up of the air and causes it to rise above.
  • As the warm, moist air rises and cools the water in the air forms clouds. The complete system of clouds and wind spins and grows, along with the ocean’s heat and water evaporating from the ocean surface.
  • As the wind system rotates with increasing speed, an eye gets formed in the middle. The centre of a cyclone is very calm and clear with very low air pressure. The difference of temperature between the warm, rising and the cooler environment causes the air to rise and become buoyant.
    1. When the winds speed is 39 mph (63 kmph), the storm is called a “tropical storm”.
    2. Whereas when the wind speed reaches 74 mph (119 kmph), the storm is officially a “tropical cyclone” or hurricane.


Well-being of Street Food Vendors


Prelims Fact


  • Ministry of Skill Development and Entrepreneurship (MSDE) announced to skill the street vendors of East Delhi and make them eligible for e-cart licenses, improving the hygiene conditions in food preparation and aesthetics of vending.


  • The initiative will be implemented under the Recognition of Prior Learning (RPL) component of Pradhan Mantri Kaushal Vikas Yojana (PMKVY) 3.0.

  • The objective of this programme is to provide relevant skills to the Street Food Vendors, leading towards better services to consumers, more opportunities to vendors for revenue generation, awareness on regulations and stipulated rules, in return providing better services to the local bodies.
  • India is land to 55 Lakh Street Food Vendors, their contribution to the informal economy is 14% which is not a small number and highlights the important role played by them in India’s economy.
  • Further, this initiative will also provide social security and safety to 4,000 vendors of East Delhi and 25 lakh street vendors, nationally.
  • The project will be implemented by the Tourism and Hospitality Sector Skill Council (THSSC) and training partners of NSDC.
  • The two training partners recommended by THSSC are Learnet Institute of Skills and Tata STRIVE.
  • The vendors will also be supported with loans under the Mudra Scheme.
  • A counselling session conducted by the Training Partners (TPs) intends to provide clarity to candidates on their skill competencies, aptitude, interests, opportunities, and structure of the itinerary for next 4-5 days.
  • To compensate the candidates for income loss during the training, NSDC will ensure that they complete the training of 32 hours and spend about 8 hours a day on training.
  • The programme will be customised as per their requirements which would mean limited number of hours for training, as per their convenience, selection of a suitable location for training and taking support of related NGOs and MCD for motivation and counselling. Training Partners will be the primary agency to address the issues.