The Hindu Editorial Notes or Summary

GS-2 Mains

QUESTION: In spite of challenges, India’s international relations with respect to European Union demonstrate willingness for a more creative commitment. Analyse



  • India and EU Relationship


  • A high-level ministerial dialogue to boost trade and investment relations, commitment to remove trade hurdles and expand market access are part of the new broad-based strategic partnership adopted between India and the EU recently.


  • The European Union (EU) is an economic and political union of 28 member states that are located primarily in Europe. European Union has launched a single European currency – the Euro. The EU and European citizenship were established when the Maastricht Treaty came into force in 1993.
  • The capital of the European Union is Brussels, Belgium.


  • Promote peace, values and the well-being of all citizens of EU.
  • Offer freedom, security and justice without internal borders
  • Sustainable development based on balanced economic growth and price stability, a highly competitive market economy with full employment and social progress, and environmental protection
  • Combat social exclusion and discrimination
  • Promote scientific and technological progress
  • Enhance economic, social and territorial cohesion and solidarity among EU countries.
  • Respect its rich cultural and linguistic diversity
  • Establish an economic and monetary union whose currency is euro.


  • EU a natural partner for India: A partnership between the two is required for maintaining global peace and stability.
  • Covid-19: In the wake of the Covid-19 pandemic, new economic challenges have emerged on a global scale and more cooperation between democratic nations was the need of the hour.
  • Relieve pressures on the rules-based international order: Through economic and human-centric development brought forward by the partnership.


  • Both aim to enhance strategic autonomy and their global standing.
  • Diversifying strategic value chains is also a common interest.
  • Both seek to address the issue of climate change on an urgent basis.


  • The EU is India’s largest trading partner accounting for €80 billion worth of trade in goods in 2019.
  • This is equal to 11.1% of total Indian trade.
  • The EU is also the biggest foreign investor, with €67.7 billion worth of investments made in 2018.
  • Which is equal to 22% of total FDI inflows.


  • India could succeed in attracting EU investment that might be moving out of China.
  • To attract this outflowing investment, India must address the mutual trust deficit.
  • Enhanced business cooperation can help both the EU and India diversify their strategic value chains.
  • Increasing people’s mobility and connectivity is another area that can create opportunities for innovation and growth.


  • Both sides need to move further on the Free Trade Agreement.
  • A new study from the European Parliament estimates the impact of an EU-India trade agreement between €8 billion and €8.5 billion.
  • The study also mentions additional potential gains from enhanced coordination on the provision of global public goods, such as environmental standards.


  • Under the new industrial strategy, the Green Deal, the EU has set an ambitious target to be carbon-emission neutral by 2050.
  • If the EU and India succeed in transforming into carbon-neutral economies by 2050, we all would gain from the investment.


  • The Indo-Pacific region is becoming contentious, so India should capitalise on its geopolitical leverage there.
  • Cooperation with like-minded, democratic powers can support this effort, especially towards assertive competitors like China.
  • The EU as a whole offers more to India than the strongest bilateral relations with individual EU member state.
  • New Delhi must learn how to maximise benefits from this strategic partnership.
  • The disruption caused by COVID-19 has been the occasion for the EU to prove its worth.
  • “Next-generation EU proposal” submitted by the European Commission has economic as well as geopolitical implications.
  • The proposal shows that the ties that bind the EU extend well beyond treaties and individual members’ self-interest.
  • The EU champions the rules-based international order, so the EU and India must act to promote sustainable reform of multilateral institutions starting from the WTO.


  • The lack of finalization of the FTA between India and the EU is a concern.
  • EU-India trade has to benchmark themselves with the best rates of growth in the world. Obviously, Chinese and USA examples need to receive greater attention.
  • The major challenge is in cutting the red tape in with respect to policy dialogue between the two nations. EU and India have missed the larger picture by limiting themselves to sectors and sub-sectors of trade .


  • A need for comprehensive trade agreement that brings in strong rules, removes barriers to trade in goods and services and investments and opens up free markets.
  • Addressing the mutual trust deficit, facilitating people’s mobility and connectivity can improve mutual understanding.
  • Enhanced business cooperation between EU and India can diversify their strategic value chains and reduce economic dependency — notably on China.
  • With India’s vast drug manufacturing capabilities and the EU’s technical expertise, a partnership between the two for the exchange of ideas, innovations, and capabilities in the health sector will benefit both regions.
  • India and the EU can also cooperate over ICT, which could help India to build strategic autonomy in the digital sphere .



GS-3 Mains

QUESTION: Define inflation and its all factors and examine important steps taken by GOI to fulfil its target.





  • Rising prices despite the depressed demand



  • The June Retail inflation at 6.1% has raised some alarming bells in the economic circles of the country as it is above RBI’s permissible limits of 2-6 %.


  • Inflation refers to the rise in the prices of most goods and services of daily or common use, such as food, clothing, housing, recreation, transport, consumer staples, etc.
  • Inflation measures the average price change in a basket of commodities and services over time.
  • The opposite and rare fall in the price index of this basket of items is called ‘deflation’.
  • Inflation is indicative of the decrease in the purchasing power of a unit of a country’s currency. This could ultimately lead to a deceleration in economic growth.
  • However, a moderate level of inflation is required in the economy to ensure that production is promoted.


Measurement of Inflation in India

 Wholesale Price Index WPI

  • It is the most widely used inflation indicator in India.
  • Published by the Office of Economic Adviser, Ministry of Commerce and Industry.
  • All transactions at the first point of bulk sale in the domestic market are included.
  • Major criticism for this index is that the general public does not buy products at wholesale price.
  • The base year of All-India WPI has been revised from 2004-05 to 2011-12 in 2017.


Consumer Price Index CPI

  • It measures price changes from the perspective of a retail buyer.
  • It measures changes over time in the level of retail prices of selected goods and services on which consumers of a defined group spend their incomes.

 Four types of CPI are as follows:

  1. CPI for Industrial Workers (IW).
  2. CPI for Agricultural Labourer (AL).
  3. CPI for Rural Labourer (RL).
  4. CPI (Rural/Urban/Combined).


  • Of these, the first three are compiled by the Labour Bureau in the Ministry of Labour and Employment. Fourth is compiled by the Central Statistical Organisation (CSO) in the Ministry of Statistics and Programme Implementation.
  • Base year is 2011-12



  • The data is worrisome as June is the first month in which the unlock process was initiated in a phased manner.
  • Further the cause of worry is the depressed demand among the consumers which may take the nation towards stagflation in near future which involves experiencing a simultaneous increase in inflation and stagnation of economic output.
  • As per Consumer Price Index data prices of food and beverages rose 7.3% on a year on year basis, which is a huge rise despite distress sales by farmers of fruits and vegetables.
  • Transport and Communication also posed a 7.1% rise owing to persistent rise in domestic oil price.
  • While employers are set to cut jobs to cope with decreasing demand, companies also plan to raise selling prices over the next year to protect profitability.


  • Researcher IHS Markit’s latest India Business Outlook survey released on Monday paints a dismal picture with sentiment having turned negative in June for the first time in the 11 years since it began polling businesses in the country, and firms reporting a steep drop in confidence.
  • Significantly, the survey shows that while employers are set to cut jobs to cope with faltering demand, companies also plan to raise selling prices over the next 12 months to protect profitability.


  • The rapid and timely onset of the monsoon in June, with higher rainfall, does offer some reassurance.
  • If the rains sustain the early momentum and cover the key agrarian heartland adequately, the prospects for a bountiful harvest and a resultant moderation in food prices later in the year are bright.
  • Still, for now, vegetable prices are reported to be surging and providers of goods and services are exploring ways to protect their businesses financially from the weak demand.
  • Steel companies recently announced they were raising prices in response to rising costs related to iron ore and the COVID-19 pandemic.
  • Significantly, the survey shows that while employers are set to cut jobs to cope with faltering demand, companies also plan to raise selling prices over the next 12 months to protect profitability.


  • The recent sustained increase in fuel prices is expected to feed through into higher costs for transporting farm produce and it is therefore hard to envisage food prices softening, at least in the near term.
  • Timely and evenly spread monsoon can give some respite to farmers and to inflation levels.
  • With inflation already above the RBI’s 6% target upper bound, monetary policy makers face a very difficult choice where a further rate cut to help revive economic momentum may put the economy on the path of stagflation.

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