Greedflation and its counter arguments, how consumers ultimately decide prices (GS Paper 3, Economy)
Context:
- Progressives in the United States have accused corporate greed as a major reason for the historically high price inflation in the U.S. since the pandemic.
What is greedflation theory of inflation?
- Greedflation refers to price inflation caused by corporate greed for high profits.
- The proponents of the idea of greedflation argue that corporate profit margins have risen significantly since the pandemic even though the larger economy has struggled and that this has contributed to high inflation.
- They contend that the U.S. corporations have allegedly increased the prices of their goods by more than what was necessary to compensate for higher input costs caused by supply-chain bottlenecks.
Questioning the narrative:
- Many economists have questioned the validity of the argument that corporate thirst for higher profits is the cause behind inflation.
- They see greedflation as a political narrative built around the issue of inflation rather than as a serious economic explanation of high inflation since the pandemic.
- Economists who disagree with the greedflation narrative argue that businesses, whether they are large corporations or small companies, cannot arbitrarily set prices as many people seem to erroneously believe.
- Businesses set prices for their products based on what consumers would be willing to pay for these products.
Primacy of consumers:
- Moreover, inflation refers to a general rise in the price level (meaning a widespread rise in the prices of goods and services across the broader economy) rather than in the prices of individual goods and services.
- The only way corporations can influence the overall price level is by reducing the supply of goods and services. There is, however, no evidence to suggest that there has been a deliberate reduction in the output of U.S. corporations recently.
- Even if corporations cut down their output, the drop in output is likely to be temporary as other suppliers would rush to meet the demand.
- It is thus extremely unlikely that U.S. corporations caused prices to rise across the board in recent years by somehow adversely influencing the aggregate supply of goods.
Causes for high inflation in the US:
- The current bout of high inflation in the U.S., most economists believe, is much better explained by the U.S. Federal Reserve’s expansionary monetary policy during the pandemic which put more money in the hands of U.S. consumers, who in turn have bid up the prices of goods and services in the economy.
- The U.S. money supply rose by a whopping 40% in the wake of the pandemic and this combined with supply-chain bottlenecks caused by stringent lockdowns led to high inflation.
Subset of Cost-push inflation:
- Greedflation has been compared to other theories of “cost-push” inflation which attribute inflation to a rise in input costs.
- For example, in the past, a rise in the wages demanded by workers has been blamed for the rise in the prices of goods and services. In the case of greedflation, it is the rise in the corporate thirst for profits that is seen as a cost that is driving up prices.
- A criticism of the cost-push theory of inflation has been that it ignores the fact that the cost of producing any good is itself determined indirectly, but ultimately, by consumers. The cost of inputs, which can be used towards different alternative ends of society, is determined by competitive bidding in the market.
Centre announces scheme to support minor rape victims
(GS Paper 2, Social Justice)
Why in news?
- Recognising the trauma faced by minor rape victims, the Union government has decided to provide medical, financial and infrastructure support to victims in cases where the sexual assault results in pregnancies.
Implementation of special scheme:
- The special scheme, announced by the Women and Child Development Ministry (WCD), would operate under the aegis of the Nirbhaya Fund and an amount of ₹74.1 crore has been allocated.
- It have additionally leveraged the administrative structure of Mission Vatsalya in collaboration with State governments and Child Care institutions (CCIs) to actualise this support to minor victims.
Background:
- Mission Vatsalya, launched in 2021, is focused on the protection and welfare of children.
- In 2021, the National Crime Records Bureau reported 51,863 cases under the Protection of Children from Sexual Offences (POCSO) Act. Out of these, 64% cases were reported under Section 3 and 5 (penetrative sexual assault and aggravated penetrative sexual assault, respectively).
Fast track courts:
- The government had already accelerated access to justice for minor victims of rape by establishing 415 POCSO fast track courts in the country.
Integrated support:
- This additional support would be available at the level of CCIs up to the age of 18 and thereafter up to the age of 23 in aftercare facilities.
- In many of these cases, girls become pregnant and bear several physical and mental health concerns, which are further aggravated when they are disowned or abandoned by their own families or are orphans.
- This scheme aims to provide integrated support to girl child victims under one roof, facilitate immediate, emergency and non-emergency access to a range of services.
DoT Launches Bharat 6G Alliance to Drive Innovation and Collaboration in Next-Generation Wireless Technology
(GS Paper 3, Science and Technology)
Why in news?
- Recently, the Ministry of Communications announced, formation of the Bharat 6G Alliance (B6GA), a collaborative platform consisting of public and private companies, academia, research institutions, and Standards development organizations.
- B6GA will forge coalitions and synergies with other 6G Global Alliances, fostering international collaboration and knowledge exchange.
Agreements under TTDF:
In addition, with a grant of 240.51 crores under the Telecom Technology Development Fund (TTDF), two agreements were signed for projects,
- 6G THz Testbed with Orbital Angular Momentum (OAM) & multiplexing through consortium of SAMEER, IIT Madras, IIT Guwahati and IIT Patna
- Advance Optical Communication Test Bed with Consortium Members as IIT Madras, IIT Delhi, Indraprastha Institute of Information Technology (IIIT) Delhi, Signalchip Innovations, Signaltron Systems Pvt Ltd, Sasmos het Technologies Ltd, SFO Technologies Pvt. Ltd, ERNET India, Quanfluence Private Ltd, Sterlite Technologies Limited, Nav tech, Tejas network.
Background:
About Bharat 6G Alliance (B6GA):
- The primary objective of B6GA is to understand the business and societal needs of 6G beyond technology requirements, foster consensus on these needs, and promote high-impact open research and development (R&D) initiatives.
- B6GA aims to bring together Indian startups, companies, and the manufacturing ecosystem to establish consortia that drive the design, development and deployment of 6G technologies in India.
- By accelerating standards-related patent creation within the country and actively contributing to international standardization organizations such as 3GPP and ITU, B6GA seeks to position India at the forefront of 6G innovation.
- One of the key goals of B6GA is to facilitate market access for Indian telecom technology products and services, enabling the country to emerge as a global leader in 6G technology.
About Telecom Technology Development Fund (TTDF):
- Telecom Technology Development Fund (TTDF) scheme was launched by DoT/USOF on 1st October 2022. 5% of annual collections from USOF will be available for TTDF Scheme for funding research & development of technologies, products, and services.
- The scheme is envisaged to bridge digital divide by developing and manufacturing state-of-the-art technologies and to form synergies among academia, start-ups, research institutes, and the industry to build and develop the telecom ecosystem
- The Telecom Technology Development Fund (TTDF) scheme entails grants to Indian entities to encourage and induct indigenous technologies tailor-made to meet domestic needs.
- Under the TTDF scheme, USOF, DoT is also targeting to develop standards to meet countrywide requirements and create the ecosystem for research, design, prototyping, use cases, pilots, and proof of concept testing, among others.
