{"id":142286,"date":"2021-10-21T19:43:32","date_gmt":"2021-10-21T14:13:32","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=142286"},"modified":"2021-10-25T08:45:45","modified_gmt":"2021-10-25T03:15:45","slug":"the-need-of-systems-thatll-help-tackle-a-crisis-rather-than-deny-it","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/the-need-of-systems-thatll-help-tackle-a-crisis-rather-than-deny-it\/","title":{"rendered":"The need of systems that\u2019ll help tackle a crisis rather than deny it"},"content":{"rendered":"\n

Synopsis<\/strong>: There is a frequent economic crisis in India like coal, onion, petrol, etc. This needs immediate attention for preventing it.<\/p>\n

Introduction<\/h5>\n

India has a history of economic crisis. For instance, In 2006-07, India had a wheat crisis, onion and tomato crisis appeared almost every year. The prices increase in horticulture directly impacts the Consumer Price Index (CPI).<\/p>\n

The auto sector has been buffeted by a global shortage of chips. Then there is a constant issue associated with the crude oil prices.<\/p>\n\n\n\n
Read more<\/strong>: Need of Indigenous Semiconductor Manufacturing Facilities in India \u2013 Explained Pointwise<\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
Why the coal crisis is unique?<\/h5>\n

The coal story is quite unique. India has one of the highest reserves of coal and theoretically, India can mine as much as the country want. But when there is a shortage, it is not just about the price of coal going up, it will also cause collateral damage to the Wholesale Price Index. The problem can also translate into a power-generation crisis as companies run out of feedstock.<\/p>\n

But ever during the crisis, the economy did not have any major shock and inflation targets are met constantly.<\/p>\n\n\n\n
Read more<\/strong>: Coal crisis in India \u2013 Explained, pointwise<\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
How the inflation targets are met without any major economic impact?<\/h5>\n

This is due to a lot of fine-tuning done by the Reserve Bank of India (RBI)<\/strong>, and having a monetary policy<\/a> review every two months ensures constant monitoring.<\/p>\n

Similarly, under the Budget<\/a> and its implementation, there are certain departments that track revenue and expenditure to spot deviations and ensure there are no economic shocks at the end of the year.<\/p>\n

Why did RBI and government fail to spot the economic crisis?<\/h5>\n

There is not enough attention<\/strong> to prior detection<\/strong> of the crisis. For instance, before the escalation of the supply crisis in coal, the government and RBI failed to realise that the monsoon rains are not favourable for the industry.<\/p>\n

The same holds for horticulture also. The horticulture department does not detect prior that the late withdrawal of the monsoon is deleterious to the onion crop.<\/p>\n

What has to be done to prevent an economic crisis?<\/h5>\n

Not import only when there is a significant shortfall<\/strong>: There should be economic thresholds in place for ministries to fast-track imports automatically based on availability rather than cost. That threshold should be used again to bring back import restrictions automatically.<\/p>\n

Improve market intelligence capability<\/strong>: All ministries should formally have an intelligence cell that monitors minute developments on a regular basis and put plans in place for corrective action before a crisis gets entrenched.<\/p>\n

Market intelligence and import mechanisms can be combined by the government to make sure that no situation of scarcity goes out of control.<\/p>\n

Source:<\/strong> This post is based on the article \u201cThe need of systems that\u2019ll help tackle a crisis rather than deny it<\/strong>\u201d published in\u00a0Live mint <\/strong>on\u00a021st October<\/strong>\u00a02021<\/strong>.<\/p>\n

Terms to know<\/strong>:<\/p>\n