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Indian Express 12th April 2020

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1)Skewflation:-Economists usually distinguish between inflation and a relative price increase.

Inflation’ refers to a sustained, across-the-board price increase, whereas ‘a relative price increase’ is a reference to an episodic price rise pertaining to one or a small group of commodities.

This leaves a third phenomenon, namely one in which there is a price rise of one or a small group of commodities over a sustained period of time, without a traditional designation. ‘Skewflation’ is a relatively new term to describe this third category of price rise.

Example :- In India, food prices rose steadily during the last months of 2009 and the early months of 2010, even though the prices of non-food items continued to be relatively stable.

2)Market Intervention Scheme (MIS):-

Market Intervention Scheme (MIS) is a price support mechanism implemented on the request of State Governments for procurement of perishable and horticultural commodities in the event of a fall in market prices.

The Scheme is implemented when there is at least 10% increase in production or 10% decrease in the ruling rates over the previous normal year.

Market Intervention Scheme works in a similar fashion to Minimum Support Price based procurement mechanism for food grains, but is an adhoc mechanism.

Its objective is to protect the growers of these horticultural/agricultural commodities from making distress sale in the event of bumper crop during the peak arrival period when prices fall to very low level. Thus it provides remunerative prices to the farmers in case of glut in production and fall in prices.

3)Explained: As Trump accuses China over WTO status, a look at the trade body’s rules:- President Donald Trump has accused China of taking advantage of the US through the World Trade Organisation (WTO), saying that if Beijing is considered a ‘developing country’, the US should be called one too.

How does WTO classify developed and developing countries?

The WTO doesn’t define countries as ‘developing’ or ‘developed’. Member nations themselves are required to declare which category they fall under. However, these declarations can be challenged by other member nations.

Over two-thirds of WTO’s 164 member countries are developing countries.

Advantages of a ‘developing country’ status

Some WTO agreements give developing countries special benefits and rights, which are referred to as “special and differential treatment provisions”. These provisions include a longer time period for implementing agreements and commitments or measures to increase trading opportunities for developing countries.

Should China still be classified as a developing nation?

China became a WTO member in 2001, the organisation’s 143rd. As per a WTO document noting its performance from the time of accession to the organisation till 2011, China became the second-largest economy in GDP terms, the first largest merchandise exporter, the fourth largest commercial services exporter and the first destination for inward FDI among developing countries.

So, should it still be called ‘developing’?

WTO answers this question by quoting the former director of South Centre, Martin Khor who said the following, “So if China is forced to take on the duties of a developed country and forego the benefits of a developing country, the West could soon ask other developing countries that are ahead of China (at least in per capita terms) to do the same.

Meanwhile, China has maintained that it will not give up its rights as a developing country.

 

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