What does the GDP deflator mean? In what ways does it differ from other inflation indexes like the WPI and CPI?
The regional effects of climate change are influenced not only by an increase in greenhouse gases but also by air pollution, land-use pattern, and local climatic events. The Indian subcontinent,between Himalayas and Indian Ocean, is subject to higher climate variability compared to continental climaRead more
The regional effects of climate change are influenced not only by an increase in greenhouse gases but also by air pollution, land-use pattern, and local climatic events. The Indian subcontinent,between Himalayas and Indian Ocean, is subject to higher climate variability compared to continental climates of North America and Europe, owing to physiography, climate, and population.
Impact of climate change on the Indian subcontinent region
- Temperature: Average temperature over the Indian region has risen by 0.7°C during 1901- 2018 which has led to increased frequency of heat waves, such as in Bihar and Telangana. The region of Hindukush Himalayas (HKH) underwent rapid warming at a rate of 0.2°C per decade during the last 6-7 decades, leading to significant decline in snowfall and glacial areas.
- Sea-level rise in the North Indian Ocean (NIO): Thermal expansion due to rising sea surface temperature (SST) has led to sea-level rise in the NIO at a rate of 3.3 mm per year during 1993- 2017. The New Moore island near Sundarbans got submerged due to rise in sea level.
- Rainfall: The frequency of localized heavy rainfall has increased by 75% from 1950-2015. The changing rainfall patterns is argued to be leading to changes in monsoon onset and retreat dates, resulting in lengthening of the monsoon season.
- Extreme weather events:
- Floods: Increased frequency of localized, short-duration intense rainfall events have caused more flooding incidents. Indus, Ganga, and Brahmaputra basins are particularly at risk of intense flooding.
- Droughts: Overall decrease in summer monsoon rainfall in the last 6-7 decades have led to an increased frequency and spatial extent of droughts.
- Tropical Cyclonic Storms: Reduction in tropical cyclones while increased frequency of very severe cyclonic storms (VSCSS) over NIO region in the post-monsoon season has been observed during 1951-2018.
Steps taken by India towards combating and adapting to climate change
- Intended Nationally Determined Contributions (INDCs): India INDCs to be achieved by 2030, under the Paris Agreement, include:
- Reduce the emissions intensity of the GDP by about a third.
- Generate 40% of the installed capacity for electricity from non-fossil fuel sources.
- Create an additional carbon sink of 2.5 to 3 billion tonnes of carbon dioxide equivalent through additional forest and tree cover.
- National Action Plan on Climate Change (NAPCC): It was launched in 2008 and includes 8 national missions, which represent multi-pronged, long term and integrated strategies for achieving key goals in climate change.
- Climate Change Action Program (CCAP): It was launched for strengthening capacity for climate change assessment, establishing institutional framework, and implementing climate actions at central and state levels.
- National Adaptation Fund on Climate Change: It was established in 2015 to meet the cost of adaptation to climate change for the State and Union Territories of India that are particularly vulnerable to the adverse effects of climate change.
- Satellite technology: India is also coordinating with other countries such as France to use satellite technology like Megha-Tropiques (to understand water cycle and energy exchanges in tropics) and Oceansat3-Argos mission.
Further, the government has also undertaken measures like National Electric Mobility Mission Plan (NEMMP) 2020, issuing Green bonds, adoption of BS-VI norms. Energy Conservation Building Code, National Biofuel Policy, Renewable Purchase Obligation, among others.
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The GDP deflator is the ratio of the value of goods and services an economy produces in a particular year at current prices, to that, at prices prevailing during any other reference (base) year. GDP deflator = (Nominal GDP/Real GDP)*100 This ratio basically shows to what extent an increase in GDP inRead more
The GDP deflator is the ratio of the value of goods and services an economy produces in a particular year at current prices, to that, at prices prevailing during any other reference (base) year. GDP deflator = (Nominal GDP/Real GDP)*100 This ratio basically shows to what extent an increase in GDP in an economy has happened on account of higher prices, rather than increased output. Hence, it is a good measure of inflation. For example: if an economy has a nominal GDP of $100 billion and has a real GDP of $80 billion, the economy’s GDP price deflator can be calculated as ($100 billion / $80 billion) x 100, which equals to 125. This means that the aggregate level of prices have increased by 25 percent from the base year to the current year. Other than GDP deflator, there are various indices such as Wholesale Price Index (WPI), Consumer Price Index (CPI), Producer Price Index (PPI), Commodity Price Index, Cost of Living Index, Capital Goods Price Index etc. that are used to measure inflation. But WPI and CPI are widely used indices to calculate inflation all over the world.
Differences between the GDP deflator, CPI and WPI are as follows:
In India, WPI was used as a key measure of inflation for a long time, but now CPI is ation for being used for the same, as it covers services and also measures inflation from consumers’ end instead of manufacturers’ end.
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