Roadmap for Answer Writing Introduction (Brief Explanation of Inflation Targeting) Define inflation targeting as a monetary policy strategy where the central bank sets a specific inflation rate as its goal. Mention its significance in providing economic stability, boosting confidence, and aiding long-term planning ...
Model Answer Manufacturing industries in India are influenced by several critical factors, which determine their location: Raw Material: Industries that use weight-losing raw materials, such as steel and iron, are typically located near the source of these materials, like coalfields (e.g., Bokaro, DRead more
Model Answer
Manufacturing industries in India are influenced by several critical factors, which determine their location:
- Raw Material: Industries that use weight-losing raw materials, such as steel and iron, are typically located near the source of these materials, like coalfields (e.g., Bokaro, Durgapur) and iron ore deposits (e.g., Bhadravati, Bhilai).
- Market: Proximity to large consumer markets is crucial for industries like heavy machinery and chemicals. Cities like Mumbai, Surat, and Ahmedabad host cotton textile industries, while petroleum refineries are located near coastal areas for easy access to ports.
- Specialized Labor: Availability of skilled labor in urban centers supports industries requiring such expertise, fostering the growth of sectors like electronics, pharmaceuticals, and engineering.
- Power: Energy is essential for industries like cement, iron and steel, and semiconductors. Proximity to reliable power sources influences industrial placement.
- Transport: With the expansion of railway lines and highways, industries have shifted from metro cities to interior regions for better accessibility.
- Government Policies: Initiatives like Special Economic Zones (SEZs) and Mega Food Processing Parks attract industries to specific regions through incentives and support.
- Historical Factors: Colonial-era industries and European trade routes have influenced the early industrial development in certain areas.
Key Industrial Regions in India
- Mumbai-Pune Region: Known for textiles, petroleum, pharmaceuticals, and electronics, among others.
- Hugli Region: Famous for jute, paper, and petrochemical industries.
- Bengaluru-Tamil Nadu Region: Key industries include textiles, rail wagons, engineering goods, and pharmaceuticals.
- Gujarat Region: A hub for cotton textiles, petrochemicals, and chemicals, with easy access to ports.
- Chotanagpur Region: Located near coal and iron ore reserves, it hosts heavy industries like steel, cement, and power.
- Vishakhapatnam-Guntur Region: Known for shipbuilding, petroleum refining, and light engineering industries.
- Gurugram-Delhi-Meerut Region: Focuses on light, market-oriented industries like electronics, textiles, and machine tools.
- Kollam-Thiruvananthapuram Region: Relies on agriculture and hydropower, with industries such as textiles, sugar, and rubber.
These factors and regions demonstrate how economic, geographical, and policy-driven elements shape the distribution and growth of manufacturing industries in India.
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Model Answer What is Inflation Targeting? Inflation targeting is a monetary policy framework where a country's central bank commits to maintaining inflation within a specified range. This target is usually expressed as a percentage change in the Consumer Price Index (CPI). The goal of inflation targRead more
Model Answer
What is Inflation Targeting?
Inflation targeting is a monetary policy framework where a country’s central bank commits to maintaining inflation within a specified range. This target is usually expressed as a percentage change in the Consumer Price Index (CPI). The goal of inflation targeting is to create a stable economic environment that encourages long-term planning and investment, promotes lender confidence, and provides a predictable inflation rate, which benefits both public and private entities.
Inflation Targeting Framework in India
India adopted the inflation targeting framework through the Inflation Targeting Agreement of 2015, which was solidified by the Amendment of the RBI Act in 2016. Under this framework, the Reserve Bank of India (RBI) targets a 4% inflation rate, with an upper and lower tolerance band of 2%. The Monetary Policy Committee (MPC), which is responsible for setting interest rates and making monetary policy decisions, follows specific protocols to ensure the inflation target is met.
Key provisions of the RBI Act (2016) include:
Additionally, there is an escape clause in the framework, which allows the RBI to exceed the inflation target under exceptional circumstances, such as during a crisis like the COVID-19 pandemic, where it might lower interest rates to stimulate the economy.
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