8 April 2026 Current Affairs for UPSC

Why in News?

The ongoing Iran war has triggered concerns of energy supply disruptions and rising oil prices, reviving the fears of stagflation. The present situation resembles the 1970s oil crisis, which pushed major economies into prolonged stagflation.

What is Stagflation?

• Stagflation is an economic condition characterised by the simultaneous occurrence of slow economic growth (stagnation), high unemployment, and high inflation. 
• Stagflation typically arises from negative supply shocks. A negative supply shock refers to an unexpected event that reduces the supply of goods and services in an economy, leading to higher prices (inflation) and lower output (stagnation). E.g., War, Pandemic, Natural disasters, closure of critical shipping routes (e.g., Strait of Hormuz) and Energy crises.

Stagflation in the Past & the factor driving it:

• During the 1970s, most Western countries experienced prolonged stagflation, driven by the oil supply shock.
  • In 1973, the OPEC (Organisation of Petroleum Exporting Countries) imposed an embargo against the US in retaliation for providing military support to Israel. As a result, global oil prices and petrochemicals skyrocketed. Higher operational costs for businesses reduced profitability and productivity while dramatically increasing the cost of goods and services. Consumer spending fell significantly, and many businesses had to downsize due to decreasing demand. The US economy entered a period of stagflation.
• The current crisis is considered more dangerous than the 2008 global financial crisis or the 2022 Russia-Ukraine shock, because it combines both:
  • Price shock (sharp rise in oil prices)
  • Supply shock (risk of disruption in the availability of oil, gas and petrochemicals)

What would be the impacts of Stagflation on the economy?

Global Impacts:

• Reduced investment
• Decline in global trade
• Currency volatility
• Stock market instability
• Rising unemployment

Impacts on India: 

India is highly vulnerable due to– High oil import dependence (~85%), LPG and other petrochemical feedstocks. High import dependence on Urea and Di-ammonium phosphate (Agriculture sector)

• Risk of non-linear outcomes in the economy (Energy crisis → sudden stoppages in industrial activity → unemployment → inflation → Financial Market Collapses)
• Inflation pressure on food prices
• Pressure on the rupee
• Increased Current Account Deficit (CAD)

What is the challenge in addressing Stagflation?

• Traditional fiscal and monetary tools are designed to manage demand; they are seen to be ineffective against stagflation, which is primarily a supply-side phenomenon. Additionally, the duration of supply shocks matters as much as their magnitude.
• Traditional policy tools are ineffective in dealing with stagflation:
  • Tightening monetary policy (increasing interest rates) to fight inflation typically slows down growth and thus increases unemployment.
  • Expansionary fiscal measures (increasing government spending and reducing taxation) to boost growth will increase demand, but as supply is constrained, it may accelerate inflation. 
• Hence, stagflationary periods like the 1970s tend to be prolonged and difficult to resolve. 

Way Forward:

• Short-Term Measures: Strategic petroleum reserves utilisation, Temporary tax cuts on fuel, Targeted subsidies for vulnerable sectors, efforts towards war de-escalation and restoring the broken supply chains. 
• Long-Term Structural Reforms: Energy transition towards renewables, reducing import dependence on fossil fuels, Domestic manufacturing push, Strategic trade partnerships and Technological innovation (AI, efficiency improvements). 

UPSC PYQ 2021

Q. With reference to Indian economy, demand-pull inflation can be caused/ increased by which of the following?

1. Expansionary policies

2. Fiscal stimulus

3. Inflation-indexing wages

4. Higher purchasing power

5. Rising interest rates

Select the correct answer using the code given below.

(a) 1, 2 and 4 only

(b) 3, 4 and 5 only

(c) 1, 2, 3 and 5 only

(d) 1, 2, 3, 4 and 5

Answer: (a) 

UPSC PYQ 2015

Q. With reference to inflation in India, which of the following statements is correct?

(a) Controlling inflation in India is the responsibility of the Government of India only

(b) The Reserve Bank of India has no role in controlling inflation

(c) Decreased money circulation helps in controlling inflation

(d) Increased money circulation helps in controlling inflation

Answer: (c) 

UPSC Mains PYQ 2024

Q. What are the causes of persistent high food inflation in India? Comment on the effectiveness of the monetary policy of RBI to control this type of inflation. 

Why in News?

The government is considering delimitation based on the 2011 Census to fast-track the implementation of the Women’s Reservation Act, 2023. Under the proposed amendments, the number of Lok Sabha seats will increase from 543 to 816, with 273 seats reserved for women.

Nari Shakti Vandan Adhiniyam (106th Constitutional Amendment Act 2023): 

• Reservation: The 106th CAA seeks to reserve 1/3rd of the total number of seats for women in the Lok Sabha, State Legislative Assemblies, and the Delhi Legislative Assembly, including seats reserved for SCs and STs. 
• Sunset Clause: The reservation is initially for 15 years, which may be extended by Parliament.
• Implementation Condition: Such a quota will apply only after 2029, once the delimitation exercise following the latest Census concludes.
• Rotation of Seats: Seats reserved for women will be rotated after every delimitation exercise.
• Excluded Bodies: Does not apply to Rajya Sabha or State Legislative Councils. 

Significance of Women’s Reservation: 

• Addressing Gender Disparity: Addresses the low representation of women (roughly 15% in the 17th Lok Sabha) in Indian law-making bodies. Gender parity in governance and political participation is a prerequisite to the realisation of gender equality.
• Women-Led Development: Shifts the focus from mere women’s development to women-led development. Improves gender-sensitive policymaking. 

Possible Policy Shift:

Recent reports suggest that women’s reservations may be implemented earlier than expected.

• Delimitation may be conducted using the 2011 Census data. 
• Lok Sabha strength may increase from 543 to around 816 seats (~50% increase). 
• State Assemblies may also expand proportionately. 

Associated Challenges & Concerns:

• Use of Outdated Census Data: Basing women’s reservation on the 2011 Census is problematic. Rapid urbanisation, migration, and the after-effects of the COVID-19 pandemic have significantly reshaped population patterns, altering both urban and rural constituencies. Proceeding with outdated data risks misrepresenting current population realities.
• Delay possible demand for sub-quota: The upcoming Census may include caste enumeration beyond SC/ST categories. Inclusive women’s reservation might see likely demands of sub-quota for OBC women and representation for minority women. Delaying Census-based delimitation may postpone these demands temporarily.

Arguments against Women’s Reservation: 

• Restricted Electoral Choice: Reservation limits the pool of candidates in certain constituencies to women only, potentially constraining voter choice. Critics argue that with ~24% seats already reserved for SCs and STs in the Lok Sabha, adding 33% reservation for women could be a disproportionate representation of people’s wishes.
• Reinforce gender stereotype: Reservation will incentivise women to contest, predominantly in reserved constituencies, against other women candidates. This may further reinforce the existing gender stereotype. Women elected under quota systems can be perceived as less competent or qualified than those elected in open seats. 
• Issues with rotation of reserved constituencies: Rotation of reserved constituencies may reduce the incentive for the representatives to develop their constituency, as they may be ineligible to seek re-election from the same constituency. Frequent rotation may disrupt continuity and accountability.
• Does Not Address Structural Issues: Women’s reservation alone may not resolve deeper systemic problems, such as the criminalisation of politics, the lack of inner-party democracy, High campaign financing barriers and Limited political training opportunities for women. Thus, women’s representation may increase without improving the overall quality of democracy.
• Possible Elite Capture: Reserved tickets may be disproportionately given to women from established political families, dominant castes, or financially affluent groups, rather than empowering ordinary women. This can make the process look symbolic rather than transformative.
• Proxy Representation: Concerns about ‘sarpanch pati’ style proxies, where men may wield power on behalf of female representatives. 

Way Forward: 

• Use the latest census data (undergoing census) to ensure fair and updated representation of women in politics. 
• ​​Reservation in nomination: Make it mandatory for every recognised political party to nominate women candidates for election in at least 1/3rd of the constituencies.
• State funding of elections or subsidising the election expenditure of women candidates will encourage women’s participation in elections.
• Encourage Mahila Gram Sabha as it provides women with the playing field for garnering political experience, and create a pipeline of women leaders from local bodies to state and national politics. 
• Combat criminalisation of politics to improve the overall quality of democracy, and Gender sensitisation of political parties.  

UPSC Mains PYQ 2019

Q. The reservation of seats for women in the institutions of local self-government has had a limited impact on the patriarchal character of the Indian Political Process. Comment.