THE HINDU Editorial Vocabulary-December 15, 2016- Topic 1
That the Centre’s decision to withdraw
high-denomination banknotes was going to impact economic activity in the short
term was never in doubt. But the specific contours of the effects were probably
a lot less understood at the time of that announcement. The deflationary shock
has manifested itself in a deceleration in retail inflation, as demand for a
range of goods and services has been damped. That the headline Consumer Price
Index-based gauge hit a two-year low of 3.63 per cent for November is therefore
no surprise, especially given the additional factor of a favourable base effect
— the reading was 5.41 per cent in November 2015. The major contributor to the
slowdown in price gains was the food and beverages group, where inflation eased
to 2.56 per cent largely on the back of a slump in the prices of vegetables, a
highly perishable commodity. But a closer look at the food group throws the
spotlight on some trends that the Reserve Bank of India had flagged in its
latest monetary policy review as areas of concern. Specifically, the prices of
sugar and confectionery accelerated by 22.4 per cent while meat and fish and
egg also reflected persistently elevated levels. The services sectors,
including transport and communication and education, also manifested
stickiness, underscoring the rationale for the RBI’s cautious approach in
keeping benchmark interest rates unchanged.
Clearly, signals from the inflation data
pose a conundrum before policymakers. With demand impulses taking a
wide-ranging knock from the shortage of cash in the hands of consumers,
proponents of policy accommodation would argue that the time is ripe for the
RBI to cut borrowing costs to help impart some credit-fuelled economic
momentum. But as the RBI’s Monetary Policy Committee itself articulated it on December
7, “while discretionary spending on goods and services in the CPI excluding
food and fuel” could have been affected by restricted access to cash, the
prices of those items may weather the transitory effects since they are
normally revised according to preset cycles. More importantly, the MPC
cautioned that food inflation pressures could re-emerge as a consequence of
disruptions in agricultural activity as a result of the currency withdrawal.
The spectre of upward price pressures from key components including food and
fuel — OPEC’s output cuts are already pushing up crude oil — combined with the
fading away of a favourable base effect could leave the RBI with little wiggle
room to support growth. With the central bank’s March 2017 target for retail inflation
of 5 per cent clearly in their sights, the monetary authorities may be
persuaded to keep the powder dry.
Vocabulary
Contours: an outline, especially one representing or bounding the
shape or form of something.
Example: She traced the contours of his face with her finger
Synonyms: outline, shape, form, lines, curves, figure, silhouette, profile
Deflationary: of, characterized by, or
tending to cause economic deflation.
Example: There are always inflationary and deflationary spots in an economy at the
same time.
Manifested: display or show a quality or
feeling by one's acts or appearance; demonstrate.
Example: Ray manifested signs of severe depression
Synonyms: display, show, exhibit, demonstrate, betray, present, reveal
Damped: control or restrain a feeling or a state of affairs.
Example: She tried to damp down her feelings of despair
Gauge: estimate or determine the magnitude, amount, or volume
of.
Example: Astronomers can gauge the star's intrinsic brightness
Synonyms: measure, calculate, compute, work out, determine, ascertain, count
Beverages: a drink, especially one other than water.
Example: In this country each individual is free to decide whether or not to drink
alcoholic beverages .
Synonyms: drink, liquid refreshment, libation, potation
Perishable: things, especially foodstuffs,
likely to decay or go bad quickly.
Example: Imagine how much easier food storage and transportation would be if
perishables didn't have to be refrigerated.
Confectionery: candy and other sweets
considered collectively.
Example: These are eaten locally, either as dessert nuts or in chocolate and
confectionery.
Conundrum: a confusing and difficult problem or question.
Example: One of the most difficult conundrums for the experts
Synonyms: problem, difficult question, difficulty, quandary, dilemma, poser
Proponent: a person who advocates a theory, proposal, or project.
Example: A collection of essays by both critics and proponents of graphology
Synonyms: advocate, champion, supporter, backer, promoter, protagonist, campaigner
Disruption: disturbance or problems that
interrupt an event, activity, or process.
Example: The schedule was planned to minimize disruption
Wiggle: move or cause to move up and down or from side to side
with small rapid movements.
Example: Stasia wiggled her toes
Synonyms: jiggle, wriggle, twitch, shimmy, joggle, wag, wobble, shake, twist
Persuade: cause someone to do something through reasoning or
argument.
Example: It wasn't easy, but I persuaded him to do the right thing
Synonyms: prevail on, coax, convince, get, induce, win
over, bring around, coerce
