The Hindu Editorial Analysis- 19th January, 2022 | Current Affairs: Daily, Weekly & Monthly - CLAT PDF Download

1. Inflation Conundrum: High Price Rise Trends could continue in 2022, Compounding the Challenge for Policy Makers

Page 6/Editorial
GS 3- Economy

Context: The latest official data suggest industrial output is stuttering with a meagre 1.4% growth in November.

• More worryingly, inflation is re-emerging as a threat — retail prices surged to a five-month high of 5.6% in December from 4.9% in November.
• While urban India continued to record a higher incidence of price rise at over 5.8%, inflation faced by rural consumers was at 5.36% — the steepest pace since July 2021.
• A dozen States clocked higher inflation than the headline 5.6% level, with half of them recording well over India’s stated inflation tolerance threshold of 6%, led by Haryana and Tamil Nadu with an over 6.6% print.

Causes of High Inflation

• Low base effects that pushed up inflation in food and beverages, and higher clothing and footwear prices. 
• Fuel prices moderated after excise duty cuts in November, but this may not sustain for long as average prices for India’s crude oil basket are now at around $84. For now, retail fuel prices have remained static, but this may have more to do with the unstated tendency of not effecting such hikes in the poll season.
• Inflation in wholesale prices: it came off a record high of 14.2% in November to touch 13.6%, staying above double digits for the ninth successive month.
  • Economists believe that the persistent gap between wholesale and retail inflation, now at eight percentage points, does not augur well for price stability ahead.
  • Producers coping with high commodity prices and input costs will have to find ways to pass them on to consumers, feeding into retail inflation and squeezing household budgets further.

Some Respite

• The deferral of a higher GST on textiles, and softening food and vegetable prices this month, may help rein in some of these pressures, but there are other headwinds.
• By Monday, yields on government bonds had hit a two-year high which could upset the fiscal math over time.

Challenges

• For industry, inflation is a critical obstacle to higher consumption and growth impulses as the new virus mutations and the third wave — which by itself is expected to further stoke retail prices.
• It acts as a hidden tax on the poor and the middle classes, but is also a potentially permanent wrecking ball for future spending capacity (and growth) amid a damaged job market.
• To farmers: Higher fuel and fertilizer prices would affect the costs.

Conclusion
The Government, through its statement of intent in the Budget, and the RBI, which has noted that the waning of inflation spiralling across geographies may ‘take longer’ than expected and will review its monetary policy stance next month, need to communicate their inflation game plan to soothe expectations.

2. The Houthi Attack on the United Arab Emirates: Who are the Houthis? What is the Underlying Conflict Threatening Regional Stability?

Text & context - I
GS 2- IR

Context: A suspected drone attack on Monday in Abu Dhabi, the capital of the United Arab Emirates (UAE), caused multiple explosions in which three people were killed —two Indians and one Pakistani.

• The Shia Houthi rebels of Yemen, who have been controlling the northern parts of the country, including the capital Sana’a, for almost seven years, have claimed responsibility for the attack.
• While the UAE hasn’t confirmed the Houthi claims, its officials said to the media that the explosions were caused by a suspected drone attack.
• On Tuesday, the Saudi-led coalition that is fighting the Houthis in Yemen, launched air strikes on Sana’a.

The Houthis Movement

• The roots of the Houthi movement can be traced to “Believing Youth” (Muntada al-Shahabal-Mu’min), a Zaydi revivalist group founded by Hussein al-Houthi and his father, Badr al-Din al-Houthi, in the early 1990s.
• Badr al-Din was an influential Zaydi cleric in northern Yemen.
• Inspired by the Iranian revolution of 1979 and the rise of Hezbollah in southern Lebanon in the 1980s, Badr al-Din and his sons started building vast social and religious networks among the Zaydis of Yemen, who make up roughly one-third of the Sunni-majority country’s population.
• The Zaydis are named after Zayd Bin Ali, the great grandson of Imam Ali, Prophet Mohammed’s cousin and son-in-law who Shias, Sunnis and Zaydis revere.
  • Zayd Bin Ali had led a revolt against the Ummayad Caliphate in the eighth century.
  • He was killed, but his martyrdom led to the rise of the Zaydi sect.
  • While the Zaydis are seen part of the Shia branch of Islam, both in terms of theology and practice, they are different from the ‘Twelver’ Shias of Iran, Iraq and Lebanon.
• The Modern Zaydi Monarchy: For centuries, the Zaydis were a powerful sect within Yemen. After the collapse of the Ottoman Empire in 1918, the Zaydis would establish a monarchy (the Mutawakkilite Kingdom) in the country.
  • But their dominance would come to an end in 1962 when the Egypt-backed republicans overthrew the monarchy. 
  • When Badr al-Din al-Houthi and his son Hussein launched the Believing Youth, the plan was to reorganise the Zaydi minority.
  • But when the movement turned political and started attacking the “corrupt” regime of Ali Abdullah Saleh and his support for the U.S.’s war on terror, it became a thorn on Saleh’s side. They called themselves Ansar Allah (Partisans of God), mobilised tribesmen in the north against the Government and chanted “Death to America”.
  • In 2004, Saleh’s government issued an arrest warrant against Hussein al-Houthi. In September, the Government troops attacked the rebels and killed Hussein. But it only strengthened the Houthis, who, by 2010, when a ceasefire was reached, had captured Sa’dah from the Government troops.

Cause of Rise of Houthis

• When protests broke out in Yemen in 2011 as part of the Arab Spring protests that felled Tunisian and Egyptian dictators, the Houthis, now confident from their military victories and the support they enjoyed in Sadah,backed the agitation.
• President Saleh, a Zaydi who was in power for 33 years, resigned in November, handing the reins to his deputy, Abdrabbuh Mansur Hadi, a Saudi-backed Sunni.
• He started a national dialogue to resolve internal differences. The Houthis were part of the dialogue.
  • But they fell out with the transitional Government of Mr. Hadi, claiming that the proposed federal solution, which sought to divide the Zaydi-dominated north into two land-locked provinces, was intended to weaken the movement. They soon got back to insurgency.

Why did Saudi Arabia Attack Yemen?

• Saudi Arabia saw Houthis as Iranian proxies. Saudi Arabia, under the new, young Defence Minister, Mohammed Bin Salman, started a military campaign in March 2015, hoping for a quick victory against the Houthis.
• But the Houthis had dug in, refusing to leave despite Saudi Arabia’s aerial blitzkrieg. With no effective allies on the ground and no way-out plan, the Saudi-led campaign went on with no tangible result.
• Attacks in recent years
  • In the past six years, the Houthis have launched multiple attacks on Saudi cities from northern Yemen in retaliation for Saudi air strikes. 
  • In 2019, the Houthis claimed the attack on two Saudi oil installations that knocked out, briefly, half of the kingdom’s oil output (the Houthi claim was disputed by experts and governments, who said the attack was too sophisticated for the rebels to carry out. The U.S. has blamed Iran).
• The Houthis have established a Government in the north. The Supreme Political Council, headed by its President, Mahdi al-Mashat, is the executive branch of their rule. Abdul-Malik al-Houthi, Hussein’s brother, leads the movement. There are serious allegations against both the Saudis and the Houthis in the war.
• While the Saudi bombings caused a large number of civilian deaths, the Houthis were accused, by rights groups and Governments, of preventing aid, deploying forces in densely populated areas and using excessive force against civilians and peaceful protesters.

Attack against UAE

• This is not the first time the Houthis attacked the UAE.
• In 2018, when the UAE-backed forces were making advances in Yemen, the Houthis claimed attacks against the Emirates.
• Since then, the UAE pulled out its troops from Yemen and offered tactical support to the Southern Transitional Council, a group of rebels based in Aden, that was also fighting the Saudi-backed Government forces of President Hadi.
• By flying armed drones undetected all the way from northern Yemen to the Gulf coast, either across Saudi Arabia or through the Gulf of Oman, and carrying out attacks on Abu Dhabi, the second most populous city in the tiny UAE, the Houthis appear to have sent a clear message to the Emiratis — stay out of Yemen or face more attacks.