Content:

1. High base effect
2. The dystopian side of Insta-commerce

High Base Effect

Overview of India’s Trade Performance (February 2024)

• Exports fell by 10.9% to $36.91 billion.
• Imports dropped by 16.3% to $50.96 billion.
• Trade deficit narrowed to $14 billion, the lowest in 42 months.
• The decline in both exports and imports signals economic distress, rather than a positive trade balance shift.

Relevance : GS 3(Economy ,Trade and Commerce)

Practice Question :Analyze the recent decline in India’s trade performance in February 2024. To what extent can the high base effect explain this trend? Suggest policy measures to mitigate structural trade issues. (250 words, 15 marks)

High Base Effect & Its Role in the Decline

• February 2024 was a leap year, leading to higher exports ($41.4 billion) and imports ($60.92 billion).
• The base effect makes this year’s decline appear more pronounced.
• However, structural trade issues persist beyond just statistical comparisons.

U.S. Trade Policy & Its Impact on Exports

• U.S. importers delaying orders due to upcoming reciprocal tariffs (effective April 2) announced by Donald Trump on February 13.
• The U.S. accounts for $118.3 billion in total trade with India and is the only major trading partner with which India has a trade surplus.
• Ongoing Bilateral Trade Agreement (BTA) negotiations between India and the U.S. have not yielded immediate solutions.

Declining Imports: Gold & Oil as Major Contributors

• Gold imports plunged by 62% due to domestic gold prices soaring to ₹87,886 per 10 grams, reducing consumer demand.
• Oil imports fell nearly 30%, driven by:
  • U.S. sanctions on Russian oil (January 2024).
  • India’s diversification of crude suppliers post-Ukraine war.
  • Russia’s share in India’s crude imports rose from <1% (2022) to >40% (2023) but faces uncertainties due to fresh U.S. actions.

Potential Consequences of U.S. Trade Policy Changes

• If the U.S. neutralizes its trade deficit with India:
  • India’s overall trade deficit could widen by 15%, based on last year’s $241 billion shortfall.
• This underscores the vulnerability of India’s trade dependence on the U.S..

Need for Trade Diversification

• China & U.K. as alternative markets:
  • China accounts for nearly a third of India’s trade deficit for over five years.
  • Trade imbalance with the U.K. is much smaller (<3% of India’s deficit).
  • FTA negotiations with the U.K. present an opportunity for India to reduce trade imbalances and increase exports.

Strategic Takeaways

• The shrinking trade deficit is not a positive sign as it stems from a drop in both exports and imports.
• High base effect explains part of the decline, but external factors like U.S. tariff policies, oil sanctions, and gold price surges have played a major role.
• India must reduce trade reliance on the U.S. and expand markets in the U.K. and China while ensuring a more sustainable trade balance.

The dystopian side of Insta-commerce

Context :The Digital Replication of Labour Exploitation

• The traditional mazdoor mandi (labour market) has been replicated in the digital world.
• Just as middlemen (thekedaars) auction labour at the lowest possible price in physical markets, gig platforms have digitized this exploitation.
• Workers are isolated, preventing collective bargaining, making them more vulnerable.
• Algorithms ensure maximum profit extraction, leaving workers with no negotiating power.

Relevance : GS 2(Social Issues) , GS 3(Trade and Commerce , Economy)

Practice Question :Insta-commerce represents the digital replication of labour exploitation in the gig economy. Discuss the ethical and economic challenges posed by this trend. What steps should the government take to ensure fair wages and worker security in platform-based employment? (250 words, 15 marks)

Insta-commerce: A New Low in Labour Exploitation

• The gig economy, originally marketed as a flexible and empowering model, has now been further degraded with services like “Insta Maids”.
• House help for ₹49 an hour is symbolic of modern digital slavery, where workers are reduced to mere commodities.
• The rating system adds to the indignity, forcing workers to seek approval instead of fair wages.
• Consumer convenience blinds society to the real costs borne by workers—long hours, no benefits, and degrading conditions.

Legislative Attempts and Corporate Pushback

• Rajasthan passed progressive legislation for gig workers, aiming to provide:
  • Social security framework for piece-rate workers.
  • Access to real–time data on their earnings.
  • Independent grievance redressal mechanisms.
• However, powerful corporate lobbies—NASSCOM, CII, and startup founders—oppose these rights.
• The Karnataka government has stalled similar legislation, bowing to business interests despite earlier promises.

The Double Standard of Platform Economy Leaders

• Startups publicly claim to “empower workers”, while privately lobbying against protective laws.
• Example: Urban Company’s founder supported anti-worker policies while promoting “financial security and dignity” on LinkedIn.
• The gig economy has moved beyond exploitation to institutionalized modern slavery, where companies maximize profits while externalizing all worker welfare costs.

The Need for Stronger Worker Protections

• The fightback has begun, with workers demanding:
  • Rights over ratings (“Rating nahi, haq chahiye!”)
  • Dignity over exploitation (“Insaan hai hum, ghulaam nahi!”)

• Governments must listen to workers, not just corporations, and implement:
  • Legally enforceable minimum wages for gig workers.
  • Transparent algorithms that do not manipulate earnings.
  • Job security measures, including protection from arbitrary de-platforming.

Conclusion

• Insta-commerce is a dangerous evolution of the gig economy, prioritizing profits over worker dignity.
• Without urgent legislative intervention, digital platforms will continue to undermine labour rights under the guise of technological progress.
• The struggle for fair wages, security, and dignity in the gig economy must continue to prevent the digital economy from becoming a modern-day sweatshop.