Civilsdaily

Subject: Economics

  • A Study of Budgets of 2024-25 (Fiscal Reforms by States) Report released by RBI

    Type:
    Subjects:
    GS Papers: ,
    Distribution: ,

    Why in the News?

    • According to the RBI report on state finances, India’s fiscal deficit has increased from 2.8% of GDP in FY22 to a projected 3.2% in FY24, signaling that fiscal consolidation is being side-lined in favor of increasing expenditure.
      • Capital expenditure (capex) has risen from 2.2% of GDP in FY23 to a budgeted 3.2% in FY24, indicating increased investment in assets for future growth.

    Fiscal position of the States as per the Report

    • Fiscal Deficit:
        • The Gross Fiscal Deficit (GFD) of states is projected to rise from 2.7% of GDP in FY2022-23 to 2.9% of GDP in FY2023-24.
        • This rise indicates that fiscal consolidation has been put on hold, with states continuing to spend more than their revenues.
        • Many states have budgeted for fiscal deficits above the 3% of GSDP mark, including Andhra Pradesh, Himachal Pradesh, Madhya Pradesh, and West Bengal, among others.
    • Revenue Expenditure:
        • Revenue Expenditure is expected to increase to 14.6% of GDP in FY2025, up from 13.5% in FY2024, indicating a rise in the current expenditure of states.
    • Capital Expenditure (Capex):
        • States have ramped up their capital expenditure (spending on creating assets), which has increased from 2.2% of GDP in FY2023 to 3.2% of GDP in FY2024.
        • This increase is in line with the government’s focus on infrastructure and long-term growth.
    • State Revenue:
        • State revenues are projected to increase from 13.3% of GDP in FY2024 to 14.3% in FY2025, driven by improved tax collections.
        • There has been a marked improvement in own tax revenue buoyancy compared to the pre-Covid period.
    • Debt-to-GDP Ratio:
        • The debt-to-GDP ratio for states has increased slightly to 28.8% in FY2024, from 28.5% in FY2023.
        • States with high fiscal deficits tend to have debt-to-GDP ratios above the national average, which suggests they have been sustaining deficits for a longer time.
    • Borrowing Trends:
        • States have shifted significantly towards market borrowings.
        • The share of market borrowings in financing the fiscal deficit has increased from 17% in 2005-06 to 79% in FY2024-25.
    • Recommendations:
      • The report suggests prudent management of subsidies, rationalization of centrally sponsored schemes, debt consolidation, and the adoption of climate and outcome budgeting to improve state fiscal health.

    PYQ:

    [2018] Consider the following statements:

    1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 60% for the general (combined) government by 2023, comprising 40% for the Central Government and 20% for the State Governments.
    2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments.
    3. As per the Constitution of India, it is mandatory for a State to take the Central Government’s consent for raising any loan if the former owes any outstanding liabilities to the latter.

    Which of the statements given above is/are correct?

    (a) 1 only
    (b) 2 and 3 only
    (c) 1 and 3 only
    (d) 1, 2 and 3

  • [pib] Comprehensive Telecom Development Plan

    Type:
    Subjects: ,
    GS Papers: ,

    Why in the News?

    The Comprehensive Telecom Development Plan for North Eastern Region (NER) funded from Digital Bharat Nidhi (DBN) aims to provide mobile coverage to uncovered villages and National Highways

    About the Comprehensive Telecom Development Plan (CTDP):

    Overview
    • CTDP aims to enhance telecommunications infrastructure in India’s North Eastern Region (NER) by improving mobile and broadband access.
    • The plan is funded by the Digital Bharat Nidhi (DBN) programme.
    Digital Bharat Nidhi (DBN):

    • Established under the Telecommunications Act, 2023.
    • Replaces the Universal Service Obligation Fund (USOF).
    • USOF was created to provide telecom services in remote and rural areas at affordable prices.
    • Funded by a 5% Universal Service Levy on the Adjusted Gross Revenue (AGR) of telecom operators.
    • Aimed to expand telecom networks in low-profit remote and rural areas.
    • Statutory Status: Granted in December 2003 through amendments to the Indian Telegraph Act (now superseded by the Telecom Act, 2023).
    Salient Features
    • Mobile Coverage Expansion: Extend mobile coverage to previously uncovered villages and National Highways in NER.
    • Enhanced Connectivity: Installation of 2,619 mobile towers, covering 3,223 villages and 286 highway locations.
    • 4G Saturation: Providing 4G connectivity to remote villages.
    • Support for Socio-Economic Development: Empower citizens through ICTs for development.
    • Digital Inclusion: Help bridge the digital divide in NER.
    Structural Mandate and Implementation
    • Funding: Primarily funded by the Digital Bharat Nidhi (DBN) programme.
    • Implementation: Coordinated through DBN-funded schemes focusing on mobile towers, 4G coverage, and broadband development.
    • Agencies Involved:
      • Ministry of Communication: Oversees implementation, ensures spectrum and policy approvals.
      • DBN: Provides funding and operational support.
      • Telecom Service Providers: Deploy infrastructure like towers and 4G networks.
      • State Governments of NER: Facilitate local implementation.
      • Project Management Agencies: Involved in setting up towers and maintenance.

     

    PYQ:

    [2018] Which of the following is/are the aims/aims of the “Digital India” Plan of the Government of India?

    1. Formation of India’s own Internet companies like China did.
    2. Establish a policy framework to encourage overseas multinational corporations that collect Big Data to build their large data centres within our national geographical boundaries.
    3. Connect many of our villages to the Internet and bring Wi-Fi to many of our schools, public places and major tourist centres.

    Select the correct answer using the code given below:

    (a) 1 and 2 only

    (b) 3 only

    (c) 2 and 3 only

    (d) 1, 2 and 3

  • Why the government could discontinue the sovereign gold scheme?

    Type:
    Subjects: ,
    GS Papers: ,
    Distribution: ,

    Why in the News?

    Sovereign gold bonds provide a safer and more cost-effective alternative to holding physical gold, as they reduce risks and storage expenses. However, the central government is considering discontinuing the SGB scheme.

    What is the Sovereign Gold Bond scheme?

    About GOI launched it on October 30, 2015.
    Structural Mandate Nodal Agency: Ministry of Finance;
    Issued by RBI on behalf of the GOI.
    Aims and Objectives To reduce dependence on gold imports and shift savings from physical gold to paper form.
    Targeted Beneficiaries Residents of India, including individuals, HUFs, trusts, universities, and charitable institutions.
    Funding Mechanism
    • The Sovereign Gold Bonds are issued by the Reserve Bank of India (RBI) on behalf of the Government of India. This ensures a sovereign guarantee for both the principal and interest payments.
    • The bonds are made available for subscription in tranches. The RBI notifies the terms and conditions for each tranche, including the subscription dates and issue price, which is based on the average closing price of gold of 999 purity published by the India Bullion and Jewellers Association (IBJA).
    • SGBs are sold through various channels, including scheduled commercial banks (excluding small finance banks), designated post offices, Stock Holding Corporation of India Limited (SHCIL), and recognized stock exchanges like NSE and BSE.
    Features
    • Sovereign gold Bonds are issued in 1-gram denominations with an 8-year tenure and early exit from the 5th year.
    • The minimum investment is 1 gram, a maximum 4 kg for individuals, and 20 kg for trusts.
    • Benefits include security, interest, and loan collateral.

    What are the concerns regarding sovereign gold bonds?

    • High Cost of Financing: The government perceives the cost of financing its fiscal deficit through SGBs as disproportionately high compared to the benefits provided to investors. This perception has led to a significant reduction in the issuance of SGBs, dropping from ten tranches annually to just two.
    • Limited Issuance in Current Financial Year: In the financial year 2024-25, no new sovereign gold bonds have been issued so far, and net borrowing through these bonds has been significantly reduced from previous estimates.
    • Market Competition from Physical Gold: The recent reduction in customs duty on gold from 15% to 6% has led to a surge in demand for physical gold. Investors may prefer holding physical gold over waiting for returns from debt securities like SGBs, which require maturity periods before realizing gains.

    What are the challenges due to the import of Gold?

    • Impact on Trade Deficit: Gold imports are a major contributor to India’s trade deficit, with a record $14.8 billion spent in November 2024, which weakened the rupee. Between 2016 and 2020, gold imports made up 86% of the country’s gold supply, leading to significant foreign exchange outflows and economic instability.
    • Encouragement of Smuggling: High import duties on gold have driven a rise in smuggling, with 65% to 75% of smuggled gold entering India through air routes. This illegal trade undermines government revenue and complicates market regulation.

    Way forward: 

    • Increase Liquidity and Accessibility: Similar to gold-backed ETFs in the U.S. and Gold Bullion Securities in Australia, India can enhance the liquidity of SGBs by allowing them to be traded on stock exchanges, providing easy access and better market engagement for investors.
    • Encourage Regular Investments: Drawing inspiration from Germany’s gold savings plans, India can introduce flexible investment options such as monthly or quarterly contributions, enabling dollar-cost averaging and attracting retail investors over time.

    Mains PYQ:

    Q Craze for gold in Indian has led to surge in import of gold in recent years and put pressure on balance of payments and external value of rupee. In view of this, examine the merits of Gold Monetization scheme. (UPSC IAS/2015)

  • US Bitcoin Strategic Reserve

    Type:
    Subjects: ,
    GS Papers: ,
    Distribution: ,

    Why in the News?

    Bitcoin surged to a record high of over $107,000 after President-elect Donald Trump reaffirmed plans to create a US bitcoin reserve, boosting investor excitement.

    Do you know?

    • The legal status of cryptocurrency in India is uncertain.
      • RBI has warned against cryptocurrencies, citing risks to investors and confirming they are not legal tender. 
    • In 2018, the Supreme Court overturned an RBI ban on financial institutions dealing with cryptocurrencies.
    • In the 2022-23 Union Budget, the Government of India announced a 30% tax on cryptocurrency transfers.
    • Additionally, a panel has been formed to explore blockchain technology and the potential for a Central Bank Digital Currency (CBDC).

    What is a Strategic Reserve?

    Details
    • A strategic reserve is a stockpile of critical resources, used in times of crisis or disruptions in supply.
    • Examples:
      • US Strategic Petroleum Reserve: Largest global emergency oil stockpile, created in 1975 after the 1973-74 oil embargo.
      • Canada’s Maple Syrup Reserve: The only global strategic reserve for maple syrup.
      • China’s Reserves: Includes resources like metals, grains, and pork.
    How Would a U.S. Strategic Bitcoin Reserve Work?
    • Establishing the Reserve: Unclear if it would require executive powers or Congress approval. Some suggest an executive order to manage bitcoin through the U.S. Treasury’s Exchange Stabilization Fund.
    • Content of the Reserve: Includes seized bitcoin (200,000 tokens, worth approx. $21 billion).
    • Additional Purchases: Possible purchase of more bitcoin from the open market.
    Benefits and Risks of a Bitcoin Reserve Benefits:

    • Global Market Dominance: Could enhance U.S. control over the global bitcoin market, especially against competitors like China.
    • Economic Advantages: Could reduce U.S. fiscal deficit and strengthen the U.S. dollar.

    Risks:

    • Volatility: Bitcoin’s value is uncertain due to volatility and lack of intrinsic use.
    • Security: Vulnerability to cyber-attacks and market fluctuations.

  • [17th December 2024] The Hindu Op-ed: Levy a higher GST rate on tobacco, sugared beverages

    Subjects:
    GS Papers: ,
    Distribution: ,
    PYQ Relevance:

    Q) “Besides being a moral imperative of a Welfare State, primary health structure is a necessary precondition for sustainable development.” Analyse. (UPSC CSE 2021)

    Mentor’s Comment: UPSC mains have always focused on major issues like the Conflict of interest in the public sector (2017) and Life Expectancy (2022).

    Tobacco is responsible for approximately 1 million deaths annually in India, accounting for about 17.8% of total deaths in the country. This includes deaths from both direct tobacco use and secondhand smoke exposure.

    The proposal to levy a higher Goods and Services Tax (GST) rate on tobacco products and sugared beverages has sparked significant discussion in India. This editorial explores the implications of such a move, the current tax structure, and the anticipated outcomes of the proposed changes.

    _

    Let’s learn!

    Why in the News?

    The proposal to levy a higher Goods and Services Tax (GST) rate on tobacco products and sugared beverages has sparked significant discussion in India.

    What is National Calamity Contingent Duty (NCCD)?

    • It is a type of excise duty imposed by the Indian government on specific manufactured goods, particularly those considered harmful to public health, such as tobacco products and certain beverages.
    • Established under Section 136 of the Finance Act, 2001, NCCD is intended to generate revenue that can be utilized for disaster relief and other national calamity responses.
    • In the Union Budget for 2023-24, the government proposed increasing NCCD rates by approximately 16% for specified cigarettes, reflecting ongoing efforts to regulate tobacco consumption through higher taxation.

    Background of the news:

    • Over the past seven years since the Goods and Services Tax (GST) was introduced in India, there have been a few significant increases in GST rates for harmful products like tobacco and sugar-sweetened beverages.
    • Apart from two small hikes in the National Calamity Contingent Duties (NCCD) on tobacco, the tax rates have largely remained unchanged. This lack of increase has made these products more affordable, which undermines efforts to reduce their consumption.
    • In this context, the recent proposal by the Group of Ministers (GoM) to raise the highest GST rate on tobacco and sugar-sweetened beverages from 28% to 35% is a positive development. This increase could help discourage the consumption of these harmful products.
    • However, it is important to note that additional tax reforms are necessary to effectively address the public health issues and fiscal challenges associated with tobacco and sugary drinks.

    What is the current GST structure?

    • Under the existing GST framework, tobacco products and aerated beverages are taxed at a base rate of 28%, with additional cess rates that can range significantly.
    • For tobacco, these cesses can be as high as 290%, making it one of the most heavily taxed sectors in India.
    • Aerated beverages also face a 12% compensation cess on top of the standard GST rate, leading to a total tax burden that is among the highest globally.

    What is the Rationale behind the recent Proposal?

    • Public Health Concerns: Higher taxes on tobacco and sugary drinks are often justified by their negative health impacts. Increasing GST rates could deter consumption and promote healthier choices among consumers.
    • Revenue Generation: The Indian government is looking for ways to bolster its revenue streams, especially in light of potential shortfalls from other sectors. By raising taxes on these “sin products,” it aims to offset losses from reductions in taxes on essential goods and services, such as health insurance premiums.
    • Alignment with Global Practices: Many countries impose high taxes on tobacco and sugary beverages as part of public health strategies. By following suit, India could align itself with global best practices aimed at reducing the consumption of harmful products.

    What were the Market reactions to the potential GST Increase? 

    • Stock Price Impact: Following the news, ITC’s shares fell by about 3%, while Varun Beverages dropped by 5%. This decline reflects investor concerns over how higher taxes might affect profitability.
    • Historical Performance: Both companies had previously enjoyed strong stock performance, with ITC’s stock rising 110% and Varun Beverages increasing by 424% in recent years.
      • However, the prospect of increased taxation has caused a correction, with both stocks down around 12% from their recent highs.
    • Analyst Insights: Analysts believe that while higher taxes could reduce sales volumes, they might also boost government revenues if managed well. 

    Way Forward:

    • Engage with Stakeholders: Regular consultations with industry stakeholders, including manufacturers and health experts, can provide valuable insights into the potential impacts of tax changes and help create balanced policies that consider both public health and economic factors.
    • Consider Broader Tax Reforms: The government could explore broader tax reforms that align with health objectives, such as revising tax structures for other products or services that impact public health, ensuring a comprehensive approach to taxation.
    • Implement the Proposed GST Increase: The government should proceed with the Group of Ministers (GoM) recommendation to raise the GST on tobacco and aerated beverages from 28% to 35%. This move aims to discourage the consumption of these harmful products while increasing government revenue.
    • Enhance Public Awareness Campaigns: Alongside tax increases, the government can launch public health campaigns to educate citizens about the dangers of tobacco and excessive sugar consumption. This could further support efforts to reduce demand for these products.
    https://www.thehindu.com/opinion/op-ed/levy-a-higher-gst-rate-on-tobacco-sugared-beverages/article68992871.ece

  • India’s wage challenge has shifted from chronic to immediate

    Type:
    Subjects:
    GS Papers: ,
    Distribution: ,

    Why in the news? 

    India’s Rural low wages pose a significant challenge, but adopting a ground-level perspective on employers’ daily realities highlights policy measures to increase the number of high-productivity employers.

    What are the root causes of the current wage stagnation in India?

    • Economic Structure: The shift from agriculture to non-farm jobs has not been accompanied by a corresponding increase in productivity. Despite significant government spending, the flow of jobs since 1991 has not reduced farm employment, leading to wage stagnation in rural areas.
    • Skill Mismatch: There is a disparity between the skills available in the labour market and those demanded by employers. Many workers remain under-skilled for the higher-paying jobs that are available, perpetuating low wages.
    • Economic growth vs wage stagnation: Despite India’s GDP growing at a strong rate, averaging 7.8% in recent years, this growth has not led to substantial wage increases for rural workers. In fact, real wages, when adjusted for inflation, have either remained stagnant or decreased. This disparity underscores a crucial issue: the underlying nature of economic growth.
    • Shift to Capital-Intensive Growth: India’s recent economic growth is driven by capital-intensive sectors, which create fewer jobs, limiting the demand for rural labour and keeping wages low.
    • Inflation vs. Wage Growth: While nominal wages have risen, inflation has outpaced wage growth, reducing the real purchasing power of rural workers. For example, rural wages grew by 5.2% nominally, but real wage growth was negative at -0.4%.
    • Increased Labour Supply: Government schemes like Ujjwala and Har Ghar Jal have increased rural women’s workforce participation, intensifying competition for jobs and putting downward pressure on wages.
    • Agricultural Wage Stagnation: Despite steady agricultural growth (4.2% and 3.6% in recent years), wages in agriculture have not increased proportionally, limiting overall wage growth in rural areas.

    How can India effectively implement a living wage system?

    A living wage system ensures workers earn enough to meet basic needs like food, housing, healthcare, and education, enabling a decent standard of living beyond mere subsistence wages.

    • Policy Framework: Establishing a clear definition of what constitutes a living wage based on local cost of living metrics is essential. This framework should be adaptable to different regions and sectors.
    • Incentives for Employers: Providing tax breaks or subsidies for businesses that pay living wages can encourage compliance and support workers’ livelihoods.
    • Strengthening Labor Rights: Ensuring robust enforcement of labor laws that protect workers’ rights to fair wages and safe working conditions is crucial for implementing a living wage system effectively.
    • Public Awareness Campaigns: Educating both employers and employees about the benefits of a living wage can help shift perceptions and practices within the workforce.

    What are the wage disparities in India?

    • Gender Wage Gap: According to the Global Gender Gap Index 2024, Indian women earn only ₹40 for every ₹100 earned by men, highlighting a significant gender pay disparity.
      • The economic gender parity level in India is recorded at 39.8%, indicating that while some progress has been made, substantial gaps remain in economic participation and remuneration between genders.
    • Regional Wage Disparities: The average daily wage for casual workers in rural areas is approximately ₹104, significantly lower than the national average of ₹247 per day for all workers.
    • Wage Inequality Metrics: The Gini coefficient for wages in India stands at 0.49, indicating a high level of wage inequality. The D9/D1 wage ratio, which compares the earnings of the top 10% to the bottom 10%, is 6.7, underscoring the stark contrast in earnings across different segments of the workforce.

    Note: The D9/D1 wage ratio is a measure of income inequality that compares the earnings of the top 10% of wage earners (D9) to the earnings of the bottom 10% (D1) within a given population

    What policy measures can be taken to address wage disparities and ensure fair compensation? (Way forward)

    • Rationalisation of Regulations: Streamlining regulatory frameworks to reduce bureaucratic hurdles can encourage entrepreneurship and job creation. This includes removing unnecessary jail provisions that deter business operations.
    • Investing in Human Capital: Prioritizing skill development programs aligned with market demands can boost employability and empower workers to secure higher-paying jobs.
    • Encouraging Non-Farm Employment: Policies should focus on fostering private, productive non-farm jobs through digitisation and formalization, paving the way for better wages.
    • Strengthening Redistribution Mechanisms: Adopting progressive taxation on higher profits can fund social programs designed to uplift wage levels across different sectors.
    • Fostering Long-Term Economic Planning: Crafting a comprehensive economic strategy aligned with labour market needs is essential for ensuring sustainable wage growth and effectively addressing disparities.

    Mains PYQ: 

    Q Can the strategy of regional-resource-based manufacturing help in promoting employment in India? (UPSC IAS/2019)

  • The hidden cost of greenwashing the Indian Railways

    Type:
    Subjects: ,
    GS Papers: ,
    Distribution: ,

    Why in the news?

    The ‘Mission 100% Electrification’ project is like chasing an unrealistic dream of becoming a green railway, leading to many usable diesel locomotives becoming unnecessary.

    What are the key points of the report? 

    • Export of Repurposed Locomotives: RITES Ltd. is exporting six refurbished broad-gauge diesel locomotives to African railways after complex gauge conversion, marking a first in such re-engineering.
    • Idle Diesel Locomotives: Around 760 diesel locomotives, with over 60% still serviceable, are redundant due to the rapid electrification of the railway network.
    • Limited Environmental and Economic Gains: Electrification reduces only 2% of diesel consumption, while coal-powered electricity (50% of the total) negates environmental benefits, maintaining reliance on polluting sources.
    • Strategic Contradictions: Despite targeting 100% electrification, Indian Railways plans to retain 3,500 diesel locomotives for disaster management and traffic needs, undercutting “green” claims.
    • Policy and Financial Wastage: The rushed electrification drive has led to premature asset redundancy, wasting public funds without ensuring environmental or financial sustainability.

    What constitutes greenwashing in the context of Indian Railways?

    • Misleading Claims of Environmental Benefits: The Indian Railways’ push for 100% electrification is framed as a move towards a “green railway.” However, this initiative overlooks the fact that a significant portion of the electricity generated in India comes from coal-fired power plants, which are environmentally harmful.
      • Thus, the transition from diesel to electric locomotives may merely shift pollution from one source to another without achieving genuine environmental benefits.
    • Redundancy of Serviceable Assets: The decision to electrify the railway network has led to the premature stabling of functional diesel locomotives, many of which have considerable residual life left.
      • This not only represents a waste of resources but also raises questions about the actual motivations behind electrification efforts.
    • Focus on Slogans Over Substance: The Mission 100% Electrification initiative appears to prioritize headline-grabbing goals over comprehensive and well-thought-out policies.
      • This approach can be seen as greenwashing, as it promotes an image of environmental responsibility while failing to address the underlying issues related to energy sourcing and pollution.

    How do greenwashing practices impact public perception and trust?

    • Erosion of Credibility: When organizations like Indian Railways promote initiatives that are not genuinely sustainable, it can lead to public scepticism regarding their commitment to environmental issues.
    • Misallocation of Resources: Public perception may shift towards viewing government initiatives as wasteful or misguided, leading to decreased support for future projects that could have real environmental benefits.
    • Increased Public Scrutiny: Greenwashing practices often lead to increased scrutiny from activists, media, and the public.
      • As stakeholders demand transparency and accountability, organizations may face backlash for failing to deliver on their environmental promises.

    What regulatory measures can be implemented to combat greenwashing in the transportation sector? (Way forward)

    • Clear Guidelines for Environmental Claims: Establishing stringent regulations that define what constitutes legitimate environmental benefits can help prevent misleading claims.
      • Organizations should be required to substantiate their claims with verifiable data and transparent reporting.
    • Mandatory Sustainability Reporting: Implementing requirements for regular sustainability audits and reporting can ensure that transportation entities disclose their actual environmental impact, including emissions data and energy sources used.
    • Public Accountability Mechanisms: Creating independent bodies to assess and review claims made by transportation sectors regarding sustainability initiatives can enhance accountability.
      • These bodies could provide certifications or ratings based on genuine environmental performance rather than promotional claims.
    • Incentives for Genuine Sustainability Efforts: Providing financial incentives or recognition for organizations that implement effective sustainability measures can encourage genuine efforts rather than superficial compliance with green initiatives.

    Mains PYQ: 

    Q Why is Public Private Partnership (PPP) required in infrastructural projects? Examine the role of PPP model in the redevelopment of Railway Stations in India. (2022)

  • [pib] Telecom Technology Development Fund (TTDF) Program

    Type:
    Subjects: ,
    GS Papers: ,
    Distribution: ,

    Why in the News?

    The Telecom Technology Development Fund (TTDF) has facilitated a collaboration between the Centre for Development of Telematics (C-DOT) and Trois Infotech on the development of “Face Recognition Using Drone” technology.

    About Telecom Technology Development Fund (TTDF):

    Details
    • Launched on October 1, 2022 under the Universal Service Obligation Fund (USOF), Ministry of Telecommunications.
    • Supports indigenous telecom technologies, especially for rural communication needs.

    About USOF (Universal Service Obligation Fund) 

    • USOF was established in April 2002 under the Indian Telegraph (Amendment) Act 2003.
    • Objective: To provide financial support for telecom services in rural and remote areas that are commercially unviable.
    • A non-lapsable fund, with the levy amount credited for continuous use.
    • Operates as an attached office of the Department of Telecom, headed by an administrator appointed by the Central Government.
    • Initially focused on providing basic telecom services in rural areas at affordable prices.
    • Expanded scope to include mobile services, broadband connectivity, and infrastructure development in rural and remote areas.
    Aims and Objectives
    • Encourage Innovation: Create synergies across stakeholders (startups, R&D, academia) and focus on rural-specific telecom solutions.
    • Bridge the Digital Divide: Provide affordable telecom solutions for rural areas and enhance connectivity.
    • Intellectual Property Creation: Support R&D projects contributing to patentable technologies.
    Key Features and Structural Mandate Funding Mechanism:

    • Grants for Indian startups, research institutes, academia, and telecom companies for R&D on rural telecom solutions.
    • Managed by Department of Telecommunications (DoT) with USOF as the administering body.

    Features:

    • Incentives for Startups: Provides financial incentives for telecom R&D projects from prototype to commercialization.
    • Collaborative Framework: Promotes collaboration between stakeholders such as startups, telecom companies, universities, and R&D centers.
    • PoC and Pilot Support: Encourages proof of concept testing and pilots to validate technological solutions.

     

    PYQ:

    [2019] In India, which of the following review the independent regulators in sectors like telecommunications, insurance, electricity, etc.?

    1. Ad Hoc Committees set up by the Parliament
    2. Parliamentary Department Related Standing Committees
    3. Finance Commission
    4. Financial Sector Legislative Reforms Commission
    5. NITI Aayog

    Select the correct answer using the code given below:

    (a) 1 and 2
    (b) 1, 3 and 4
    (c) 3, 4 and 5
    (d) 2 and 5

  • Employees’ Pension Scheme (EPS)

    Type:
    Subjects:
    GS Papers: ,
    Distribution: ,

    Why in the News?

    The Parliamentary Standing Committee on Labour has recommended increasing the minimum pension of ₹1,000 paid by the Employees’ Provident Fund Organisation (EPFO) under the Employees’ Pension Scheme (EPS).

    About the Employees’ Pension Scheme (EPS):

    Details
    • Introduced in 1995 by the Employees Provident Fund Organisation (EPFO) under the Ministry of Labour and Employment.
    • Provides pension benefits to employees in the organized sector.
    Aims and Objectives
    • To provide pension benefits to employees in the organized sector.
    • Ensures financial security for employees post-retirement or in case of disability or death.
    Features and Significance
    • Employee and Employer Contribution: Both contribute 12% of the salary towards the EPF.
    • Employer’s Contribution: 8.33% of the employer’s contribution goes towards the pension fund.
    • Union Government Contribution: 1.16% of the employee’s basic salary is contributed to the pension fund.
    • Pension Fund Setup: The fund is created by allocating 8.33% of the employer’s contribution from the EPF corpus.
    Structural Mandate and Implementation Supreme Court in November 2022, the court upheld the Employees’ Pension (Amendment) Scheme, 2014, extending the deadline for opting for the new scheme by 4 months.

    • Pre-Amendment Scheme: Pensionable salary was based on the average salary of the last 12 months prior to exiting the pension fund.
    • Post-Amendment Scheme (2014): Pensionable salary based on average salary of the last 60 months (5 years).
    Eligibility Criteria
    • Applies to employees whose basic salary exceeds ₹15,000 per month.
    • Employees who are members of the Employees’ Provident Fund (EPF) and meet the contribution requirements are eligible for the scheme.

     

    PYQ:

    [2021] With reference to casual workers employed in India, consider the following statements:

    1. All casual workers are entitled for Employees Provident Fund coverage.

    2. All casual workers are entitled for regular working hours and overtime payment.

    3. The government can by a notification specify that an establishment or industry shall pay wages only through its bank account.

    Which of the above statements are correct?

    (a) 1 and 2 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

  • In news: Bharatmala Pariyojana

    Type:
    Subjects: ,
    GS Papers: ,
    Distribution: ,

    Why in the News?

    • Bharatmala Pariyojana is a comprehensive road development project initiated by the Government of India to improve connectivity and reduce logistics costs across the country.
      • The total length covered under the scheme is 34,800 km, with an estimated cost of Rs. 5.35 lakh crore.

    About Bharatmala Pariyojana

    Details
    • Launched to improve road connectivity, enhance freight/passenger movement, and reduce logistics costs.
    • First-phase launched in 2017, covering 34,800 km of roads, with an estimated cost of Rs. 5.35 lakh crore.
      • Long-term goals to be completed in phases over several years.

    Key Components:

    • Economic Corridors & Efficiency: Focus on developing 26,000 km of roads and improving the Golden Quadrilateral and North-South/East-West Corridors.
    • Inter-State & Feeder Routes: 8,000 km of interstate corridors and 7,500 km feeder routes.
    • Border & International Roads: 2,000 km of roads for trade and security.
    • Coastal & Port Connectivity: 2,000 km of roads for better port connectivity.
    • Green-Field Expressways: New expressways to reduce congestion.
    Aims and Objectives
    • 50 national corridors to be constructed, reducing freight traffic congestion and facilitating movement on national highways.
    • 550 districts to be connected nationwide, up from the current 300 districts linked with national highways.
    • Logistic Performance Index (LPI) to be introduced, helping identify trade and logistics challenges and opportunities.
    • Expected to increase employment opportunities for people.
    Funding and Implementation
    • Central Road and Infrastructure Fund (CRF): Created under the Central Road Fund Act, 2000, this non-lapsable fund is used for building and upgrading national highways and other infrastructure, funded through cess on petrol and diesel.
    • Monetization of National Highways: The monetization of existing infrastructure assets is used as a source of funding.
    • Private Sector Investment: Bharatmala invites participation from the private sector for funding and execution of certain projects.
    • Additional Budgetary Support: Funds from additional budgetary allocations by the central government also support the project.

     

    Do you know?

    1. Sagarmala Programme approved in 2015, focuses on port infrastructure development along the 7,516-km coastline through modernisation, mechanisation, and computerisation.
    2. Parvatmala (National Ropeways Development Programme) announced in Union Budget 2022-23 to improve connectivity in hilly areas, under MORTH.
      • Implemented in PPP mode as an ecologically sustainable alternative to conventional roads in challenging terrains.
      • Initial regions: Uttarakhand, Himachal Pradesh, Manipur, Jammu & Kashmir, and North Eastern states.

     

    PYQ:

    [2017] With reference to ‘National Investment and Infrastructure Fund’, which of the following statements is/are correct?

    1. It is an organ of NITI Aayog.
    2. It has a corpus of Rs 4,00,000 crore at present.

    Select the correct answer using the code given below:

    (a) 1 only
    (b) 2 only
    (c) Both 1 and 2
    (d) Neither 1 nor 2

  • India launched the World’s first Green Steel Taxonomy

    Type:
    Subjects: ,
    GS Papers: ,
    Distribution: ,

    Why in the News?

    The Ministry of Steel unveiled the world’s first Taxonomy of Green Steel, setting a benchmark for decarbonizing the steel industry.

    About the Green Steel Taxonomy:

    What is it?
    • A formal framework introduced by India to define and promote the production of steel with reduced carbon emissions.
    • It sets clear standards for what constitutes green steel, aiming to help the Indian steel sector transition to low-carbon production methods.
    • The taxonomy defines greenness percentages based on the steel plant’s carbon emission intensity.
    • Seeks to ensure that production aligns with India’s goal of net-zero emissions by 2070.
    Key Features
    • Emissions Threshold: Green Steel is defined based on emissions intensity, with steel plants needing to keep emissions below 2.2 tCO2 per tonne of finished steel (tfs) to be classified as green.
    • Star Rating System:
      1. Five-star: Emission intensity lower than 1.6 t-CO2e/tfs.
      2. Four-star: Emission intensity between 1.6 and 2.0 t-CO2e/tfs.
      3. Three-star: Emission intensity between 2.0 and 2.2 t-CO2e/tfs.
    • Steel exceeding 2.2 t-CO2e/tfs does not qualify as green steel.
    • Emissions Scope: Includes Scope 1, Scope 2, and limited Scope 3 emissions, covering production, agglomeration, beneficiation, and emissions from raw materials and intermediates.
    • Certification: NISST will oversee Measurement, Reporting, and Verification (MRV), issuing greenness certificates and star ratings annually.
    • Review Period: The thresholds for green ratings will be reviewed every 3 years.
    Significance
    • Environmental Sustainability: Aims to reduce carbon footprint in line with national climate goals.
    • Market Creation: Promotes innovation in low-carbon steel products.
    • Global Competitiveness: Ensures Indian steel meets international sustainability standards.
    • Guidance for Industry: Encourages adoption of greener practices.
    Other Key Initiatives
    • National Mission on Green Steel (NMGS): Policy support, funding, and incentives for low-carbon technologies.
    • Electrification of Steelmaking: Use of electric arc furnaces (EAF) to reduce reliance on coal.
    • Hydrogen-based Steelmaking: Exploring hydrogen as a clean fuel.
    • Carbon Capture and Storage (CCS): Technologies to capture CO2 emissions.
    • Public Procurement Policies: Promotes green steel use in public infrastructure.
    • Research and Development: Investments in low-carbon technologies and materials.

     

    PYQ:

    [2020] Steel slag can be the material for which of the following

    1. Construction of base road

    2. Improvement of agricultural soil

    3. Production of cement

    Select the correct answer using the code given below:

    (a) 1 and 2 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3 only

  • [pib] Projects under PM-DevINE Scheme

    Type:
    Subjects: ,
    GS Papers: ,
    Distribution: ,

    Why in the News?

    The Ministry of Development of North-East Region has provided progress update regarding various projects under the Prime Minister’s Development Initiative for North East Region (PM-DevINE) Scheme.

    About the PM-DevINE Scheme:

    Details PM-DevINE is a Central Sector scheme introduced under the Union Budget 2022-23, aiming to drive development in the North Eastern Region (NER) through infrastructure and social projects.
    Aims and Objectives
    • Infrastructure Development: Enhance connectivity and accessibility in NER, aligned with PM GatiShakti.
    • Social Development: Address critical issues and improve residents’ quality of life.
    • Livelihood Opportunities: Focus on creating opportunities for youth and women.
    Structural Mandate and Implementation
    • Nodal Agency: Ministry of Development of North-East Region.
    • Approval: Cabinet approved on 12th October 2022.
    • Central Funding: 100% central funding for projects.
    • Outlay: Rs. 6600 crore for FY 2022-23 to FY 2025-26.
    • Project Sanctions: 35 projects worth Rs. 4857.11 crore sanctioned as of November 2024.
    State-wise Project Analysis
    • Sikkim: Passenger Ropeway System (completed), Skywalk Project (13% completed).
    • Mizoram: Bamboo Link Roads (28% completed).
    • Nagaland: Special Development Projects (30% completed).
    • Assam: School Transformations (55% completed), IT Park Construction (23% completed).
    • Manipur: Infrastructure for Manipur Technical University (25% completed).
    • Tripura: Solar Micro Grid (30% completed), Skill Development Centre (work started).

  • [pib] Yuva Sahakar Scheme

    Type:
    Subjects: ,
    GS Papers: ,
    Distribution: ,

    Why in the News?

    The Ministry of Cooperation, in written reply to a question in the Lok Sabha has informed about the progress of the Yuva Sahakar Scheme.

    Current Financial Details:

    • As of 30th November 2024, the following financial assistance details have been recorded:
      • Sanctioned Amount: ₹4734.97 lakh to cooperatives with 18,915 beneficiary members.
      • Disbursed Amount: ₹294.44 lakh.
      • Sanctioned for 2024: ₹230.61 lakh, with ₹89.88 lakh disbursed.

     

    About the Yuva Sahakar Scheme:

    Details
    Overview and Objectives
    • Launched in 2018 under the Ministry of Agriculture and Farmers Welfare.
    • Implemented by NCDC (National Cooperative Development Corporation), which operates under the Ministry of Cooperation
    • Goal: To promote the formation of new cooperative societies and encourage innovative ideas from young entrepreneurs.
    • Targets cooperatives that have been operational for at least 3 months.
    NOTE: NCDC was established in 1963 as a statutory Corporation under Ministry of Agriculture & Farmers Welfare.
    Features and Provisions
    • Loan Tenure: Up to 5 years.
    • Interest Subvention: 2% subvention on the applicable interest rate for term loans related to project activities.
    • Subsidy Integration: Loans can be combined with subsidies available under other Government of India schemes.
    • Eligibility: All cooperatives in operation for at least 1 year are eligible for funding based on proposed projects.
    Significance
    • Encourages cooperatives to explore new and innovative areas.
    • Dedicated fund by NCDC for youth cooperatives.
      • Linked to the ₹1000 crore Cooperative Start-up and Innovation Fund (CSIF).
    • Increased funding for cooperatives from North Eastern regions, Aspirational Districts, and those with women, SC/ST, or PwD members.

  • [pib] New Policy Initiatives in Agriculture Sector

    Type:
    Subjects: ,
    GS Papers: ,

    Why in the News?

    • The Government of India, recognizing agriculture as a State subject, actively supports State governments through various policy measures and budgetary allocations aimed at improving the welfare of farmers.
      • Below are some key initiatives approved by the Union Cabinet:
    Clean Plant Programme (CPP)
    • Approval Date: 09.08.2024 ; Outlay: ₹1,765.67 crore
    • Objective: Enhance quality and productivity of horticulture crops.
    • Key Features: Focus on providing disease-free planting material, promoting climate-resilient varieties, reducing crop losses, and improving horticultural produce quality.
    • Financial Support: 50% from Mission for Integrated Development of Horticulture (MIDH) budget and 50% as a loan from the Asian Development Bank (ADB).
    • Implementation: Establishment of 9 Clean Plant Centers (CPCs) for disease diagnostics, treatments, and quarantine; development of large-scale nurseries for clean planting material propagation; creation of a regulatory and certification framework to ensure traceability in planting material production.
    Digital Agriculture Mission
    • Objective: Create a robust digital ecosystem for farmers by providing timely and reliable crop-related information.
    • Key Features: Establish Agristack, Krishi Decision Support System (DSS), Comprehensive Soil Fertility & Profile Map, Digital General Crop Estimation Survey (DGCES), and expansion of IT platforms like Krishi Nivesh Portal and Krishi-DSS Portal.
    • Digital Infrastructure: Promotes farmer-centric solutions, digitization, and technology-enabled agricultural services.

    (Discussed in detail in one of the today’s articles.)
    Agriculture Infrastructure Fund Scheme
    • Approval Date: 28.08.2024
    • Objective: Enhance agricultural infrastructure across India.
    • Key Features: Loans up to ₹2 crores with 3% interest subvention for 7 years. Covers a wide range of entities like PACS, FPOs, self-help groups, agri-entrepreneurs. 24% reserved for SC/ST entrepreneurs.
    • Credit Guarantee: Available under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for loans up to ₹2 crores.
      Integration: Linked with PM Kusum ‘A’ and other community farming assets projects to enhance agricultural production.
    National Mission on Edible Oils – Oilseeds (NMEO-Oilseeds)
    • Approval Date: 03.10.2024; Outlay: ₹10,103 crore
    • Objective: Boost domestic oilseed production and achieve self-reliance in edible oils.
    • Implementation Period: 2024-25 to 2030-31
    • Key Features: Target to increase oilseed production from 39 million tonnes (2022-23) to 69.7 million tonnes by 2030-31. Focus on key oilseeds like rapeseed, mustard, groundnut, soybean, sunflower, and Sesamum.
    • Expansion: Oilseed cultivation in rice fallow areas, and intercropping. Setting up 65 new seed hubs and 50 seed storage units. Development of over 600 Value Chain Clusters in 347 districts.
    National Mission on Natural Farming (NMNF)
    • Approval Date: 25.11.2024; Outlay: ₹2,481 crore (GOI Share: ₹1,584 crore; State Share: ₹897 crore)
    • Objective: Promote natural farming practices across India.
    • Key Features: Focus on Bhartiya Prakritik Krishi Paddhati (BPKP), scaling up natural farming across 7.5 lakh hectares through 15,000 clusters.
    • Financial Assistance: ₹15,000 per hectare for 3 years to farmers for infrastructure creation.
    • Infrastructure: Establishment of 15,000 BRCs to facilitate access to bio-inputs like cow dung, neem, and bioculture. Master Trainer Program for large-scale training on natural farming techniques.
    Additional Key Programmes Initiated in 2024-25
    1. National Pest Surveillance System (NPSS): To monitor and control pest infestations.
    2. AgriSURE: A fund for start-ups and rural enterprises in agriculture.
    3. Krishi Nivesh Portal (Phase-I): A platform for facilitating investments in the agriculture sector.
    4. Krishi-DSS Portal: A geospatial platform to provide decision support for Indian agriculture.
    5. Voluntary Carbon Market (VCM): Promoting sustainable agricultural practices through carbon credit initiatives.

     

    PYQ:

    [2020] In India, which of the following can be considered as public investment in agriculture?

    1. Fixing Minimum Support Price for agricultural produce of all crops
    2. Computerization of Primary Agricultural Credit Societies
    3. Social Capital development
    4. Free electricity supply to farmers
    5. Waiver of agricultural loans by the banking system
    6. Setting up of cold storage facilities by the governments

    Select the correct answer using the code given below:

    (a) 1, 2 and 5 only

    (b) 1, 3, 4 and 5 only

    (c) 2, 3 and 6 only

    (d) 1, 2, 3, 4, 5 and 6

  • [pib] Digital Agriculture Mission (DAM)

    Type:
    Subjects: ,
    GS Papers: ,

    Why in the News?

    The Ministry of Agriculture & Farmers’ Welfare has provided details of the progress and implementation of Digital Agriculture Mission (DAM).

    Progress as of December 2024:

    • As of 5th December 2024, the following progress has been reported:
      • 29,99,306 Farmer IDs have been created.
      • Digital Crop Survey (DCS) has been conducted in 436 districts during the Kharif 2024 season.

     

    About the Digital Agriculture Mission (DAM):

    Details
    Overview and Launch
    • Digital Agriculture Mission (DAM) was approved on 2nd September 2024 with an outlay of ₹2817 Crore.
      • Initially planned for the financial year 2021-22, but delayed due to the COVID-19 pandemic.
    • Aligned with the Union Budget 2024-25 and 2023-24 announcements for implementing Digital Public Infrastructure (DPI) in agriculture.
    Aims and Objectives
    • Digital Identities for 11 crore farmers are targeted over the next 3 years: 6 crore in FY 2024-25, 3 crore in FY 2025-26, and 2 crore in FY 2026-27.
    • Digital Crop Survey to be launched nationwide: 400 districts in FY 2024-25 and all districts in FY 2025-26.
    Provisions and Features AgriStack: Includes 3 foundational registries:
    1. Farmers’ Registry: A database recording information about farmers.
    2. Geo-referenced Village Maps: Digital maps providing geographical data related to agricultural areas.
    3. Crop Sown Registry: A digital registry tracking crops sown by farmers.

    • Krishi Decision Support System (DSS): Designed to assist farmers in making data-driven decisions related to farming practices. It integrates remote sensing data on crops, soil, weather, and water resources into a comprehensive geospatial system.
    • Comprehensive Soil Fertility & Profile Map: A map designed to help farmers understand soil health, enabling informed decisions about fertilizer usage and crop selection.
    • Digital General Crop Estimation Survey (DGCES): Provides yield estimates based on scientifically designed crop-cutting experiments.
    • Soil Profile Mapping: Detailed soil profile maps on a 1:10,000 scale for approximately 142 million hectares of agricultural land.
    Structural Mandate
    • Supported by the Central Government, State Governments, and Academic & Research Institutions for successful implementation.
    • AgriStack is designed as a federated structure, where State Governments retain ownership of the data.
    • The system follows privacy standards set by the Digital Personal Data Protection (DPDP) Act, 2023, ensuring data security and privacy.

    PYQ:

    [2017] What is/are the advantage/advantages of implementing the ‘National Agriculture Market’ scheme?

    1. It is a pan-India electronic trading portal for agricultural commodities.
    2. It provides the farmers access to nationwide market, with prices commensurate with the quality of their produce.

    Select the correct answer using the code given below:

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

  • [10th December 2024] The Hindu Op-ed: In energy-dependent world, the issue of food security

    Subjects:
    GS Papers: ,
    Distribution: ,
    PYQ Relevance:
    Q) What are the salient features of the National Food Security Act, 2013? How has the Food Security Bill helped in eliminating hunger and malnutrition in India? (UPSC CSE 2021)

    Mentor’s Comment: UPSC Mains have always focused on ‘Food Security’ (in 2021), ‘conventional energy generation’ (in 2020) and ‘India’s Energy Security’ (in 2017).

    “Food insecurity and energy poverty are critical to ensuring global stability, but addressing them in isolation is inadequate,” cautions the World Bank in its latest climate and development report. The intertwined crises of food and energy security are shaping the course of the 21st century, posing significant threats to global stability. Food production is under pressure from climate change, population growth, and inequality, while energy systems grapple with geopolitical conflicts, aging infrastructure, and a slow shift away from fossil fuels. 

    Today’s editorial explores their deep interconnection and intensifies the challenge: agriculture, vital for humanity, is both a major energy consumer and a driver of climate change.

    _

    Let’s learn!

    Why in the News?

    In a virtual address at the 5th Energy Finance Conference, it was emphasized that energy-reliant agricultural systems struggle to adapt to climate-induced changes in food production, underscoring their interlinked challenges.

    Impact of Energy Price Fluctuations on Food Production and Security

    • Dependency on Fossil Fuels: Agriculture relies heavily on fossil fuels for mechanization, irrigation, fertilizer production, and transportation. This dependence creates a cycle where rising energy prices lead to increased costs for food production, directly impacting food security.
    • Volatility in Natural Gas Prices: Natural gas is crucial for fertilizer production so fluctuations in its prices can significantly affect fertilizer costs and, consequently, global food prices. For instance, geopolitical actions such as export bans can disrupt supply chains, exacerbating food insecurity in countries reliant on imports.
    • Climate Change Effects: Erratic weather patterns due to climate change further strain agricultural output, putting the livelihoods of billions at risk.
      • Nearly 11.8% of the global population faced severe food insecurity between 2020 and 2023, a figure expected to rise significantly.

    Role of Sustainable Energy in Enhancing Food Security

    • Renewable Energy Investments: The transition to renewable energy presents opportunities for enhancing food security. Investments in renewable technologies can help reduce reliance on fossil fuels and lower operational costs for agricultural practices.
    • Innovative Solutions: Solar-powered irrigation and biomass energy solutions could transform agricultural productivity. However, high costs and inadequate infrastructure limit their adoption in low-income countries where they are needed most.
    • Reducing Vulnerability: Clean energy solutions can help mitigate the vulnerability of food systems to energy price shocks. By integrating renewable energy into agricultural practices, countries can improve resilience against climate-induced disruptions.

    Strategies to Address the Nexus of Water, Energy, and Food Security (Way Forward)

    • Integrated Policy Approaches: A holistic approach that integrates water management with energy and food policies is essential. This includes promoting water-efficient agricultural practices and investing in infrastructure that supports sustainable resource management.
    • Investment in Renewable Technologies: Increasing investments in renewable energy infrastructure can support agricultural productivity while reducing carbon emissions. This includes expanding access to clean energy solutions for rural areas to enhance agricultural efficiency.
    • Financial Support for Vulnerable Communities: Providing financial resources and technical support to low-income nations is crucial for enabling them to transition towards sustainable practices without exacerbating poverty. Targeted investments can help build resilience against climate impacts while ensuring food security.

    https://www.thehindu.com/opinion/op-ed/in-energy-dependent-world-the-issue-of-food-security/article68966351.ece

  • The issue of India’s economic growth versus emissions

    Type:
    Subjects:
    GS Papers: ,

    Why in the News?

    The Economic Survey (2023-24) claims that India has managed to grow its economy without significantly increasing its greenhouse gas emissions. This claim has sparked the debate about actual sustainable growth in India.

    What does the Economic Survey (2023-24) say about GHG emissions?

    • Relative Decoupling Achieved: Between 2005 and 2019, India’s GDP grew at a 7% CAGR, while GHG emissions increased by 4%.
    • Emission Intensity Reduction: India reduced emission intensity by 33% from 2005 levels, achieving its 2030 NDC target 11 years early.
    • Carbon Sink Expansion: India aims to add a 2.5–3 billion tonne carbon sink by 2030, building on the 1.97 billion tonnes achieved (2005–2019).
    • Investment Needs: Achieving NDC targets requires $2.5 trillion by 2030, with a focus on domestic resources, affordable finance, and technology access.

    Has India decoupled its economic growth from GHG emissions? 

    • Arguments against decoupling:
        • The Economic Survey does not clarify whether the observed decoupling is absolute (declining emissions with GDP growth) or relative (emissions rising slower than GDP).
        • India has achieved economy-wide relative decoupling since 1990, with GDP growing six-fold while GHG emissions have only tripled. However, absolute decoupling has not been achieved, as emissions continue to rise.
        • Agriculture and manufacturing, major contributors to India’s GHG emissions, require detailed sectoral analysis.
    • Argument in favour of decoupling:
      • The Economic Survey indicates that between 2005 and 2019, India’s GDP grew at a compound annual growth rate (CAGR) of approximately 7%, while GHG emissions grew at a CAGR of only 4%.
      • India has successfully reduced its emission intensity by 33% from 2005 levels, achieving its initial Nationally Determined Contribution (NDC) target for 2030 eleven years ahead of schedule. This reduction indicates that India is managing to grow economically while lowering the emissions per unit of GDP.
      • India is on track to create an additional carbon sink of 2.5 to 3.0 billion tonnes (installed electricity generation capacity reaching 45.4% by May 2024) through tree and forest cover by 2030, building on a carbon sink of 1.97 billion tonnes established from 2005 to 2019.

    What are the steps taken by the Government?

    The Economic Survey 2023-24 outlines several key steps taken by the Indian government to address greenhouse gas (GHG) emissions and promote sustainable development:

    • Reduction of Emission Intensity: India has successfully reduced its emission intensity by 33% from 2005 levels, achieving its initial Nationally Determined Contribution (NDC) target for 2030 eleven years ahead of schedule.
      • This significant reduction demonstrates the effectiveness of various climate action strategies implemented by the government.
    • Investment in Renewable Energy: The government has made substantial progress in expanding renewable energy capacity.
      • As of May 31, 2024, non-fossil sources accounted for 45.4% of the total installed electricity generation capacity in India, up from 32% in 2014.
      • Additionally, India added 15.03 GW of solar power capacity in 2023-24, bringing the cumulative total to 82.64 GW.
    • Creation of Carbon Sinks: The survey highlights that India is on track to create an additional carbon sink of 2.5 to 3.0 billion tonnes through tree and forest cover by 2030, building upon the 1.97 billion tonnes of CO2 equivalent already achieved from 2005 to 2019.
    • Sovereign Green Bonds: The government has raised funds through sovereign green bonds, amounting to ₹36,000 crore in 2023, to finance public sector projects aimed at reducing emissions and promoting sustainable practices.
    • Framework for Green Finance: The Reserve Bank of India (RBI) has implemented a framework for accepting green deposits and promoting renewable energy through its Priority Sector Lending (PSL) rules, fostering a green finance ecosystem in the country.
    • Adaptation Expenditure: India’s climate adaptation expenditure has increased from 3.7% of GDP in 2015-16 to 5.6% in 2021-22, indicating a greater integration of climate resilience into development plans.

    What efforts must be continued by India? (Way forward)

    • Pursuit of Absolute Decoupling: To achieve long-term climate commitments and sustainability goals, India must strive toward absolute decoupling, where economic growth continues alongside a reduction in emissions.
      • This requires comprehensive policies focused on renewable energy adoption, emission mitigation strategies, and sustainable development initiatives.
    • Investment in Renewable Energy and Climate Resilience: Continued efforts are necessary to enhance investments in renewable energy sources and technologies, alongside measures to improve energy efficiency and reduce reliance on fossil fuels.

    Mains PYQ:

    Q Describe the major outcomes of the 26th session of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC). What are the commitments made by India in this conference? (UPSC IAS/2021)

  • The row over tungsten mining near Madurai

    Type:
    Subjects: ,
    GS Papers: ,

    Why in the News?

    Environmental activists protested outside the Madurai District Collector’s office (Tamil Nadu), voicing their opposition to Vedanta’s auction win for Tungsten Mining Rights in Melur, following the Ministry of Mines‘ announcement

    Why have there been protests over mining Rights?

    • Environmental Concerns: Activists and residents are vehemently opposing the tungsten mining project due to its potential impact on biodiversity. Because of the fears that mining activities could irreparably damage these sites and disrupt local ecosystems, including vital water sources like the Periyar canal.
    • Community Impact: Locals fear that mining will threaten their livelihoods, as many depend on agriculture and local resources. The protests have seen significant participation from various villages in the region, highlighting widespread community opposition to the project.
    • Political Response: The Chief Minister of Tamil Nadu has called for the cancellation of the mining rights and plans to introduce a resolution in the Tamil Nadu Assembly to formally reject the mining project. He emphasizes that any mining activity in these areas would be unacceptable without state consent.

    What does the Ministry of Mines say about Mining?

    • Auction of Mineral Blocks: The Nayakkarpatti Tungsten Block covering an area of over 20.16 sq. km. was proposed for auction in February 2024. Inputs were taken from the state government of Tamil Nadu before the block was put up for auction.
      • The Ministry cited the Mines and Minerals (Development and Regulation) Act of 1957 as the legal framework enabling this auction process.
    • Mineral Richness: The Ministry also noted that the area designated for tungsten mining was found to be rich in scheelite (a crucial ore for tungsten extraction), thus justifying its selection for mining activities.

    About the  Mines and Minerals (Development and Regulation) Act of 1957:

    • The Mines and Minerals (Development and Regulation) Act, 1957, provides a framework for the regulation of mining activities in India, governing the exploration, licensing, and development of minerals except for petroleum and natural gas.
    • It empowers the central government to specify major minerals and the state governments to regulate minor minerals, ensuring a structured division of responsibilities in mineral resource management.
    • Major minerals are high-value minerals that include coal, lignite, iron ore, bauxite, gold, silver, zinc, copper, manganese, and other ores critical for industrial and strategic purposes.
    • Minor minerals are low-value, non-metallic minerals primarily used in construction and local industries, such as sand, gravel, clay, building stones, marble, and slate.

    Is there a Centre-State rift?

    Yes, a notable rift exists between the Tamil Nadu government and the Union government regarding this issue.

    • Lack of State Consent: The Tamil Nadu government claims it did not provide consent for the auction and had previously communicated concerns regarding environmental implications. In contrast, the Union government contends that there was no formal opposition from Tamil Nadu during the auction process.
    • Political Tensions: This situation has led to heightened tensions between the state and central governments, with accusations from Tamil Nadu officials that their concerns were ignored by the Union government when granting mining rights to Hindustan Zinc Limited.

    Can the state government supersede the authority of the central government in this matter?

    In the context of mining rights and environmental matters, the state government cannot directly override the power of the central government. However, there are several ways available to the state government to influence or challenge the decision made by the Union government.

    • Constitutional Framework: The Indian Constitution divides powers between the Union and states; mining regulation is under the Union List, while environmental protection is in the Concurrent List, granting states authority over local environmental issues.
    • Biodiversity & Environmental Protection: States can challenge mining projects through laws like the Environmental Protection Act (1986) and Biological Diversity Act (2002), or by passing laws to protect ecologically sensitive areas.
    • State Assembly’s Role: The state legislature can pass resolutions expressing opposition to federal actions, and applying political pressure on the Union government, especially with public protests.
    • Judicial Review & Coordination: States can seek judicial review if Union actions violate constitutional or environmental laws. While states cannot override central mining rights, cooperative federalism emphasizes consultation between the Union and states.

    Way forward: 

    • Enhanced State-Central Coordination: Establish a more transparent and binding consultation process between the state and central governments before granting mining rights, ensuring that local concerns and state consent are prioritized, especially for ecologically sensitive areas.
    • Thorough Environmental Review: Implement a mandatory, independent Environmental and Social Impact Assessment (ESIA) for mining projects in biodiversity hotspots, incorporating input from local communities, environmental experts, and authorities to address potential ecological and socio-economic impacts.

    Mains PYQ:

    Q Coastal sand mining, whether legal or illegal, poses one of the biggest threats to our environment. Analyse the impact of sand mining along the Indian coasts, citing specific examples. (UPSC IAS/2019)

  • Polavaram Project Controversy

    Type:
    Subjects: ,
    GS Papers: ,
    Distribution: ,

    Why in the News?

    The Biju Janata Dal (BJD) has restarted its protest against the Polavaram multipurpose project in Andhra Pradesh, claiming it will flood large areas in Malkangiri, Odisha, displacing many tribal communities.

    What were the recommendations by the Godavari Water Disputes Tribunal (GWDT) 1969?

    The Godavari Water Disputes Tribunal (GWDT), was established to resolve water-sharing disputes concerning Godavari River water among the states of Andhra Pradesh, Maharashtra, and Madhya Pradesh (now Chhattisgarh). It made several key recommendations regarding the utilization of Godavari River water. Notable points include:

    • Water Allocation: The Tribunal allowed Andhra Pradesh to divert 80 TMC (thousand million cubic feet) of Godavari water at 75% dependability for irrigation and other uses, which could also substitute releases from the Nagarjunasagar project for the Krishna delta.
    • Inter-State Agreements: The Tribunal recognized various inter-state agreements that specified how water from the Godavari and its tributaries could be utilised, ensuring equitable distribution among the states involved.
    • Project Approvals: The GWDT endorsed the construction of projects like Polavaram, provided they adhered to specified Full Reservoir Levels (FRL) and operational guidelines.

    What are the social and environmental impacts of the Polavaram Project?

    • Social Impact: The project is expected to displace over 150,000 people across approximately 276 villages, with many of these being tribal communities. For every five acres irrigated, one tribal family is projected to lose their land.
      • Infrastructure Strain: The project has faced funding challenges for rehabilitation efforts, leading to halted work on necessary infrastructure like canals, which could exacerbate social tensions among displaced populations.
    • Environmental Impact: The dam’s backwaters will submerge an estimated 3,731 hectares of forest land. The environmental impact assessments have raised concerns about ecosystem disruption, including increased vulnerability to erosion and regional landslides.

    How is the project being managed politically and administratively?

    • National Project Status: Declared a national project under the Andhra Pradesh Reorganisation Act of 2014, the Central Government is responsible for executing the project while ensuring compliance with environmental and rehabilitation norms.
    • Polavaram Project Authority: A governing body has been established to oversee project execution, comprising representatives from both state and central governments. This authority is tasked with ensuring timely execution and adherence to regulatory requirements.
    • Political Dynamics: The project has become a focal point for regional politics, particularly as parties like the BJD leverage opposition against it to bolster their regional identity amidst changing political landscapes in states like Odisha.

    What are the legal and regulatory challenges faced by the Polavaram Project?

    • Ongoing Litigation: Multiple states have challenged the project in court on grounds of inadequate environmental assessments and potential adverse impacts on their territories. Legal disputes have persisted since at least 2011, complicating project timelines.
    • Regulatory Compliance Issues: Environmental clearances for the project have been contentious, particularly following changes in flood situation estimates that were not incorporated into updated designs. This has raised questions about compliance with earlier environmental impact assessments conducted in 2005.
    • Funding Challenges: Financial constraints have hindered progress on rehabilitation efforts for displaced populations, leading to further legal scrutiny regarding compliance with social justice norms and commitments made during project approval processes.

    Way forward: 

    • Comprehensive Impact Assessment and Mitigation: Conduct updated environmental and social impact assessments, including backwater studies, and implement robust mitigation measures for displaced populations, ensuring compliance with legal and regulatory frameworks.
    • Strengthen Inter-State Collaboration: Establish a transparent and inclusive mechanism involving all affected states to address concerns, promote equitable resource sharing, and expedite the resolution of legal and administrative challenges.

    Mains PYQ:

    Q Constitutional mechanisms to resolve the inter-state water disputes have failed to address and solve the problems. Is the failure due to structural or process inadequacy or both? Discuss. (UPSC IAS/2013)

  • Building on the revival of the manufacturing sector

    Type:
    Subjects: ,
    GS Papers: ,

    Why in the News?

    Manufacturing output grew by 21.5% in 2022-23, but the GVA (Gross value addition) only grew by 7.3%. This is because input costs increased sharply by 24.4%, making production more expensive. As a result, even though industries produced more, their profits and value-added were reduced.

    Note: GVA represents the value added by industries, while manufacturing output refers to total production. GVA reflects the economic contribution, factoring in costs like inputs.

    What is the present scenario of India’s manufacturing sector?

    • Growth Momentum: India’s manufacturing sector is experiencing significant growth, with a reported output increase of 21.5% in 2022-23, as indicated by the Annual Survey of Industries (ASI).
      • This growth is attributed largely to the Production Linked Incentive (PLI) scheme, which has played a crucial role in boosting production across various sectors, including electronics, pharmaceuticals, and automobiles.
    • Sectoral Contributions: Key sectors benefiting from the PLI scheme, such as basic metals and motor vehicles, collectively contributed 58% to total manufacturing output, showcasing robust performance driven by these incentives.
    • Positive Economic Indicators: The gross value added (GVA) from manufacturing grew by 7.3%, highlighting an overall recovery in the sector post-COVID-19 disruptions.

    What are the current challenges facing the manufacturing sector?

    • Input Cost Surge: A significant challenge is the rising input prices, which increased by 24.4% in 2022-23. This surge has created a gap between manufacturing output growth and GVA growth, indicating that while production volumes are increasing, profitability is being squeezed due to higher costs.
    • Regional Imbalance: Manufacturing activity is heavily concentrated in a few states—Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Uttar Pradesh—accounting for over 54% of total manufacturing GVA. This concentration limits equitable development across the country.
    • Skill Development Needs: There is a pressing need for skill enhancement to meet the demands of evolving manufacturing technologies and processes.

    How can digital transformation contribute to the future of manufacturing?

    • Adoption of Advanced Technologies: Digital transformation can enhance manufacturing efficiency through automation, data analytics, and IoT (Internet of Things) integration. This can lead to improved productivity and reduced operational costs.
    • Supply Chain Optimization: Digital tools can streamline supply chain management, making it more resilient to disruptions and better able to respond to global demand fluctuations.
    • Enhanced R&D Capabilities: Investing in digital technologies can foster innovation in product development and advanced manufacturing techniques, positioning India as a leader in high-tech manufacturing sectors.

    What strategies can be implemented to stimulate growth in manufacturing? (Way forward)

    • Expand PLI Scheme Scope: To further stimulate growth, the PLI scheme should be extended to include labour-intensive sectors such as apparel and furniture, as well as emerging industries like aerospace and space technology. This could unlock new growth opportunities and reduce import dependency.
    • Streamline Import Regime: Implementing a simplified three-tier tariff system for imports—0–2.5% for raw materials, 2.5%–5% for intermediates, and 5%–7.5% for finished goods—could help lower input costs and enhance competitiveness.
    • Focus on MSMEs: Tailoring PLI incentives for micro, small, and medium enterprises (MSMEs) by lowering capital investment thresholds could empower these businesses to scale up and innovate.

    Mains PYQ:

    Q  Can the strategy of regional-resource-based manufacturing help in promoting employment in India? (UPSC IAS/2019)