Economy

All (4049)Current Affairs (4038)Mains Practice (126)Mains PYQs by Subjects (40)

Unified Quality Interface (UQI) for Industry Excellence

Context: With India’s goal of becoming a $6 trillion economy by 2030, a Unified Quality Interface (UQI) is essential for ensuring quality-driven industrial growth.

Relevance of the Topic: Mains: Unified Quality Interface (UQI)- Can be used as a way forward to address challenges in the Manufacturing sector. 

Current Status of India’s Manufacturing Sector

  • The manufacturing sector has remained stagnant at 15-17% of GDP for decades, with a target of 25%.
  • Projections indicate a rise from $0.6 trillion (2024-25) to $1.2 trillion (2030-31) and $7.5 trillion (2047-48) in absolute manufacturing output.
  • Government initiatives like Make in India, Atmanirbhar Bharat, and PLI schemes aim to drive industrial growth, but quality remains a key challenge.

Unified Quality Interface (UQI)

  • A modular and scalable digital ecosystem leveraging Digital Public Infrastructure.
  • A single-window approach for quality management, ensuring Indian products meet global standards (ISO, ASTM, CE, FDA).
  • Core Pillars of UQI:
    • Core Infrastructure Primitives: Standardised data governance and interoperability.
    • Elemental Services: Real-time access to testing, accreditation, and certification records.

Need for Unified Quality Interface (UQI)

  • Quality Issues: India’s industrial landscape is vast and diverse, with thousands of MSMEs facing quality consistency challenges.
  • Inefficient quality assurance framework: Existing quality assurance mechanisms are fragmented, with multiple regulatory bodies leading to inefficiencies, rework costs, and global perception issues.

Key Challenges in India’s Quality Assurance System: 

  • Information asymmetry: No real-time mechanism for verifying compliance with national and international standards.
  • Lack of digital linkage: Regulators lack direct digital access to real-time production quality data, leading to repetitive testing cycles.
  • Fragmented conformity assessment: Manual and disconnected accreditation processes delay regulatory approvals and market entry.
  • Reactive market surveillance: Quality monitoring is post-facto rather than real-time, making it inefficient for precision industries.
  • Lack of a centralised framework: Despite having multiple agencies like BIS, FSSAI, NABL, and ARAI, there is no unified framework integrating their efforts.

Benefits of UQI Implementation: 

  • Transparency: Eliminates information asymmetry through real-time access to compliance records. AI-driven anomaly detection to flag suspicious supply-chain activities.
  • Real-time anomaly detection: AI-powered systems to flag fraudulent certifications; product safety risks and suspicious supply-chain activities.
  • Streamlined regulatory compliance: Enables dynamic policy updates and seamless enforcement through digital APIs. Faster regulatory interventions and grievance resolution mechanisms.
  • Strengthening trade competitiveness:
    • National Trade Network (NTN) for seamless digital export-import compliance.
    • Tokenization of compliance for incentives like reduced transaction fees.
  • Empowering MSMEs: Affordable and accessible quality compliance processes to integrate MSMEs into global supply chains.

Institutionalising UQI will transform compliance into a competitive advantage, reinforcing India’s position as a global manufacturing powerhouse. This strategic intervention aligns with India’s ambition of achieving Viksit Bharat by 2047. 

Household Debt and Consumption Loans in India

Context: The Financial Stability Report (FSR) 2024 by the RBI highlights the rise in household debt and its implications on financial stability and economic growth. 

Relevance of the topic:

Prelims: Questions on economic indicators like GDP, inflation, household debt, and financial stability.

Mains: Impact of debt on economic growth, financial inclusion, and inequality. 

Major Highlights: 

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1. Rising Household Debt:  

  • Household debt-to-GDP ratio increased from 36.6% (June 2021) to 42.9% (June 2024), while household assets declined.
  • Debt growth driven by increase in number of borrowers, not rising indebtedness per borrower
  • Sub-prime borrowers are decreasing; two-thirds of debt now belongs to prime and super-prime borrowers

2. Shift in Borrowing Purpose: 

  • Shift in borrowing patterns—greater unsecured loans for consumption (than asset creation), particularly among low-income groups.
    • Super-prime borrowers: 64% of loans used for asset creation.
    • Sub-prime borrowers: Nearly 50% of loans used for consumption.
  • Lower-income groups rely more on unsecured credit (credit cards, personal loans).

3. Increasing Financial Stress for Lower-Income Households:  

  • Higher delinquencies in credit card and personal loans since September 2023.
  • Unsecured debt defaults can impact secured loans (housing, vehicle loans).
  • Financial stress among low-income groups can weaken economic stability.

Challenges: 

  • Macroeconomic Weakness: High household debt can lower economic growth.
  • Financial Marginalisation: Low-income households are burdened with debt, reducing their ability to spend.
  • Credit Risks: Increase in non-performing assets (NPAs) due to defaults in unsecured loans.
  • Decline in Income Multiplier Effect  Poor households spend more of their income, but debt servicing reduces consumption, impacting economic growth.
  • Role of Financial Innovations: Growth in unsecured loans raises concerns over financial stability.

Benefits: 

  • Increase in Credit Access: More individuals now have access to credit.
  • Better Borrower Profiles: More lending to prime and super-prime borrowers.
  • Control Measures by RBI: Recent steps have slowed credit growth, reducing risks.

The policy will have to remain awake to the possible sources of fragility engendered by the increase in consumption loans and the proliferation of unsecured forms of consumer credit. 

Need for 10-Digit HSN in India’s Trade Policy

Context: The World Customs Organisation (WCO) has drafted the 2027 HSN update, revising the 2022 version. India aims for a $2 trillion export target by 2030, making trade efficiency and compliance critical. Transitioning to a 10-digit Harmonised System of Nomenclature (HSN) is essential for better trade tracking, enhanced policy interventions and stronger global competitiveness. 

Relevance of the Topic: Prelims: Key facts about 10-digit Harmonised System of Nomenclature (HSN).  

Harmonised System Nomenclature code

  • HSN code is a standardised system of names and numbers used to classify traded products internationally developed by the World Customs Organisation (WCO). It allows countries to identify goods during import and export, and apply duties and taxes accordingly.
  • India has been a member of the WCO since 1971. It initially employed six-digit HSN codes to classify merchandise for Customs as well as Central Excise duties. To make the codes more precise, the Customs and Central Excise authorities added two more digits. This resulted in an eight-digit HSN classification.
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Benefits of 10-Digit HSN in India

1. Trade Transparency & Policy Efficiency

  • India's 8-digit HSN lacks precision in capturing product details.
  • A 10-digit system will :
    • Prevent misclassification of goods.
    • Ensure accurate tariff application.
    • Facilitate smoother trade negotiations and preferential market access
    • Align India with WTO standards, enhancing Brand India.

2. Supporting Organic & Geographical Indication (GI) Products

  • Organic and GI products (E.g., Basmati Rice, Darjeeling Tea, Pashmina, Kanjeevaram Silk) face classification challenges under the 8-digit system.
  • A 10-digit HSN will:
    • Classify GI products by sector (agriculture, handicrafts, textiles, food).
    • Improve traceability, preventing counterfeiting.
    • Strengthen India’s position in e-commerce and blockchain-based supply chains.
    • Enhance sustainability in organic agricultural exports.

3. Strengthening Brand India & Export Growth: 

  • Helps promote India's heritage products under One District One Product (ODOP).
  • Prevents misclassification of ethnic crafts like: Desi Ghee, Channapatna Toys, Kanjeevaram Silk Sarees, Gur and Desi Khand. 
  • Supports India’s cultural and artisanal legacy in global markets.

4. Compliance with Global Regulations: 

  • The EU Deforestation Regulations require accurate classification for agri-exports.
  • A 10-digit HSN will:
    • Ensure precise documentation for ‘transaction certificates’.
    • Reduce confusion in customs clearance and regulatory approvals.
    • Prevent invoice mismatching, improving orderly trade engagements.

5. Improved Revenue Collection & GST Compliance: 

  • Luxury goods, high-end watches, premium cosmetics, and automobiles often face mis-declaration in GST and Customs.
  • A granular classification under a 10-digit HSN will:
    • Improve tax collection and reduce evasion.
    • Enable progressive taxation based on value, brand, and end use.
    • Strengthen policy planning for tariff applications.

6. Counter Trade Disruptions & Dumping: 

  • India’s rice export policy struggled post-Russia-Ukraine conflict, leading to:
    • Confusion in minimum export price (Basmati).
    • Export duty issues on parboiled rice.
    • Export licensing and quotas for non-Basmati rice.
    • Loopholes allowing broken rice exports.
  • A 10-digit HSN will ensure:
    • Better categorisation of rice and other essential commodities.
    • Effective control over trade instruments like duties, quotas, and licensing.

7. Strengthening Non-Tariff Barriers (NTBs): 

  • A 10-digit HSN helps India strategically use:
    • Sanitary and Phytosanitary (SPS) measures.
    • Technical Barriers to Trade (TBT).
    • Other regulatory tools to prevent unfair trade practices.
  • Allows strategic use of non-tariff measures for industries facing dumping from: Steel, electronics, semiconductors, chemicals, lead, and metallurgical products.
  • Helps India negotiate better sectoral Free Trade Agreements (FTAs) with key partners like: US, EU, UK, and Israel.

By refining classification, India can counter unfair trade practices, protect domestic industries, and navigate the evolving global trade landscape more effectively.

Kisan Credit Card bad loans rise by 42% in four years: RBI

Context: Recently, in an Right to Information (RTI) request reply, the Reserve Bank of India informed that the outstanding NPA amount in the Kisan Credit Card (KCC) segment surged to Rs 97,543 crore as at end of December 2024. 

Relevance of the Topic: Prelims: Kisan Credit Card; Non-Performing Assets in KCC segment. 

Major Highlights:

  • Among all other agriculture loans offered by banks, such as tractor or food and agri-processing loans, the highest amount of delinquencies are seen in the Kisan Credit Card (KCC) segment.
    • Scheduled commercial banks, excluding regional rural banks, have seen a sharp increase of 42% in bad loans in KCC accounts, during FY21-FY25. 
    • Outstanding NPA amount surged to Rs 97,543 crore at the end of December 2024, compared to Rs 68,547 crore at the end of March 2021. 
  • Amount outstanding in operative KCC accounts across all banks (SCBs, cooperative banks and RRBs), has risen from Rs 4.76 lakh crore in FY22 to Rs 5.91 lakh crore as of December 2024. This reflects stress in the agriculture sector. 

NPA classification in the KCC segment

  • In case of a retail loan, an account becomes an NPA if interest and instalment of principal remain overdue for more than 90 days. 
  • The repayment period for KCC loans is as per the crop season (short or long) and marketing period for the crop.
    • The crop season for states is decided by the respective State Level Bankers Committee (SLBC). 
    • For short duration crops, the crop season is 12 months and for long duration crops it is 18 months in most states.
  • If a KCC loan is not paid within three years of disbursal, it is classified as NPA.

Factors for rise in defaults in KCC segment: 

  • Inability of farmers to repay loans due to weather-related damages to crops.
  • Lack of awareness among farmers about repayment timelines.
  • Delay in payments due to exigencies related to personal household requirements.
  • Weak loan recovery mechanism for banks.
  • Expectations of farm loan waiver; Borrowers choose to default strategically in anticipation of future bailouts.

Kisan Credit Card (KCC) scheme

  • Introduced in 1998, KCC scheme provides timely access to institutional credit to small and marginal farmers for agricultural and allied activities. 
  • KCC offers credit support for:
    • Cultivation and post-harvest activities.
    • Working capital for essential farming equipment. 
    • Investment credit for allied activities (animal husbandry, dairying, fisheries, and other agricultural extensions). 
    • Meet household consumption expenses. 
  • Key Features:
    • Banks provide collateral-free loans up to Rs 2 lakhs under KCC scheme. 
    • KCC offers a revolving cash credit facility, allowing farmers to withdraw and deposit funds multiple times, without any restrictions.
    • KCC loans come under the priority sector lending (PSL) for banks. Of the overall PSL target of 40%, banks are mandated by RBI to allocate 18% of their funds towards agriculture lending. 
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Modified Interest Subvention Scheme under KCC

  • Modified Interest Subvention Scheme (MISS) offers concessional Short-term Agri-loans to farmers through KCC, up to Rs 3 lakh at a concessional interest rate of 7% per annum. 
  • An additional 3% subvention is provided for timely repayment, reducing the effective rate to 4%. 
  • MISS also includes post-harvest loans against Negotiable Warehouse Receipts (NWRs) for small farmers with KCCs.
  • In the Budget 2025-26, the government announced to increase the loan limit under the MISS from Rs 3 lakh to Rs 5 lakh.

A 2019 report of an RBI working group to ‘Review Agriculture Credit’ cited that loan waivers impact the credit flow to agriculture due to moral hazard among both beneficiaries and non-beneficiaries. This essentially leads to banks reallocating lending to lower risk borrower segments, and thus reducing credit availability for the agriculture sector. 

India’s push for Semiconductor Chip Production amid Rising Imports

Context: India's escalating demand for electronic devices has led to a significant increase in semiconductor chip imports. 

Relevance of the topic:

Prelims: Semicon India Programme; Import trends.

Mains: Challenges of high import Dependence.

Major Highlights: 

  • Data from the Ministry of Commerce and Industry shows that in the past 10 years, imports for semiconductor chips such as monolithic integrated circuits (ICs), memories, amplifiers, and other ICs have increased significantly.
    • In FY24, the total value of Monolithic IC imports was ₹1.05 lakh crore, a 2,000% increase compared to FY16. 
    • In FY24, import of memory chips increased by 4,500% compared to FY16.
    • Imports of amplifiers, which are utilised in wireless communication and audio equipment, increased by 4,800% in FY24 from FY16.  
  • In the past 10 years, except FY19, China has been the major supplier of semiconductor chips to India, accounting for nearly one third of the import value every year. Hong Kong, Japan, South Korea, Singapore, and Taiwan have also been major suppliers to India.  
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Challenges associated with High Import Dependence: 

India's heavy reliance on semiconductor chip imports presents several challenges that impact its economy, technological advancement, and national security.  

  • Supply Chain vulnerabilities: Dependence on external sources for semiconductors exposes India to global supply-chain disruptions. E.g., the global semiconductor shortage in recent years led to production delays in various industries, including automotive and electronics.  
  • Economic Implications: Importing semiconductors contributes to a significant outflow of foreign exchange, affecting the country's trade balance.
  • Technological Lag: High import dependence can hinder the development of a domestic semiconductor industry, limiting innovation and technological self-reliance. This reliance may prevent India from keeping pace with global advancements in semiconductor technology.
  • National Security Concerns: Dependence on foreign-made semiconductors can pose national security risks, as these components are integral to defense and critical infrastructure.  

To address these challenges and enhance self-reliance, India is focusing on developing a robust domestic semiconductor manufacturing ecosystem. 

Government Initiatives in this regard:  

As per industry estimates, the size of the Indian semiconductor market was about $38 Billion in 2023 and is expected to reach $109 Billion by 2030. 

1. Manufacturing Facilities:

  • Five manufacturing facilities are under construction for the manufacturing and assembly of semiconductor chips, backed by the Semicon India Programme. These include- Tata Semiconductor Assembly and Test facility in Morigaon (Assam); Dholera (Gujarat) semiconductor fabrication facility (fab) by Tata Electronics in collaboration with the Taiwan-based Powerchip Semiconductor Manufacturing Corporation. 
  • With the new facilities, India will be able to add value in the assembly, testing, and packaging, and fab segments of the global value chain for semiconductors. 
  • India is yet to make major strides in EDA (software used for designing chips), Core IP (patents), wafers (semiconductor materials), fab tools and ATP tools (machinery), and design of chips. 

Also Read: Assam Semiconductor Plant to start making Chips in 2026 

2. Semicon India Programme: 

  • Launched in 2021 with an outlay of ₹76,000 crores for the development of semiconductors and display manufacturing ecosystem in India.
  • Aim: To provide financial support to companies investing in semiconductors, display manufacturing and design ecosystem.
  • Implementing Agency: India Semiconductor Mission under Ministry of Electronics and Information Technology (MeitY).
  • Following four schemes have been introduced under the programme:
    • Modified Scheme for setting up of Semiconductor Fabs in India extends fiscal support of 50% of the project cost for setting up of Silicon CMOS based Semiconductor Fabs in India.
    • Modified Scheme for setting up of Display Fabs in India extends fiscal support of 50% of Project Cost for setting up of Display Fabs in India.
    • Fiscal support of 50% of the Capital Expenditure for setting up of Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fab/ Discrete Semiconductor Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP)/ OSAT facilities in India.
    • ‘Design Linked Incentive (DLI) Scheme’: Product Design Linked Incentive of up to 50% of the eligible expenditure subject to a ceiling of ₹15 Crore per application.

Also Read: India-US semiconductor Partnership 

India's Spice Sector

Context: The World Spice Organisation (WSO) reported that despite being the largest producer and exporter of diverse varieties of spices in the world, India’s share in the global seasoning market is only 0.7%.

Relevance of the topic:

Prelims: Spices Industry in India- types, trends, growing areas. 

Mains: Spice exports- Trends, issues, initiatives, way forward. 

Spices in India

  • Primary spice-growing regions include Kerala, Karnataka, Tamil Nadu, Andhra Pradesh, and Gujarat. However, new regions like the North-East, Odisha, and Jharkhand are emerging as significant spice producers.
  • Some of the most widely grown and exported spices in India include:
    • Black Pepper: "The King of Spices," mainly grown in Kerala and Karnataka.
    • Cardamom: Highly valued in global markets, produced in South India.
    • Turmeric: Used in culinary, medicinal, and nutraceutical applications.
    • Cumin & Coriander: Essential for Indian and Middle Eastern cuisine.
    • Chilies: India is the largest producer of red chilies, widely grown in Andhra Pradesh and Telangana.

Current Status of India's Spice Exports

  • Largest producer and exporter: India is the largest producer and exporter of diverse varieties of spices globally.
  • Total spice export: India exports 1.5 million tonnes of spices worth $4.5 billion, commanding about 25% of the $20 billion global spice market.
  • Low market share: India's share in the global seasoning market (valued at $14 billion in 2024) is only 0.7%, compared to:
    • China: 12%
    • United States: 11%
  • Value addition in spice exports:
    • Only 48% of India's spice exports are value-added products.
    • The remaining 52% are exported as raw, whole spices with limited processing.

Challenges in Indian Spice Industry

  • High cost of production: Farmers struggle with rising costs due to inefficient agricultural practices, pesticide overuse, and outdated processing methods.
  • Low value addition: India primarily exports whole spices rather than processed spice products like seasonings, extracts, and nutraceuticals. To meet the $10 billion export target by 2030, the share of value-added spices should increase from 48% to 70%.
  • Limited global market penetration: While India dominates spice production, countries like Vietnam, Indonesia, Brazil, and China have expanded their presence in international spice markets. Additionally, African nations have recently entered spice cultivation, posing new competition.
  • Quality & Safety Concerns: Stringent global regulations on pesticide residues and contamination require strict quality control measures. Many Indian spice farmers need training in integrated pest management, hygiene to meet international standards.
  • Climate change impact: Spice cultivation is highly sensitive to climate conditions. Unpredictable monsoons and rising temperatures threaten yields and quality. Developing high-yielding and climate-resistant varieties is essential to maintaining production levels.

Government & Industry Efforts for Improvement

  • Spices Board of India: Promotes research, processing, and export growth in the sector.
  • World Spice Organisation (WSO): Works with Farmer Producer Organisations (FPOs) to improve spice farming techniques.
  • Indian Council of Agricultural Research (ICAR): Developing high-yield and climate-resistant spice varieties.
  • Integrated Pest Management (IPM) Programs: Educates farmers on sustainable cultivation practices.

To achieve the $10 billion spice export target by 2030, India must boost production efficiency, increase value-addition, expand global market presence, enhance pesticide control and meet international standards. 

US Strategic Crypto Reserve

Context: The US President has signed an executive order to create a strategic reserve of bitcoin, having previously said he wants the United States to be a leader in digital money.

Relevance of the Topic: Prelims: Strategic reserves; US Strategic Crypto Reserves. 

What is a Strategic Reserve?

  • Strategic Reserve is a stockpile of critical resources maintained by a government or large organisation to ensure stability during emergencies or future uncertainties. 
  • Common examples:
    • Strategic Petroleum Reserve (SPR): To ensure energy security during oil crises.
    • Food Grain Reserves: To prevent food shortages during emergencies.
    • Gold Reserves: Held by the Central bank to stabilise the economy and facilitate International trade.

US Strategic Crypto Reserves: 

  • Trump has named the five cryptocurrencies to be held in the reserves, namely Bitcoin, Ethereum, XRP (Ripple), Solana and Cardano.
  • By creating an official strategic crypto reserve, the US government indirectly legitimises Bitcoin and other cryptocurrencies.

Why is the US creating a Crypto Reserve?

  • Diversification of Assets:
    • Currently, the US monetary reserves are heavily reliant on gold, dollars, and foreign currencies.
    • Holding cryptocurrencies like Bitcoin can provide a new store of value, and hedge against economic instability. 
  • Boosting Digital Economy:
    • Promoting cryptocurrency adoption can strengthen the US leadership in digital assets and global financial systems. China is already advancing in Central Bank Digital Currencies (CBDCs).
    • It can attract more investments into blockchain technology and fintech innovations.
  • Utilising Seized Crypto Assets:
    • The US government has seized around 198,109 bitcoins from criminal and civil activities, valued at $18.1 billion. Retaining these assets could strengthen the national reserve without additional taxpayer expenditure.

Challenges and Risks of a Crypto Reserve: 

  • Price Volatility: Cryptocurrencies like Bitcoin are highly volatile. A market crash could result in massive losses to the government’s reserves.
  • Contradiction in Government Control: Bitcoin was originally designed as a decentralised asset, free from government control. Stockpiling it as a government asset contradicts its foundational principle.
  • Market Manipulation: If multiple governments start accumulating Bitcoin, it may allow state actors to manipulate crypto prices, similar to gold markets. This could destabilise the cryptocurrency market.
  • Favouritism Concerns: Critics have accused Trump of favoring the crypto industry, especially since some of his major political backers are major crypto investors. This raises ethical concerns about impartial policy-making.

Global Implications of US Crypto Reserve: 

  • New Trend in National Reserves: If the US successfully implements a Crypto Reserve, other countries may follow, increasing demand and value for cryptocurrencies.
  • Shift in Global Financial System: Increased government participation in cryptocurrencies could reshape global finance, reducing reliance on traditional assets like gold or fiat currencies.
  • Increased Surveillance: Governments may use blockchain technology to monitor and control financial transactions, reducing financial privacy for individuals.
  • Impacts on Global Cryptocurrency Prices: If the US reserve grows significantly, it could artificially inflate Bitcoin’s value, making the asset unaffordable for small investors.

The US should work with international bodies like the G20, IMF, and WTO to standardise the global use of cryptocurrency reserves. A clear legal and regulatory framework must be established to ensure transparency and accountability in crypto holdings.  

Revised Livestock Health and Disease Control Programme

Context: The Cabinet approved the revision of the Livestock Health and Disease Control Programme (LHDCP) with a total outlay of ₹3,880 crore for FY 2024-25 and FY 2025-26, and added a new component Pashu Aushadhi, with allocation of Rs 75 crores. 

Relevance of the topic:

Prelims: Livestock Health and Disease Control Programme

Mains: Livestock sector in India- Significance, Initiatives, Issues

Status of Livestock Sector in India

  • India has the world's largest population of livestock. As per the 20th Livestock Census, India’s Livestock population stood at 535.78 million in 2019. This included a total bovine population (including cattle, buffalo, mithun and yak) of 302.79 million.

Significance of Livestock Sector

  • Contribution to GDP: Contribution to total Livestock GVA (at constant prices) was 30.19% of Agricultural and Allied Sector GVA and 5.73% of Total GVA in 2021-22.
    • India is ranked 1st in milk production contributing 23% of global milk production.
    • India is the largest producer of buffalo meat and 2nd largest producer of goat meat.
  • Employment generation: Livestock rearing is a major source of livelihood for over 70% of rural households in India, especially for small and marginal farmers and landless laborers.
  • Food and Nutritional Security: Livestock products such as milk, meat, and eggs are rich in essential nutrients, playing a crucial role in combating malnutrition.
  • Interlinkages with Agri-activities: The livestock sector is crucial for production of organic inputs like manure and agricultural waste is used as fodder for animals.

Issues faced by Livestock Sector in India

  • Health and Veterinary Issues:
    • High economic losses due to animal diseases: E.g., Foot and Mouth Disease (FMD), Brucellosis, Peste des Petits Ruminants (PPR), Cerebrospinal Fluid (CSF), Lumpy Skin Disease etc. 
    • Zoonotic diseases can be transmitted between animals and humans, as evidenced by recent outbreaks like COVID-19, Ebola, and Avian influenza.
    • Inadequate infrastructure: India has less than 60 recognised veterinary colleges in India, which are inadequate to turn out the required number of vets. 
    • Anti-Microbial Resistance: India ranks 4th in antibiotics use in animals, wherein the poultry sector is the largest reservoir of antibiotics. 
  • Economic Issues:
    • Low Productivity: Due to inadequate nutrition, poor management practices, and low genetic potential of local breeds.
      • Average annual productivity of cattle in India is 1777 kg/animal/year as against the world average of 2699 kg/animal/year (2019-20).
    • Unorganised Sector: About half of total meat production comes from un-registered, make-shift slaughterhouses. 
    • High Marketing and transaction costs: of livestock products at around 15-20% of sale price.
    • Low Insurance Cover: Only 15.47% of animals are under insurance cover.
    • Shortage of Fodder: India has only 5% of its cultivable land under fodder production while having 11% of livestock, creating a huge pressure on land, water and other resources. 
  • There is no exclusive livestock extension program, and most services are animal health-focused, not extension-focused. 
  • Greenhouse gas emissions: Enteric methane emission from Indian livestock contributed 15.1% total global enteric methane emissions.

Livestock Health & Disease Control Programme (LHDCP)

  • Aim: To improve the animal health sector by implementation of prophylactic vaccination programmes against various diseases of livestock and poultry, capacity building, disease surveillance and strengthening of veterinary infrastructure. 
  • Objectives of the scheme:
    • To implement a Critical Animal disease control programme to eradicate PPR (viral disease) by 2030 by vaccinating all sheep and goats and to control Classical Swine Fever (CSF) by vaccinating the entire pig population.
      • Peste des Petits Ruminants (PPR), also known as sheep and goat plague, is a highly contagious viral disease affecting domestic and wild small ruminants.
    • To provide veterinary services at the farmers’ doorstep through Mobile Veterinary Units (MVUs). 
    • To assist States/UTs for Control of Animal Disease (ASCAD) by prevention & control of important livestock and poultry diseases.

Revised LHDCP consists of Three Major Components

1. National Animal Disease Control Programme (NADCP): Focuses on immunisation and control of major livestock diseases.

2. Livestock Health and Disease Control (LH&DC): Comprises three sub-components:

  • Critical Animal Disease Control Programme (CADCP): Targets major livestock diseases like Foot and Mouth Disease (FMD), Brucellosis, etc.
  • Establishment and Strengthening of Veterinary Hospitals & Dispensaries (ESVHD-MVU): Includes Mobile Veterinary Units (MVU) for doorstep healthcare.
  • Assistance to States for Control of Animal Diseases (ASCAD): Financial and technical support to state governments.

3. Pashu Aushadhi Kendras (New component):

  • Aim: To provide affordable and good-quality generic veterinary medicines.
  • Distribution through PM-Kisan Samriddhi Kendras and cooperative societies.
  • Pashu Aushadhi Kendras will also sell ethno-veterinary medicines, based on traditional beliefs and indigenous knowledge and practices.

Other Initiatives in Livestock Sector: 

  • Rashtriya Gokul Mission: Focuses on the development and conservation of indigenous breeds through selective breeding and genetic upgradation.
  • National Livestock Mission: Aims to ensure quantitative and qualitative improvement in livestock production systems and capacity building of all stakeholders.
  • Extension of Kisan Credit Card (KCC) to the sector and establishment of Animal Health Infrastructure Development Fund etc.
  • Dairy Development Programs: Schemes like the National Programme for Dairy Development (NPDD) and Dairy Entrepreneurship Development Scheme (DEDS) aim to modernize the dairy sector and promote entrepreneurship.

District-level GDP Estimation

Context: In keeping with the international standards, India’s economic growth story has long been measured through National level GDP Estimates. Yet the most critical unit of development- the district- remains an economic blind-spot. 

Relevance of the Topic: Mains: District-level GDP Estimation- Issues, Need, Challenges, Way Forward

Limitations of the Current GDP Estimation Methodology

  • Top-down Approach:
    • Economic output is first estimated at the national level and then apportioned to States and districts. This method does not measure economic activity directly at the district level.
  • Sectoral Challenges:
    • Primary Sector (Agriculture, Forestry, Fishing, Mining):
      • Uses a bottom-up approach, aggregating data from districts to the national level.
      • However, data collection methods are often outdated and inconsistent.
    • Secondary & Tertiary sectors (Manufacturing, Construction, Services, etc.):
      • Relies on a top-down approach, using indicators like employment levels, wages, and infrastructure presence.
      • Fails to capture real-time economic activity or the sectoral contribution of districts.
  • Data Gaps and Inaccuracies:
    • The unorganised sector and informal economic activities are poorly captured.
    • Survey methodologies are inconsistent, leading to unreliable estimates.
    • Economic reality at the district level is often misrepresented.

Need for District Domestic Product (DDP) Estimation

  • Granular data for policymaking: Helps tailor policy interventions to address economic disparities at the district level.
  • Localised economic planning:
    • Identifies sector-specific growth opportunities for each district.
    • Enables targeted investments in agriculture, manufacturing, or services as needed.
  • Strengthening Fiscal federalism:
    • Empowers districts to develop independent economic strategies aligned with national and state goals.
  • Case Study: Uttar Pradesh (UP) & COVID-19: 
    • During 2020-21, GDP data was distributed using the traditional method, which did not reflect UP’s economic reality.
    • UP’s agriculture sector contributed 25% of its Gross State Value Added (GSVA) and was less impacted than manufacturing.
    • The state advocated for a bottom-up approach to estimate GDP more accurately.
image 32

Challenges in Implementing district-level GDP estimation:

  • Financial and logistical investment: Requires substantial funding for data collection and statistical infrastructure.
  • Collaboration between Central & State agencies: Needs coordination between MoSPI and state statistical departments.
  • Capacity building: Training local officials to collect and analyze economic data.

Way Forward

  • Investment in data infrastructure: Every $1 invested in statistics leads to $32 in economic development.
  • Real-time economic monitoring: Use digital tools, AI, and big data analytics to track economic activities.
  • Incorporating DDP in Viksit Bharat 2047 vision: Empowering districts for equitable and inclusive growth.

A robust district-level economic measurement framework will ensure balanced growth, making India’s journey toward a $5 trillion economy more inclusive and sustainable.

India's Labour Market: Key Trends

Context: India’s labour market is witnessing a shift from jobless growth to rising employment across sectors. Various surveys highlight increasing job creation, especially in manufacturing, MSMEs, and rural non-farm employment.

Relevance of the Topic: Prelims: India’s labour market- Trends.

Survey findings on Employment Trends

  • MSME Udyam Portal: Jobs increased from 121 million (2023) to 201.9 million (2024).
  • Annual Survey of Industries (ASI) FY23: Manufacturing employment rose by 7.5% (from 17.2 million in FY21 to 18.4 million in FY23).
  • Periodic Labour Force Survey (PLFS): Manufacturing employment growth increased from 1.15% p.a. (2017/18-19/20) to 5.8% p.a. (2019/20-22/23).
  • RBI KLEMS Database: 46.7 million jobs were created in FY24, more than double the 19.1 million in FY23.

Women's Labour Force Participation Rate

  • Rural Job Diversification and Women's LFPR: 
    • Increasing shift of males to rural non-farm employment (RNFE) has led to higher women’s labour force participation rate (LFPR).
    • PLFS 2023-24: 
      • 59.8% of rural workers are in agriculture, with the rest in RNFE.
      • The share of male workers in agriculture fell to 49.4% and that of females rose to 76.9%.
    • Study in Eastern UP (2006-2023):
      • Agricultural income growth: 0.1% p.a.
      • RNFE (including remittances) growth: 7.3% p.a.
      • Agriculture’s share in household income: fell from 22% to 8%.
    • Rural manufacturing employment grew at 4%, exceeding urban manufacturing growth of 3.8%.
  • Urban women’s LFPR is rising due to higher incomes, availability of household help, and reduced household constraints. 

Wage growth and Income patterns

  • PLFS 2023-24:
    • The self-employed had the highest wage growth (9.6%).
    • Casual workers saw 7.4% growth, with a daily wage of ₹433.
    • Regular wage earners had a lower wage growth of 5.5% (₹21,103 monthly).
  • ICRIER Analysis of PLFS Data:
    • Since 2019, urban nominal wages grew at 6% p.a., while real wages rose by only 0.5% p.a.
    • Real wages remain largely constant due to labour absorption trends.
    • Higher real wage growth without productivity rise could lead to inflationary pressures.
  • Lessons from previous wage growth:
    • 2010-2013: Real wage growth in rural areas peaked at 7% due to high post-GFC fiscal deficits and food inflation.
    • Post-2013: Real wages stabilized due to financial tightening and economic corrections.
    • Wage growth must align with productivity to remain sustainable.
  • Real Private Final Consumption Expenditure (PFCE):
    • Fell after the pandemic but recovered to 7% growth in FY25.
    • A slight dip to 6% in Q2 was cyclical and expected to reverse with financial easing.
    • Sustaining consumption requires continued income growth and employment generation.

Economic growth and Job creation: 

  • Growth averaged 8.3% (2021-24), providing stability for job creation. Earlier periods of jobless growth were marked by economic volatility.
  • Labour Market Trends (FY25):
    • Q2 FY25 saw GDP growth dip to 5.4% and unemployment rise to 6.6%.
    • Q3 FY25: Government capital expenditure revival led to UR falling to 6.4%.

Youth Unemployment: 

  • High youth unemployment often results from aspirational job-seeking. Above 35 years, unemployment declines as job-seekers settle for available opportunities.
  • Government jobs remain highly sought after due to higher entry-level pay, job security, and lesser workload.
  • If government jobs shift to contract-based hiring, youth unemployment may decrease significantly.

Corporate Investment and Productivity: 

  • The post-reform period saw rising labour productivity benefiting corporate margins more than wages.
  • Policy tools needed:
    • Incentives (Carrots): Encouraging investment and job creation.
    • Regulations (Sticks): Ensuring wage growth aligns with productivity.
  • External shocks create uncertainty, affecting business expansion.
  • India’s post-pandemic policies have helped sustain growth despite global volatility.

Policy recommendations for Job sustainability

  • Skilling and Training: Enhancing workforce capabilities for higher productivity.
  • Job-specific training: Ensuring alignment with industry demands.
  • Labour market flexibility: Balancing worker security with employer needs.
  • Macroeconomic stability: Maintaining steady growth to encourage hiring.
  • Continued policy support: Implementing countercyclical policies to absorb global shocks.

Import of Pulses

Context: Indian government has recently reimposed import duties on yellow peas after allowing duty-free imports for a limited period. The surge in pulse imports has impacted domestic prices, causing distress among Indian farmers.

Relevance of the topic:

Prelims: Pulses, Import of pulses- Trends

Mains: Pulses- Production, Imports, Challenges

Pulses

  • Temperature: Between 20-27°C
  • Rainfall: Around 25-60 cm.
  • Soil type: Sandy-loamy soil.
  • These are the major sources of protein in a vegetarian diet.
  • Being leguminous crops, all these crops (except arhar) help in restoring soil fertility by fixing nitrogen from the air. Therefore, these are mostly grown in rotation with other crops.
  • Pulses are grown throughout the agricultural year. 
  • Rabi Pulses (contribute over 60%): Gram (chickpea), Chana (Bengal gram), Masoor (lentil), Arhar (pigeon pea).
    • Rabi crops require a mild cold climate during sowing period
    • Cold climate during vegetative to pod development
    • Warm climate during maturity/harvesting
  • Kharif Pulses: Moong (green gram), Urad (black gram), Tur (arhar dal).
    • Kharif pulse crops require a warm climate throughout their life from sowing to harvesting.
image 29

Recent Government Policies on Pulse Imports

  • The government allowed duty-free imports of yellow peas from December 2023 to February 2025, but has now reimposed the duty.
  • The duty-free import period for pigeon peas (tur) has been extended until March 31, 2026.
  • A decision on chickpeas (chana) and black gram (urad) is awaited.
  • The Ministry of Food has recommended reimposing customs duty on lentils, but no notification has been issued yet.

Impact of Duty-free imports on domestic market

  • Increased imports: According to trade data, India is estimated to have imported 6.63 million tonnes of pulses in 2024, compared with 3.31 million tonnes in 2023.
  • Falling domestic prices:
    • Prices of pulses in India have fallen below the Minimum Support Price (MSP) due to increased imports.
    • Example:
      • Urad prices dropped by 25% from over ₹100/kg since June 2024.
      • Pigeon pea (tur) prices fell to $800/tonne from $1,400/tonne in mid-2024.
      • Yellow peas prices fell to $450/tonne from $700/tonne when duty-free imports were allowed.
image 30
  • Benefits to foreign farmers, while Indian farmers struggle:
    • Australian and Canadian farmers have benefited from exports, while Indian farmers struggle with lower prices.
    • Example: Australian farmers earn ₹160/kg for chickpeas, whereas Indian farmers earn ₹100/kg.
  • Impact on Domestic farmers:
    • Lower prices may discourage farmers from growing pulses, impacting India's self-sufficiency in food production.
    • Farmers may switch to other crops like maize, which is gaining demand due to ethanol production.

Reasons behind India’s dependence on Pulses Imports

According to trade data, India is estimated to have imported 6.63 million tonnes of pulses in 2024, compared with 3.31 million tonnes in 2023.

  • Shifting cropping patterns:
    • Traditionally, farmers in India practised crop rotation with pulses. 
    • However, in recent decades, there has been a shift towards cultivating water-intensive cereals like rice and wheat due to the following reasons:
      • Rice and wheat are staples in most Indian diets, leading to a rise in consumption demands.
      • Government incentives like higher margins over the average cost of production in MSPs and assured procurement for these crops.
      • Availability of better irrigation facilities in some areas.
  • Lower profitability:
    • Pulses often offer lower returns per hectare compared to cereals. This discourages farmers from planting them, especially on fertile and irrigated land.
  • Climate challenges:
    • Erratic rainfall and droughts can negatively impact pulse production, which are generally rain-fed crops.
  • Limited technological advancements: Compared to cereals and cash crops, research and development in pulse is limited and higher susceptibility to diseases and pests persist.

India’s Initiatives to boost Pulses Production

1. National Food Security Mission (NFSM)-Pulses:

  • Led by Department of Agriculture & Farmers Welfare 
  • It operates in 28 States and 2 Union Territories including Jammu & Kashmir and Ladakh.
  • Interventions under NFSM-Pulses:
    • Assistance to farmers through States/UTs for various interventions.
    • Cropping system demonstrations.
    • Seed production and distribution of HYVs/hybrids.
    • Additionally, the establishment of 150 Seed Hubs for Pulses has significantly contributed to increasing the availability of quality pulse seeds.

2. Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA) Scheme: comprises three components:

  • Price Support Scheme (PSS): Procurement from pre-registered farmers at Minimum Support Price (MSP).
  • Price Deficiency Payment Scheme (PDPS): Compensates farmers for price differences.
  • Private Procurement Stockist Scheme (PPSS): Encourages private sector participation in procurement.

3. Mission for Aatmanirbharta (self-reliance) in Pulses: 

  • In Budget 2025, the government announced plans to launch a 6-year mission with a special focus on Tur, Urad and Masoor. 
  • The Mission will place emphasis on:
    • development and commercial availability of climate resilient seeds
    • enhancing protein content in pulses
    • increasing pulses productivity
    • improving post-harvest storage and management
    • assuring remunerative prices to the farmers. 
  • Rs 1,000 crore have been allocated to provide Minimum Support Price (MSP) based procurement and post-harvest warehousing solutions for these 3 pulses. 
  • Central Agencies (NAFED and NCCF) will procure these 3 pulses, as much as offered during the next 4 years from farmers who register with these agencies and enter into agreements.

4. ICAR's role in research and variety development:  ICAR focuses on:

  • Basic and strategic research on pulses.
  • Collaborative applied research with State Agricultural Universities.
  • Development of location-specific high-yielding varieties and production packages.
  • During the period from 2014 to 2023, an impressive 343 high-yielding varieties and hybrids of pulses have been officially recognised for commercial cultivation across the country.

Way Forward: Balanced Approach

  • Imposing customs duties on pulses:
    • Urgent need to curb imports of chickpeas and lentils to protect domestic farmers.
    • A moderate duty on pulses can stabilize prices while preventing excessive dependence on imports.
  • Import quotas for future stability: Instead of a blanket duty-free policy, the government should set an import quota and adjust duties based on production estimates.
  • Stakeholder consultation for a long-term policy: Engaging farmers, traders, and policymakers to create a stable pulse import policy.
  • Supporting farmers with MSP and procurement:
    • Strengthening procurement mechanisms to ensure farmers get prices above MSP.
    • Promoting pulse cultivation with incentives and better storage facilities.

Criticism of Income Tax Bill 2025

Context: Income Tax Bill 2025 was introduced in Parliament to replace the Income Tax Act, 1961. However, analysis reveals that the bill primarily introduces structural and textual changes rather than substantive reforms. 

Relevance of the Topic:Prelims: Income Tax Bill 2025 - Provisions

Objectives of Income Tax Bill 2025

  • Simplification of tax laws by removing redundancies.
  • Making legal text more concise and accessible.
  • Reducing ambiguity to minimise litigation.
  • Enhancing transparency and accountability.

Read More: New Income Tax Bill, 2025 

Concerns with Income Tax Bill 2025

  • Complexity and legal ambiguity:
    • Fiscal laws inherently require clarity for common taxpayers, but the bill does not substantially change taxation principles.
    • It continues to use complicated legal text. For instance, minor terminological changes, such as replacing "notwithstanding anything contained to the contrary" with "irrespective of anything to the contrary," do not effectively simplify legal language.
  • Superficial structural changes:
    • Cross-references to the old Income-Tax Act, 1961 undermine the claim of a fresh legislation.
    • The bill primarily reorganises timelines and compliance requirements into tables and schedules.
    • It does not fundamentally alter the structure of tax assessments or compliance mechanisms. 
  • Potential for increased litigation:
    • Courts have rigorously interpreted provisions of the 1961 Act over decades.
    • Redrafting certain provisions may lead to re-litigation of settled issues.
    • Uncertainty in interpretation could lead to more disputes rather than reducing them.
  • Expanded powers for tax authorities:
    • The bill retains and extends search and seizure powers. Officials can now access "electronic media or computer systems," including emails and social media accounts.
    • Raises concerns over privacy, especially post-K.S. Puttaswamy judgment (2017), which upheld the right to privacy.
  • Lack of judicial oversight over these enhanced powers increases risks of misuse.

Changes and their Implications

  • Removal of Inter-corporate dividend deductions:
    • Bill removes deduction for inter-corporate dividends for companies under the 22% tax regime.
    • Retains benefits for companies under the 15% regime. This discrepancy could impact tax efficiency of holding company structures.
  • Expansion of Associated Enterprises (AE) definition:
    • Section 92A of ITA defines AEs under transfer pricing rules.
    • The bill broadens AE definition by treating "management, control, or capital participation" as sufficient criteria.
    • This change increases transfer pricing disputes and may lead to excessive litigation.
  • Interpretation of Tax Treaties:
    • The bill allows the government to define undefined treaty terms via notification.
    • This contradicts the Vienna Convention and may create conflicts with judicial interpretations.
    • Raises concerns over unilateral government amendments to tax treaty interpretations.
  • Timely filing for Refunds:
    • Requires taxpayers to file returns on time to claim refunds.
    • Departs from the current provision, which allows refunds even with belated returns.
    • Could negatively impact taxpayers who miss deadlines due to genuine reasons.
  • Indemnity for Tax Deduction at Source (TDS):
    • Introduces an indemnity clause for tax withholders.
    • Raises questions about the scope of indemnity (e.g., penalties, interest, etc.).
    • Unclear whether parties can contractually waive indemnity obligations.
  • Overlap between Old and New law: 
    • The bill repeals the 1961 Act but retains certain provisions.
    • For example, the definition of "income" includes references to the old law.
    • This overlap may create confusion rather than simplifying compliance.

Way Forward

  • Ensure genuine simplification by adopting plain legal language without losing precision.
  • Introduce safeguards against excessive government authority in tax searches and seizures.
  • Reduce overlap between old and new laws to avoid confusion.
  • Address inconsistencies in corporate tax provisions to maintain fairness.
  • Align tax treaty interpretations with international standards to avoid disputes. 

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