Economy

All (4265)Current Affairs (4243)Mains Practice (77)Mains PYQs by Subjects (40)

Centre plans to launch National Monetisation Pipeline 2.0

Context: The Central Government is preparing to launch Phase II of the National Monetisation Pipeline (NMP) with an ambitious asset monetisation target of Rs 10 lakh crore over 5 years (FY26-FY30). 

Relevance of the Topic: Prelims: Key facts related to NMP 2.0; Asset Monetisation. 

What is Asset Monetisation?

  • Asset Monetisation is defined as transfer of core assets owned by the Government to the private sector for a limited period. 
  • Ownership of the assets would continue to remain with the Government. The assets would be only transferred to the private sector for a limited duration based upon the contract.
  • The government uses the money earned from monetisation to fund new infrastructure projects without taking on more debt. This is called capital recycling – using old assets to fund new ones.
image 53

National Monetisation Pipeline (NMP 1.0)

  • In Phase 1 (FY22 - FY25): government planned to raise Rs 6 lakh crore from Asset Monetisation. The government was able to manage about Rs 5.65 lakh crore, or 94% of the target.
  • NMP includes monetisation of core assets (central to the business objectives of the government). Core infrastructure assets include roads, ports, airports, telecom, railways, warehousing, energy pipelines, power generation, power transmission, hospitality and sports stadiums. 
  • NMP does not include monetisation of non-core assets (such as land, buildings etc).
  • Initiative of: NITI Aayog, in collaboration with the Ministry of Finance. 

National Monetisation Pipeline (NMP 2.0):

  • Phase 2 (FY26 - FY30): Target of Rs 10 lakh crore in total over 5 years, and in FY26 the target is Rs 1.9 - 2 lakh crore.
  • Asset classes and land parcels to be monetised: Highways, railways, power, petroleum and natural gas, civil aviation, ports, warehousing and storage, urban infrastructure (housing and transport), coal and mines, and telecom.
  • New focus area: Developing vacant public land in partnership with private companies.
  • A consultant will be hired to identify government assets and land suitable for monetisation, estimate how much money or investment these assets can attract and suggest new models of public-private partnerships to speed up infrastructure growth.
  • Monetisation proceeds could be in the forms of upfront revenues for leases, revenue sharing from operations, and capital expenditure by private parties.

India's Retail Inflation hits Six-Year Low

Context: Data released by the National Statistical Office (NSO) shows that retail inflation slipped to near six-year low of 3.16% in April 2025, primarily due to moderation in prices of food items including vegetables, pulses, cereals, meat and fish. 

Relevance of the Topic:Prelims: Key facts about Retail Inflation; Consumer Price Index

Retail Inflation

  • Retail inflation reflects the cost of everyday goods and services bought for consumption purposes by households. It is measured by the Consumer Price Index (CPI).
  • Retail inflation in India fell to a remarkable 3.34% in March 2025, the lowest since FY19. 
  • Under the inflation-targeting regime (2016), the Reserve Bank of India has an inflation target of 4% (with a leeway of 2% points on either side).
image 51

What is the Consumer Price Index (CPI)?

  • CPI is an economic indicator that measures inflation at retail level (changes in the level of retail prices over time). 
  • It reflects how much households need to spend on a fixed basket of goods and services they typically consume, such as food, clothing, housing, and fuel. 
  • Compiled by: National Statistical Office (NSO), under the Ministry of Statistics and Programme Implementation.
  • Calculated using: base year 2012 
  • CPI is a key benchmark for targeting inflation, monitoring price stability, and guiding monetary policy decisions by the Reserve Bank of India. It also serves as a deflator in the National Accounts to measure real economic growth.
image 52

Key government interventions to help lower Retail Inflation

The government’s strategic interventions have been pivotal in achieving this outcome. Key measures include:

  • Bolstering buffer stocks of essential food items, and releasing them periodically in open markets. 
  • Subsidised retail sales of staples like rice, wheat flour, pulses, and onions. 
  • Simplified import duties on critical food items. 
  • Stricter stock limits to prevent hoarding. 
  • Reduced GST rates on essentials have further eased price pressures. 
  • Targeted subsidies, such as LPG support under Pradhan Mantri Ujjwala Yojana and the Pradhan Mantri Garib Kalyan Anna Yojana.

With inflation now at its lowest since 2018–19, India has reinforced macroeconomic stability and created an enabling environment for sustainable growth. Easing inflation could raise domestic consumption and India’s sluggish industrial production. 

However, the steep fall in food prices can lower farmer incomes and directly impact rural consumption demand. The government must take measures to improve farmers’ income. 

How Governmentality exacerbates the problem of Stubble Burning

Context: Stubble burning is not just a result of farmers' apathy but a systemic outcome of distorted marketing systems and neo-liberal governance.

Relevance of the Topic: Mains: Factors leading to stubble burning.

Factors contributing to Pollution in Northern India

Every winter, the Indo-Gangetic Plains in India are enveloped in a dense shroud of pollution. Two major factors contributing to this alarming environmental condition are: 

1. Temperature Inversion: 

  • Withdrawal of monsoonal winds and the onset of cooler temperatures creates an Inversion Layer, an atmospheric condition conducive to pollution accumulation.
  • A layer of warm air traps cooler air beneath it, inhibiting vertical dispersion of pollutants such as vehicular emissions, industrial smoke, construction dust, and suspended particulate matter. These pollutants, instead of dispersing into the upper atmosphere, remain concentrated near the surface causing a dense smog.
image 47

2. Stubble Burning: 

  • Farmers in Punjab, Haryana, Rajasthan and Uttar Pradesh rely on stubble burning as a cost-effective and time-saving method to clear paddy residue before sowing Rabi wheat.
  • As per a 2023 study by IIT Kanpur, IIT Delhi, TERI, and Airshed, stubble burning contributed an average of 22% to air pollution levels between mid-October and end-November 2022, with peak contributions reaching 35%. These findings are consistent with previous estimates ranging from 20% to 40%, underscoring the recurring and significant role of agricultural residue burning in deteriorating air quality.

Complex Issue of Stubble Burning

Although often viewed as a law-and-order issue or individual farmer negligence, recent studies indicate that this is a systemic outcome of distorted marketing systems and neo-liberal governance. 

  • Distorted Agricultural Incentives: Preferential procurement of wheat and rice under Minimum Support Price, indirectly promotes monocropping and discourages crop diversification. The narrow crop choices reduce flexibility, compelling farmers to use quick and low-cost methods like stubble burning to prepare for the next sowing cycle.
  • Issues in APMCs and Intermediary dependence: The agricultural marketing system is dominated by middlemen (arhtiyas), who exercise control over pricing, credit access, and market connectivity. Farmers are often forced to sell at low prices, leading to chronic indebtedness and financial stress. Low crop prices →  low income →  less ability to afford clean alternatives → more stubble burning. 
  • Stagnant MSP rates (E.g., wheat prices rose only 5% over a decade) fail to cover rising cultivation costs, including labour and equipment.
  • Neo-liberal Governance and ‘Governmentality’: Drawing from Michel Foucault’s concept of ‘governmentality’, the IIM Amritsar study highlights that the state nudges farmers toward self-regulation without adequate institutional support. On one hand, farmers are penalised for stubble burning, while on the other, the state continues to push for higher grain production to meet food security goals. This contradictory stance fosters sub-optimal behaviours like stubble burning as coping mechanisms within a broken system.

Hence, the state and market forces create a cycle of marginalisation, pushing farmers toward stubble burning as a survival tactic. 

Remedial Measures

  • Market Development for Stubble-Based Products: Focus on developing a market for stubble and stubble-based products, such as fodder, energy products like pellets and packaging materials, aimed to boost farmers’ income, while simultaneously addressing climate change challenges. 
  • Policy and Market intervention: Currently, there is a significant lack of an efficient market mechanism for farm-waste, underscoring the need for policy and market interventions to bridge this gap.
  • Fair prices for Farmers: Ensuring that farmers receive fair prices for their produce by addressing existing inefficiencies within the market system. Digitise procurement platforms to reduce intermediary exploitation. 
  • Addressing Aspirational consumption: Recognise the role of aspirational consumption in exacerbating farm indebtedness. Socio-cultural organisations, including religious groups, could play a role in de-marketing non-essential aspirational consumption. 

Also Read: Burning of Agricultural Residue 

Stubble burning is not merely an act of environmental negligence but a manifestation of deeper agrarian and policy dysfunctions. Addressing the issue requires a farmer-centric, market-sensitive, and ecologically sustainable integrated approach.

US classifies Coal as a Critical Mineral

Context: The United States has classified coal, especially coking coal, as a critical mineral. This marks a stark departure from previous energy policies and could have far-reaching implications for climate targets and global coal markets.

Relevance of the Topic: Prelims: Key facts related to Critical Minerals. 

US classifies Coal as a Critical Mineral: 

  • The US has classified coal as a critical mineral. This classification aims to:
    • Revive the declining US coal industry, which peaked in 2008.
    • Support domestic manufacturing, especially the steel industry.
    • Power AI data centres that require consistent electricity supply, unlike variable renewables.
  • The US became among the first countries in the world to do so.
    • The European Union also includes coal in its list of “critical raw materials,” alongside high-demand minerals such as lithium, cobalt, and rare earth elements. 
    • Recently, a NITI Aayog report titled ‘Enhanced Domestic Coking Coal Availability to Reduce the import of Coking Coal’ also advocated coking coal to be included in the list of critical minerals.  
  • Concerns: Doubling down on coal without parallel investments in carbon capture or emissions abatement could derail national and global net zero targets.

What are Critical Minerals?

Critical minerals are metallic or non-metallic elements that are: 

  • Essential for modern technologies, economy and national security, such as electronics, renewable energy, and defense.
  • Subject to disruption of supply chain, often due to limited reserves, geopolitical issues, or complex processing.

Utility of Critical Minerals:

  • Renewable Energy sector: Graphite, Lithium, Cobalt, and Nickel are key components of batteries for electric vehicles (EVs).
  • Defence and Aerospace: Tungsten, molybdenum, and REEs are used in advanced weaponry, fighter jets, satellites, and aircraft. E.g., India’s Chandrayaan-3 mission (2023) and the upcoming Gaganyaan mission underscore the strategic significance of beryllium, tungsten, and rare earth elements.
  • High-Tech Manufacturing: REEs, Indium, and Gallium are used in electronics, semiconductors, and renewable technologies.
  • Agriculture: Fertiliser minerals like potash and phosphate. 

Global Distribution of Critical Minerals: 

  • According to the 2019 USGS Mineral Commodity Summaries report, China is the world’s largest producer of 16 critical minerals. China is responsible for 60% of global production of rare earth elements.

Critical Minerals in India: 

  • Different countries create their own lists of critical minerals based on their individual needs and strategic considerations. In 2023, the Ministry of Mines, India classified 30 minerals as critical minerals. 
  • These are: Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Graphite, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, PGE, Phosphorous, Potash, REE,Rhenium, Silicon, Strontium, Tantalum, Tellurium, Tin, Titanium, Tungsten, Vanadium,Zirconium, Selenium and Cadmium. 
  • India is heavily dependent on imports for critical minerals, making its key strategic sectors vulnerable to global supply chain disruptions and geopolitical tensions. 

Also Read: China tops list of Critical Mineral suppliers to India
 

Pradhan Mantri Urja Ganga Project

Context: GAIL (India) Limited has completed the laying of over 97% of the integrated Jagdishpur-Haldia-Bokaro-Dhamra Pipeline (JHBDPL), under the Pradhan Mantri Urja Ganga Project, which will carry Natural Gas to the eastern and Northern parts of India.

Relevance of the Topic: Prelims: Key facts about Pradhan Mantri Urja Ganga Project. 

Pradhan Mantri Urja Ganga Project

  • Total length of pipeline under the Project is approx. 3384 km, and its components include:
    • Jagdishpur-Haldia-Bokaro-Dhamra Pipeline 
    • Barauni-Guwahati Pipeline 
  • Aim: To expand India’s natural gas grid, promote cleaner energy solutions and ensure efficient natural gas distribution, including LNG. 
  • States covered: Uttar Pradesh, Bihar, Jharkhand, Odisha, West Bengal and Assam. 
  • Implemented by: Gas Agency of India Limited (GAIL).  
  • Utility: The pipeline is currently transporting 12.26 Million Standard Cubic Meters Per Day (MMSCMD) of natural gas including supplies to fertilizer plants, refineries, industrial consumers, and City Gas Distribution networks, along the pipeline route.
Pradhan Mantri Urja Ganga Project

Significance of Urja Ganga Project

  • Spur economic growth in eastern India by providing access to cheapest gas transportation and gas pricing reforms, and regional integration through natural gas grid. 
  • Enhances India’s energy security by diversifying energy mix. 
  • Reduces carbon emissions by providing a cleaner alternative to conventional fossil fuels.

India’s transition to a Gas-based Economy

  • Natural gas is a fossil fuel energy source. The largest component of natural gas is methane. It also contains smaller amounts of natural gas liquids (hydrocarbon gas liquids), and non hydrocarbon gases, such as carbon dioxide and water vapour. It is processed and converted into cleaner fuel for consumption.
  • The Indian Government has set a target to increase the share of gas in the energy mix up to 15% in 2030 to make India a gas-based economy, around 7% at present. Presently, India is importing around 50% of its requirement of natural gas. 

RBI cuts Repo Rate by 25 bps

Context: RBI’s Monetary Policy Committee has decided to cut the repo rate by 25 basis points to 6%. The decision comes amidst heightened global economic uncertainty in the face of reciprocal tariffs announced by the US.  

MPC has slashed the GDP growth to 6.5% in FY26 from 6.7% projected earlier. Retail inflation is expected to be 4% in FY26. 

Relevance of the Topic:Prelims: Repo Rate; Reverse Reo Rate. 

Repo Rate and Reverse Repo Rate

  • Repo Rate: The interest rate that the RBI charges when commercial banks borrow money from it. 
  • Reverse Repo Rate: The interest rate the RBI pays commercial banks when they park their excess cash.

Reduction of Repo Rate: Promotes Economic Activity

  • When the RBI wants to encourage economic activity in the economy, it reduces the repo rates. 
  • This enables commercial banks to bring down the interest rates they charge (on their loans) as well as the interest rate they pay on deposits. Interest rates on home, personal, vehicle loans and deposit loans come down. 
  • This incentivises people to spend money as keeping their savings in the bank pays back a little less interest.
  • Businesses are incentivised to take new loans for new investments as new loans now become cheaper. 

Increase in Repo Rate: Control Inflation:

  • When the RBI wants to control inflation, it increases the repo rate. 
  • Banks charge more interest to their borrowers, as they have to pay more interest to borrow from the RBI. 
  • At a macro level, this inhibits people from borrowing money as well as from spending, which in turn reduces the amount of money in the market, and thus negates inflation.

Repo and Reverse repo rates are often referred to as the “benchmark” interest rates in the economy. Using these rates, the RBI sets the tone for all other interest rates in the banking system, and in the broader economy.

MUDRA Loans hit All Time High

Context: Over 52 crore loans worth more than 32 lakh crore rupees have been sanctioned under Pradhan Mantri Mudra Yojana since the launch of the scheme in 2015. Half of the beneficiaries belong to SC, ST and OBC communities, and over 70% of them are women. 

Relevance of the topic:

Prelims: Pradhan Mantri Mudra Yojana (PMMY)

Mains: Benefits of MUDRA Loans

Pradhan Mantri MUDRA Yojana

  • Launch: April 8, 2015
  • Type: Central Sector Scheme
  • Objective: Providing loans up to Rs. 10 lakh to the non-corporate, non-farm small/micro enterprises. These loans are classified as MUDRA loans under PMMY. 
  • Eligible Member Lending Institutions (MLIs):
    • Public Sector Banks
    • Private Sector Banks
    • State operated cooperative banks
    • Rural banks from regional sector
    • Micro Finance Institution (MFI)
    • Non-Banking Finance Company (NBFC)
    • Small Finance Banks (SFBs) 
    • Other financial intermediary approved by Mudra Ltd. as member financial institutions
  • Eligible borrowers:
    • Individuals
    • Proprietary concern
    • Partnership Firm
    • Private Ltd. Company
    • Public Company
    • Any other legal forms
  • Application: The borrower can also apply online through portal www.udyamimitra.in
  • Interest rate: declared by Member Lending Institutions from time to time as per RBI guidelines based on which applicable interest rate is determined.

Components of MUDRA loans

  • The scheme has been classified as:
Components of MUDRA loans
  • Tarun Plus: From FY 2024-25, the upper cap on Tarun loans was increased to ₹20 lakh, for loanees with a good repayment history, which can be given on the discretion of the banks. This has been one of the drivers for higher quantum of loans.
  • Key facts- MUDRA:
    • MUDRA is a refinancing Institution. 
    • MUDRA does not lend directly to the micro entrepreneurs / individuals. 

Present status of MUDRA Loans

  • All-time high disbursal: The disbursal of MUDRA Loans reached an all-time high at ₹3.39 lakh crore in the third quarter of FY 2024-25, that ended December 2024.
  • Largest share: SBI has the largest share in the distribution of PMMY loans.
  • Reduction in NPAs of PMMY: Aggregate NPAs of PMMY loans decreased to 3.4% in 2023-24 from 4.9% in 2019-20.
image 173

Benefits of MUDRA Loans

  • Financial Inclusion: Extending financial services to those who are traditionally underserved by the formal banking sector, including small entrepreneurs, micro-enterprises, and self-employed individuals. Funding support helps them start, expand, or modernise their operations. 
  • Economic Growth: Contribute to the overall economic growth of the country by boosting the productivity and profitability of micro and small enterprises.
  • Employment Generation: Facilitate creation of job opportunities and promote entrepreneurship, particularly in rural and semi-urban areas, by supporting small businesses and self-employment ventures.
  • Skill Development: Encourage skill development and capacity building among small entrepreneurs and individuals engaged in various trades and businesses.
  • Women Empowerment: Empower women entrepreneurs. Promote their participation in economic activities by offering financial assistance and support.

There are certain challenges such as over-indebtedness and the need for a more comprehensive support system. Addressing these challenges and expanding MUDRA's reach can further contribute to economic growth and inclusive development in India.

New Pamban Rail Bridge

Context: The Prime Minister of India inaugurated the new Pamban railway bridge which connects the Rameswaram island of the Tamil Nadu coast with Ramanathapuram on the mainland.

Relevance of the Topic: Prelims: Location of Pamban rail bridge. 

Key Facts about Pamban Railway Bridge

  • Connects: Rameswaram or Pamban island on Tamil Nadu coast with Ramanathapuram on the mainland Tamil Nadu. 
  • Length: 2.08 km
  • India’s first vertical lift sea bridge. The bridge features a 72.5-meter vertical lift span that can be raised by 17 meters, allowing for ship movement beneath the bridge. 
image 27

Old Pamban Bridge

  • The 2.05-km long Pamban bridge served as the sole transportation link between mainland Ramanathapuram and Rameswaram Island for over 70 years. 
  • It was completed in 1914, and featured a Scherzer rolling lift span, allowing ships to pass underneath. 
image 28

Pamban Island

  • Pamban or Rameswaram Island is located between peninsular India and Sri Lanka. 
  • It is the largest island in Tamil Nadu by area and hosts the pilgrimage centre Rameswaram.
  • At the eastern tip of the island lies Dhanushkodi, a harbour and a pilgrimage centre. 

India-US Trade Deal Negotiations amid Reciprocal Tariffs

Context: The Ministry of Commerce and Industry has stepped up efforts by expanding its NAFTA division (which handles India’s bilateral trade with the United States, Canada, and Mexico) to strike an early trade deal with the US, and potentially sidestep the 26% reciprocal tariffs. 

Relevance of the Topic: Mains: Impacts of Reciprocal Tariffs on India; India-US Trade deal- challenges.  

US Reciprocal Tariffs on India

  • Recently, the US has imposed 26% reciprocal tariffs on all Indian exports to the US.
  • The US goods trade deficit with India was $45 billion in 2024.
  • India's main exports to the US: Drug formulations and biologicals, telecom instruments, precious and semi-precious stones, petroleum products, gold and other metal jewellery, ready-made garments of cotton, and products of iron and steel.
  • India’s Imports from the US: Crude oil, petroleum products, coal, coke, cut and polished diamonds, electric machinery, aircraft, spacecraft and parts, and gold. 

Impacts of Reciprocal Tariffs over India

1. Potential Negative Impacts:

  • The sectors expected to be most impacted include: Electronics and smart phones, Marine products, gold and other metal jewellery, electrical machinery, textiles. 
  • Global Trade Research Initiative (GTRI) estimates that India’s exports to the US might decline by over 6% or around $5.7 billion in 2025.

2. Window of Opportunity: Relative Tariff Advantage 

  • India has a relative advantage over other countries, as the tariffs over India (26%) are lower than that in other countries, like, China (34%), Thailand (36%), Bangladesh (37%), Vietnam (46%) etc. This differential could encourage the US firms to diversify supply chains away from high-tariff economies towards India. 
  • Certain sectors can benefit, particularly electronics manufacturing, Textiles and apparel etc.

India’s Options

  • Selective Tariff Reductions: Identify sectors where tariff reductions would have minimal domestic impact and could accommodate U.S. interests. India is considering slashing tariffs on 55% of the US exports to India, worth about $23 billion.
  • Negotiating bilateral trade agreement: India can push towards negotiating a bilateral trade deal with the US. If India delays, it could risk losing market share in the US to countries (like Vietnam, Cambodia) which are aggressively pursuing trade deals with the US.
  • Trade diversification with other countries and regional groups, like the UK, European Union, African countries, ASEAN countries etc. to reduce the reliance on the US markets. 

Bottlenecks in negotiating bilateral trade agreement

  • Limited progress on Trade Agreements: India has not yet signed a comprehensive trade agreement with any major Western country, including the US, UK or EU. The major hurdle is India's resistance to incorporating labour and environmental standards, which are often prerequisites for Western trade deals.
  • Data localisation norms: The US has raised objections to India’s data localisation requirements for payment service providers, which restrict foreign firms from freely transferring user data abroad.
  • Weak Intellectual Property Rights (IPR) protection: India remains on the US 'Priority Watch List’ due to delays in patent approvals and the absence of strong laws for trade secret protection. This deters American innovators and firms from entering the Indian market.
  • Non-tarriff barriers: E.g., The US is critical of India’s price caps on coronary stents and knee implants. These controls are viewed as non-tariff barriers that hinder US companies’ ability to operate profitably in India. 

Crisis in Cotton Production in India

Context: India’s cotton economy is not in great shape. India has no surplus in cotton and its yield at 450-kilogram per hectare is one of the lowest, against a global average of 800- kilogram plus.

Relevance of the Topic: Mains: Cotton production in India- challenges and opportunities.

Current Status of Cotton Production in India

  • Declining Output: India's cotton production for 2024–25 is projected at 294 lakh bales (lb)- the lowest since 2008–09. This marks a fall from a peak of 398 lb in 2013–14, representing a nearly 100 lb drop in a decade. 
  • Net negative Exports: Once a major exporter, India cotton imports (30 lb) now exceed exports (17 lb). This shift raises concerns for India's textile and spinning industries. 
image 25
image 26

Global Trade Context and Comparative Advantage: 

  • Favorable US Tariffs on Indian Textiles: Under the US’s reciprocal tariff policy, Indian textiles face a relatively lower import duty (27%) compared to China (54%), Vietnam (46%), Bangladesh, Indonesia and Sri Lanka. Despite these favourable trade terms, India’s declining output limits its ability to capitalise on global export markets.

Fall in Cotton Production- Pink Bollworm (PBW) Crisis: 

  • Cotton lint yields rose from 302 kg/ha in 2002–03 to 566 kg/ha in 2013–14, due to Bt cotton adoption. However, since the PBW resurgence, yields have declined to around 436–437 kg/ha over the last two years.
  • PBW is a monophagous pest that feeds exclusively on cotton bolls, damaging seeds and lint leading to yield loss and fibre discolouration.
  • Resistance to GM Bt Cotton: Bt hybrids carry two genes- cry1Ac and cry2Ab- originally effective against multiple pests. However, PBW developed resistance by 2014, making these genes ineffective.
  • Why did PBW adapt faster? Its exclusive diet (cotton only) allowed faster genetic resistance. A short life cycle (25-35 days) enabled 3-4 generations per crop season, speeding up resistance evolution.

Regulatory Process for GM Crop Approval: Stages of GM crop trials in India:

  • Event Selection Trial: Initial screening of gene effectiveness.
  • BRL-1 (2 years): Confined field trials on <1 acre plots.
  • BRL-2 (1 year): Expanded trials on up to 2.5 acres.
  • GEAC Clearance: Post-trial approval needed from the Genetic Engineering Appraisal Committee (GEAC).
  • State Government Approval: Necessary for field trial permissions.

Efforts to increase Cotton Production

  • Development of New GM Hybrids: Indian seed companies are developing hybrids using new Bt genes to combat PBW resistance. These include testing cry8Ea1 gene hybrids (Bioseed Research India); synthetic cry1c gene; chimeric Bt protein etc. However, the challenges include:
    • Bureaucratic delays in regulatory clearances.
    • Opposition from environmental groups.
    • No GM crop commercialised since 2006 in India (after Monsanto’s Bollgard-2 Bt cotton).
  • Government Mission for Cotton Productivity: The 2025-26 Union Budget has announced an ambitious Rs 500 crore five-year plan to boost cotton production, promote extra-long staple cotton varieties, and promote scientific and technological support for cotton farmers. 

Pink Ballworm has created an emergency-like situation in India’s cotton sector. The Central Government needs to adopt a more proactive approach with regard to new GM crop development and extending policy support. 

US-India Agriculture Trade and Reciprocal Tariffs

Context: The US is India’s top market for agricultural goods, with bilateral farm trade totalling $6.6 billion in 2024. The US has imposed a 26% “reciprocal tariff" on Indian imports. The introduction of a ‘reciprocal tariff’ policy may pose certain challenges to agri-exports from India.

Relevance of the Topic:Mains: India-US Agriculture trade- Statistics, Potential, Challenges, Way forward

Key Stats India-US Agri Trade

  • Tariff Disparity: Historically, a tariff disparity of 32% has existed between India and the US. India imposes an average 37.7% tariff, while the US applies only 2.6% on agricultural products. A reciprocal tariff policy could impact the trade dynamics between the two countries.
  • Bilateral Trade Statistics (2024): 
    • Total India-US agricultural trade: $6.6 billion
    • India’s exports to the US: $5 billion
    • US exports to India: $1.5 billion
  • India’s Agricultural Imports from the US primarily include Pulses, vegetable oils, tree nuts and Fresh fruits. Tariff changes could disrupt this trade. 

Impacts of Tariffs on India’s major Agri-Exports to the US

  • Tariffs can hit key agricultural exports, particularly basmati and non-basmati rice, shrimp, wheat, and buffalo meat, which together account for 46% of India’s farm trade with the US.
  • Shrimp (India’s largest seafood export to the US) will become un-competitive in the US market. Currently, it is subjected to around 7% duty including countervailing duty and anti-dumping duty. With the increase (26%) in tariff, Indian exporters would be subjected to 33% tariff.
  • Tariff hike on processed foods, sugar, and cocoa exports will make Indian snacks and confectionery less attractive to US buyers.
  • Dairy products (ghee, butter, and milk powder) would be costlier in the US.

Potential for India’s Agri-Exports to the US: 

  • India can expand its export portfolio by increasing trade in: Rubber and derivatives; Beverages, spirits, and vinegar; Tobacco; Fish and dairy produce; Cotton. 
  • GTRI has suggested that to soften the impact, India can propose a 'zero-for-zero' tariff strategy' to the US, under which both countries would mutually eliminate tariffs on select goods rather than negotiating a full bilateral trade agreement. 

Indo-Pacific Economic Framework for Prosperity (IPEF)

  • Signed in May 2022 between the US and 13 Indo-Pacific countries, including India.
  • Aims to: Strengthen food safety and trade standards; Reduce agri-trade barriers for US agricultural exports.

Challenges Hindering India’s Agri-Export Growth

  • Logistics and Infrastructure Issues: India’s logistical efficiency improved from 54th in 2014 to 38th in 2023 (World Bank’s Logistics Performance Index). However, India still lags behind countries like Canada, China, South Africa, and Malaysia. Cold storage and supply chain infrastructure remain major bottlenecks.
  • High Post-Harvest Losses: 40% of food waste in India due to poor post-harvest management (FAO report). 30% of fruits and vegetables perish due to inadequate storage.
  • Stringent Sanitary and Phytosanitary (SPS) Standards: Trade agreements by the US, European Union etc. require adherence to strict environmental and quality regulations. Attaining compliance remains a major issue in increasing exports to these countries. 
  • Structural Issues in Indian Agriculture: Small and fragmented landholdings reduce economies of scale. Lack of aggregation and processing facilities for small and micro-enterprises results in limited value addition in agricultural produce and makes them less competitive in global markets. 

Way Forward for Strengthening India’s Agri-Exports

  • Modernising supply chains with improved cold storage and logistics.
  • Enhancing compliance with international food safety and environmental regulations.
  • Diversifying export products to reduce dependency on a few commodities.
  • Strengthening trade agreements to secure preferential access to US markets.
  • Supporting small farmers through aggregation models and export incentives.

RBI to buy ₹80,000 Crore Government Securities

Context: The Reserve Bank of India (RBI) has announced an open market operation (OMO) purchase to purchase government securities worth ₹80,000 crore in April 2025. This comes after major expectations of further liquidity operations by the Reserve Bank of India.

Relevance of the Topic: Prelims: Key facts about OMOs; G-Secs; Liquidity Management measures by RBI.

Major Highlights

  • RBI will conduct fresh purchase of government securities under OMOs for an aggregate amount of ₹80,000 crore. This will be carried out in four tranches of ₹20,000 crore each. 
  • The move is in continuation of the RBI's recent measures to inject liquidity into the financial system.
    • Earlier in March 2025, RBI conducted OMO purchases of government securities worth Rs 1 lakh crore in two tranches of Rs 50,000 crore each. 
    • RBI also held a dollar-rupee buy/sell swap auction of $10 billion for 36 months.

Open Market Operations (OMO)

  • OMOs are a key monetary policy tool used by the RBI to regulate liquidity in the banking system by buying or selling government securities (G-Secs) in the open market.
  • When RBI purchases government securities, it injects liquidity into the system. This encourages banks to lend more which can boost economic activity. 
  • When RBI sells government securities, it absorbs excess liquidity and helps to control inflation by reducing the money supply.
  • OMOs are crucial for maintaining stable interest rates, ensuring adequate credit availability, and managing overall financial stability in the economy.

Government Securities (G-Secs)

  • G-Sec is a tradable debt instrument issued by Central government or State governments. It acknowledges the government's debt obligation.
  • Types of G-secs:
    • Short-Term Government Securities (maturity <1 year): Treasury Bills, Cash Management Bills.
    • Long-Term Government Securities (Maturity >1 year): Dated G-Secs.
  • G-Secs are issued through auctions conducted by Reserve Bank of India, through the electronic platform E-Kuber. 

Also Read: RBI’s Liquidity Moves and Forex Market Intervention 

The RBI’s liquidity support is crucial as it comes at a time when economic recovery in India is showing mixed signals, with inflationary pressures, slowing industrial output, and the global economic slowdown affecting business sentiments.