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CII proposes 10-point roadmap for Ease of Doing Business

Context: Ahead of the Budget, the Confederation of Indian Industry (CII) has suggested a 10-point agenda to drive ease of doing business reforms. While India has remained focused on improving ease of doing business (EoDB), there is a need to maintain the momentum especially in certain specific areas.

Relevance of the topic:

Prelims: Ease of Doing Business Index

Mains: Ease of Doing Business- Reform recommendations

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What is Ease of Doing Business?

  • Ease of Doing Business (EoDB) is an index developed by the World Bank Group.
  • What does it do?
    • It measures the regulatory environment of a country and its impact on the ease with which businesses can operate. 
    • It assesses how conducive a country's policies, regulations, and administrative practices are for starting, running, and closing a business.
  • In 2021, the World Bank discontinued the EoDB index following allegations of data irregularities and ethical concerns during its preparation.
    • However, its principles continue to influence global reforms and economic policies.

CII recommendations for Ease of Doing Business Reforms

  • Mandatory Use of National Single Window System (NSWS) for Approvals:
    • Integrating all central ministries into the NSWS within six months, with states to follow in a phased manner. 
    • A dedicated central budget to incentivize states to adopt the system. This will ensure transparency and faster processing.
  • Time-Bound Services with Statutory Backing:
    • A new Act to impose statutory obligations on public authorities to process industry applications and grievances within set timelines. 
    • Provisions for deemed approvals beyond deadlines are also suggested.
  • Strengthening Dispute Resolution Mechanisms:
    • Expanding commercial courts and increasing reliance on Alternative Dispute Resolution (ADR) methods like mediation and arbitration. 
    • Prioritising establishment of the Mediation Council of India and the Arbitration Council of India.
  • Expanding National Judicial Data Grid (NJDG):
    • NJDG’s scope should include tribunal cases to manage and reduce pendency effectively. Tribunals constitute a significant share of unresolved cases.
  • Unified Environmental Compliance Framework:
    • A single framework to consolidate environmental compliance requirements. 
    • Existing laws like the Water Act and Air Act should be incorporated into the Environmental Protection Act to centralise regulations. 
    • Performance-based incentives could reward companies exceeding environmental standards.
  • Facilitating Land Access:
    • States should develop an Online Integrated Land Authority to streamline land records, digitise land banks, and provide dispute information. 
    • The India Industrial Land Bank (IILB) should evolve into a National Level Land Bank with central budgetary support.
  • Simplified Labour Compliances:
    • Implementation of the four Labour Codes is essential to ease compliance. 
    • Additionally, the Shram Suvidha Portal should become a centralised platform for all labour law compliances across central and state levels.
  • Improving Trade Facilitation:
    • The Authorised Economic Operator (AEO) program should be simplified with enhanced benefits like:
      • extended duty payment periods
      • self-declared renewals
      • easier access for MSMEs.
  • Aligning Metrology Rules with Global Standards:
    • Synchronising allied legal metrology rules with international standards. 
    • Imported equipment certified by OIML labs should be exempt from additional approval processes.
  • Addressing Tax Dispute Pendency: The government should reduce income tax litigation by:
    • Unclogging cases at the Commissioner of Income Tax (Appeals) level. 
    • Improving ADR mechanisms like Advance Pricing Agreements and Dispute Resolution Schemes.

The 10-point agenda can help create a predictable, transparent, and business-friendly environment. By implementing these recommendations, India can strengthen its position as a global investment destination while boosting domestic economic activity.

Data Correction of Gold Import Figures

Context: The Ministry of Commerce and Industry recently revised gold import figures for November 2024, reducing the reported value by $5 billion. The correction narrowed the trade deficit and highlighted challenges in data accuracy, raising concerns about the reliability of India’s trade statistics.

Relevance of the Topic: Prelims: Gold Imports- Trends. 

What was the data correction?

  • India's gold imports in November 2024 saw a huge increase (331% more compared to last year). 
  • This caused:
    • Pressure on the Indian rupee, which almost reached its lowest value against the US dollar.
    • Concerns in the gold industry, which raised alarms about the accuracy of the data.
  • When the government checked the numbers carefully, they realised there was a big mistake in how gold import data was calculated. This mistake happened because of technical issues during a change in the data system.
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Reasons that caused the Error:

  • In Special Economic Zones (SEZs), businesses enjoy relaxed trade rules. The issue arose from the migration of data from SEZ Online to the Indian Customs Electronic Gateway (ICEGATE) system.
    • Previously, SEZ-related trade data was recorded separately by SEZ Online, while data from other ports was captured by ICEGATE. 
    • When the decision was made to shift all SEZ EXIM declarations to ICEGATE, a technical glitch caused both systems to continue transmitting data for SEZs separately, leading to duplicate entries.
  • This led to double counting of gold imports, first when they entered SEZs and then again when they were cleared into domestic tariff areas (DTAs).

Impacts of Data Correction:

  • Budget Impact:
    • The earlier data suggested that gold imports were rising too fast. This could have led to an increase in gold import duties in the upcoming Union Budget.
    • But with the corrected numbers, the chance of higher taxes is reduced.
  • Impact on Trade Deficit:
    • Gold imports contribute significantly to India's trade deficit, which weakens the rupee. The revised data paints a better picture.
  • Soothes Jewellery Industry Concerns:
    • Higher taxes on gold would hurt the gems and jewellery industry, which relies heavily on gold. This industry is already struggling due to weak demand in Europe and China, and supply issues from Russia.
  • Controls Gold Smuggling Problem:
    • High taxes on gold encourage smuggling, which accounts for about 200 tonnes of gold (25% of the total gold entering India).
    • Even at the current 6% duty, cases like passengers hiding gold in their bodies are common. 

What is Climate Smart Agriculture?

Context: Natural farming is one of the key strategies to reduce input costs and the government is promoting this practice to encourage farmers to move to chemical-free agriculture as part of efforts to mitigate the adverse effects of climate change.

Relevance of the Topic:Mains: Climate-smart Agriculture- Need, Benefits, Strategies, Initiatives, Way Forward

About Climate Smart Agriculture

  • Climate-smart agriculture (CSA) is an approach that helps guide actions to transform agri-food systems towards green and climate resilient practices. 
  • Objectives: CSA aims to tackle three main objectives:
    • sustainably increasing agricultural productivity and incomes; 
    • adapting and building resilience to climate change; 
    • reducing and/or removing greenhouse gas emissions, where possible.
  • CSA supports the FAO Strategic Framework 2022-2031 based on the Four Betters:
    • better production
    • better nutrition
    • better environment 
    • better life for all, leaving no one behind. 
  • What constitutes a CSA practice is context-specific, depending on local socio-economic, environmental and climate change factors. 
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Dimensions of Climate Smart Agriculture

  • Water-smart: Access to water for production, including:-
    • increasing the soil’s capacity to absorb and store moisture (green water)
    • rainwater harvesting and storage
    • wastewater reuse
    • supplementary small-scale irrigation.
  • Weather-smart:
    • Growing crops based on agro-ecological conditions
    • Use science and technology for creating climate resilient crops and seeds. 
    • Example: Drought resistant crops.
  • Energy-smart:
  • Carbon-smart practices:
    • Reduced or no-till farming practices help minimize soil disturbance, which can reduce the release of carbon dioxide (CO2) from the soil into the atmosphere.
    • Planting cover crops during periods when the main cash crop is not growing provides ground cover, prevents soil erosion, and enhances carbon sequestration.
    • Agroforestry and Organic farming practices, which avoid synthetic fertilizers and pesticides.

Need for Climate Smart Agriculture

  • Ensuring food security: Agriculture production should be increased by 60% to meet the food demand. 
  • Reduce yield loss: In India, crop yield decline owing to climate change (between 2010 and 2039) could be as high as 9%.
  • Enhance resource efficiency: CSA activity like no-tillage is advantageous for fertilizer management and can boost yield, nutrient usage efficiency, and profitability while lowering GHG emissions.
  • Meet SDG: UN’s SDG aims to end hunger and enhance environmental management.
    • CSA helps in achieving these goals through sustainable agriculture and rural development.
  • Combat climate change: CSA promotes crop diversification, increases water efficiency, and integrates drought-resistant crop types, all of which help lessen the disruptive effects of climate change.
  • Meet international obligation: Paris Agreement goal of limiting global warming by reducing GHG emissions is tied directly to the success of the CSA.
    • Agroforestry and carbon sequestration could help India meet its international obligations and contribute to the global fight against climate change.

Strategies to boost Climate-smart Agriculture

Govt. Initiatives to boost Climate Smart Agriculture: 

  • Cooperatives as a vital tool: Leveraging cooperatives in building climate-smart agriculture in rural India.
  • Role of NABARD: NABARD aims to build a more resilient and sustainable agricultural sector through:
    • data-driven solutions
    • new financial mechanisms, such as Agri Fund and the upcoming Carbon Fund
    • forming strategic partnerships with multilateral agencies and State governments
  • National Innovation on Climate Resilient Agriculture: aims to enhance resilience of Indian agriculture to climate change and climate vulnerability through strategic research and technology demonstration.
  • Pradhan Mantri Krishi Sinchayee Yojana: extending the coverage of irrigation (‘Har Khet ko pani’) and improving water use efficiency (‘More crop per drop’) in a focused manner.
  • Paramparagat Krishi Vikas Yojana: aims at supporting and promoting organic farming, in turn resulting in improvement of soil health.
  • Biotech-KISAN:
    • a scientist-farmer partnership scheme that empowers farmers, especially women farmers for agriculture innovation. 
    • It aims to understand the problems of water, soil, seed and market faced by the farmers and provide simple solutions to them.
  • Climate Smart Village: It is an institutional approach to test, implement, modify and promote Climate smart agriculture locally and enhance farmers’ abilities to adapt to climate change.

Way Forward

  • Promote Agro-ecological Practices: Encourage the adoption of biodiversity-enhancing and soil-friendly agro-ecological techniques.
  • Develop Resilient Crop Varieties: Invest in research and dissemination of climate-resistant crop varieties.
  • Improve Water Use Efficiency: Implement water-efficient irrigation systems and rainwater harvesting.
  • Optimise Livestock Management: Promote climate-resilient livestock practices and breeding for heat tolerance.
  • Enhance Weather Forecasting: Provide farmers with accurate and timely weather information for better planning.
  • Implement Conservation Agriculture: Advocate minimal soil disturbance, cover cropping, and crop rotation for soil health.
  • Integrate Agroforestry: Combine trees with crops and livestock for biodiversity and climate resilience.
  • Community-Based Adaptation: Involve local communities in developing and implementing climate adaptation strategies and provide training to farmers.
  • Financial Incentives: Implement policies offering financial support and incentives to access affordable, sustainable agricultural technologies.
  • Tap into the potential of Cooperatives to boost climate resilient agriculture in rural India.

President’s invitation box includes South Indian Handicrafts

Context: Indian President’s invitation box for “At home” reception during Republic Day will include handicraft items from South India.

Relevance of the topic:

Prelims: GS-1 (Handicraft based questions)

Mains: GS-3 (Analytical question on scope, issues and suggestions for handicraft sector in India)

Major Highlights:

  • Every year the President of India hosts an ‘At Home’ reception on the eve of Republic Day at Rashtrapati Bhawan. 
  • Unlike traditional invitation card this year invitation includes a bamboo box along with various handicraft items which are GI tagged (Geographical Indicators) from various South Indian states:
    • Box decorated by Kalamkari Art of Andhra Pradesh
    • Pochampally Ikat from Telangana
    • Ganjifa Art from Mysore
    • Kanjivaram cloth pouch from Tamil Nadu
    • Etikoppaka dolls from Andhra Pradesh.
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Facts about mentioned Handicrafts:

1. Kalamkari Art (Andhra Pradesh):

  • Kalamkari is a traditional Indian art form involving hand-painting or block-printing on fabric, often cotton or silk. 
  • Originating in Andhra Pradesh and Telangana, its name combines "kalam" (pen) and "kari" (work). Intricate designs depict mythology, nature, and folk tales, using natural dyes for vibrant, eco-friendly colors.
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2. Pochampally Ikat (Telangana):

  • Pochampally Ikat is a traditional handwoven textile from Telangana, India, known for its geometric patterns and vibrant colors. Artisans use a unique tie-and-dye technique on threads before weaving. 
  • Renowned for its precision and craftsmanship, Pochampally Ikat represents India’s rich heritage and is often crafted into sarees, dupattas, and home décor items.
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3. Ganjifa art (Mysore):

  • Ganjifa art is a traditional Indian craft involving hand-painted playing cards, popular during the Mughal and Deccan eras. 
  • Made from cloth or paper, the cards feature intricate designs depicting mythology, flora, and geometric patterns. 
  • Often circular or rectangular, Ganjifa cards are painted with natural pigments, showcasing India's rich artistic heritage.
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4. Kanjivaram (Tamil Nadu):

  • Kanjivaram, or Kanchipuram silk, is a luxurious handwoven silk fabric from Tamil Nadu, India. 
  • Renowned for its vibrant colors, intricate zari work, and durability, it is often used for traditional sarees. 
  • Crafted with pure mulberry silk and gold or silver threads, Kanjivaram symbolises elegance and is treasured for weddings and festive occasions.
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5. Etikoppaka dolls (Andhra Pradesh):

  • Etikoppaka dolls are traditional wooden toys crafted in Etikoppaka, a village in Andhra Pradesh, India. 
  • Made from softwood called "Ankudu," these eco-friendly toys are hand-carved and coated with natural, lacquer-based dyes. 
  • Known for their vibrant colors and smooth finish, Etikoppaka dolls showcase India's artisanal heritage and sustainable craftsmanship.
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Scope for Indian Handicrafts:

  • High global demands: Indian handicraft items are unique in their build, history and decorations, making them highly demanded in the global markets E.g., Madhubani print paintings and Jaipur’s blue pottery. 
  • Expansion of e-commerce: Online websites like Amazon are providing a marketplace for these handicrafts by facilitating both artisans and customers.
  • Tourism extension: Indian Tourism industry is seeking expansion with the rise in UNESCO heritage sites. These arts are promoted as tourism extensions.
  • Government schemes: Schemes like ‘One District One Product’ are promoting local handicrafts in both India and abroad. E.g.; Channapatna toys under ODOP receive government support.
  • Sustainability demand: The world is focusing on reducing solid waste and promoting biodegradable goods. Indian Handicrafts like Bamboo craft from Assam and Etikoppaka toys.

Challenges to Handicrafts in India:

  • Limited market integration: Local Artisans often fail to find an adequate marketplace for their goods. E.g., Traditional Bidriware artisans often rely on local markets, reducing profitability.
  • Competition from machine made clothes: Handicraft items like Kanjivaram and Pochampally Ikat face price competition from bulk made products from machines. Also, cheaper goods made of artificial fiber compete with handicraft goods.
  • Reducing artisans: Artisans are changing their professions due to low profitability of handicrafts creating a void in training of new artisans in the family. E.g., Gujarati Rogan art families are migrating to other professions.
  • Dependence on middleman: Artisans depend on the middle man due to the unregulated and fragmented market of goods making profession less attractive. E.g., Channapatna toy makers often receive a fraction of the retail price.
  • Environmental impact on the raw material of goods impacts the future of arts in a negative manner. E.g., Sandalwood used in many handicraft goods is facing the wrath of climate change.

Suggestions to boost handicrafts:

  • Fashion integration: The handicrafts need to be integrated with the fashion industry with help of NIFT centers. E.g., Banarasi silk sarees and Phulkari embroidery in designer collections.
  • Common market place: There should be a free of cost common market place for the traditional goods and handicrafts to facilitate artisans. E.g., Dilli Haat for regular showcasing of crafts such as Pashmina shawls and Madhubani paintings.
  • Promoting traditional learning with schemes like USTAAD to foster a new generation of artisans.
  • Branding and certification: Handicraft goods to be provided with branding of Geographical Indications to promote their value and artisans profitability.

Conclusion: Indian handicrafts embody cultural heritage and economic potential. Addressing challenges with financial aid, e-commerce, branding, and awareness can preserve traditions, empower artisans, and expand global recognition.

Collective Farming: Empowering Small Farmers

Context: India’s agricultural landscape portrays a stark contrast between large landowners and small and marginal farmers. Holistic Collective Farming practices can bridge this divide.

Relevance of the topic:

Prelims: Collective Farming- Meaning, Features. 

Mains: Collective Farming- Benefits, Features, Need. 

What is Collective Farming?

  • Definition: Collective Farming is a system of agricultural production in which a group of farmers collectively owns and operates their farms as a collective farm.
  • Holistic collective farming aims to pool fragmented landholdings and empower small farmers through collective efforts.
  • Types: There are generally two types of collective farming:
    • Agricultural Cooperatives: Owned by members of the farm.
    • State Farms: owned by governments.
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Need for Collective Farming in India:

  • As per the latest agricultural census (2015-16), the average land holding size in India is 1.08 hectares.
    • Land inheritance traditions have led to a steady reduction in farm sizes over generations. 
    • Small plots of land are insufficient to sustain a family. 
  • Without access to reliable water sources, quality seeds, or market knowledge, small and marginal farmers struggle to make ends meet. 
  • Many fall prey to moneylenders who charge exorbitant interest rates, pushing them deeper into debt. The result is a cycle of poverty and despair, which has contributed to India’s agricultural distress.
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Features of Collective Farming:

  • Pooling Land: 
    • Farmers retain ownership of their land but agree to pool their plots into a collective unit.  This creates larger, contiguous areas for farming, which improves efficiency and scalability.
  • Collaborating with Social Entrepreneurs: 
    • A non-exploitative social entrepreneur provides initial capital, access to water resources, seeds, and marketing channels. 
    • They also bring in agricultural experts to train farmers in sustainable practices.
  • Natural Farming Techniques: 
    • Farmers are taught to prepare organic fertilizers using cow dung, cow urine, jaggery, lentil flour, and virgin soil. This is done to enhance soil fertility and reduce dependency on expensive chemical inputs.
  • Revenue Distribution: 
    • Farmers receive daily wages for their labour, ensuring financial stability. 
    • After the harvest, revenue from the sale of produce is distributed. 
    • Operational expenses are deducted, and the remaining profits are shared among farmers based on their land contribution.
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Benefits of Collective Farming:

  • Economic stability: By earning both wages and profit shares, farmers experience immediate and long-term financial benefits.
  • Sustainability: Natural farming practices improve soil health and reduce environmental harm, creating a sustainable agricultural system.
  • Social Empowerment: Collective farming fosters community cooperation, reduces dependence on moneylenders, and gives farmers greater bargaining power in markets.
  • Prevention of Land Fragmentation: Joint ownership through a pooled model halts the physical division of land, ensuring its viability for future generations.

Steps to promote Collective Farming in India

  • Financial incentives, such as subsidies for natural farming inputs or tax benefits for social entrepreneurs, could accelerate adoption.
  • Development of Aggregating apps to aggregate agri-mechanised inputs on rental basis. This would enable mechanisation of farms in the collective farming model. 
  • Ease of financing: Like KCC, procedures to avail term loan may be simplified with minimum documentation. Capacity building of bank staff dealing with agriculture term loan products may be ensured.

The holistic collective farming model is not just an economic initiative; it is a vision for social transformation. By integrating traditional knowledge with modern sustainability practices, it offers a way to rejuvenate India’s farming sector.

Decoding India’s Growth Slowdown

Context: The National Statistics Office (NSO) released the first advance estimates of India’s Gross Domestic Product (GDP) in 2024-25. It shows a decline in the real GDP growth rate to 6.4% from 8.2% registered in 2023-24. The official diminution of India’s projected GDP growth rate may still be an underestimation of the extent of economic slowdown.

Relevance of the Topic: Prelims: Economic Slowdown- Trend Analysis

Data Discrepancies in GDP Estimates

1. Issues with GDP Deflator:

  • GDP deflator is a weighted average of wholesale and retail price indices. It is used for the estimation of real or constant price GDP to estimate values of GDP components in constant prices.
  • The Wholesale Price Index (WPI), 2011-12 series has shown high volatility over the past decade. The WPI volatility leads to inexplicably large divergences between the WPI and CPI inflation rates.
  • This has had serious implications for the accuracy of the GDP deflator and real GDP estimates.
    • For instance, nominal GDP growth rate was at 14.2% in 2022-23 and 9.6% in 2023-24, which indicated a sharp decline in growth.
      • However, the real GDP growth rate was estimated to have grown from 7.0% to 8.2%, indicating growth acceleration. 
    • This implied that the GDP deflator was only 1.4% in 2023-24, even as retail inflation was at 5.4%
      • This is because the WPI inflation rate was estimated to have fallen from a high of 9.4% in 2022-23 to a negative of -0.7% in 2023-24. 
    • Thus, because of high volatility in the WPI, the nominal GDP estimate showed a growth deceleration in 2023-24 but the real GDP estimate reflected growth acceleration. 
image 93
  • IMF Observations:
    • IMF has criticised India’s reliance on WPI as a deflator, recommending Producer Price Index (PPI) for better accuracy.
    • The absence of seasonally-adjusted GDP data and discrepancies between GDP by activity and expenditure hinder real-time economic analysis.

2. Elusive Private Investment:

  • Investment Trends:
    • The latest GDP estimates have shown a significant decline in the growth of real gross fixed capital formation from 9% in 2023-24 to 6.4% in 2024-25. 
  • Irrational official expectations:
    • Economic Survey 2023-24 indicated a vigorous expansion of investment by the private-sector. 
    • However, the Chief Economic Advisor highlighted the sluggish corporate investments in machinery and equipment and intellectual property products. 
    • The Union Budget over-relied on private corporate investment for massive job creation through ‘Prime Minister’s Package for Employment and Skilling’.
    • A longer view of India’s growth trajectory over the past decade shows the irrationality of official expectations.
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3. Sectoral Trends:

  • Downward trends in manufacturing, mining, construction, and key services sectors.
  • Only public administration, defence, and other government services show increased growth, emphasizing the role of public expenditure.
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4. Fiscal Challenges:

  • Tax revenue growth has slowed, with only 56% of the annual target achieved by November 2024.
  • Less than half of the budgeted capital expenditure (₹11.11 trillion) was utilised during the same period.
  • Balancing fiscal consolidation with growth-enhancing public spending remains a critical challenge.
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Way Forward: Balancing Growth with Fiscal Discipline

  • Economic slowdown has disrupted budgetary plans by slowing down tax revenue growth. Adhering to the fiscal consolidation path would imply a squeeze on public spending, including capital expenditure. This in turn would further aggravate the slowdown. The way out is to rework the revenue mobilisation strategy by enhancing taxation on wealth and profits in order to enhance capex and welfare spending.

Farmer ID

Context: The Ministry of Agriculture and Farmers’ Welfare (MoA&FW) has made Farmer ID mandatory for new applicants to enrol into the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) and get benefits under the scheme. The farmer ID guarantees that the applicant-farmer owns the land, and thus the PM-KISAN registration process would be vastly simplified.

Relevance of the Topic: Prelims- Farmer ID, Digital Agriculture Mission, Agristack, PM-KISAN Scheme.

What is a Farmer ID?

  • Farmer ID (also known as Kisan Pehchaan Patra) is an Aadhaar-linked Unique Digital Identity of the farmers.
  • Created and maintained by: State Governments/ Union Territories.
  • The IDs will be linked to various farmer-related data including:
  • The database created through the Farmer ID will be known as Farmer’ registry. It is one of the three registries under Agri Stack component of the Centre’s Digital Agriculture Mission for creation of digital public infrastructure in the farm sector.

Benefits of Farmer ID: 

  • Targeted delivery: Only legitimate and eligible farmers receive subsidies and benefits and eliminates duplication in government schemes.
  • Precision agriculture: Facilitates data-driven policy-making for better crop planning, insurance, and market linkages.
  • Empowerment of farmers: Encourages financial inclusion by enabling easy access to credit and crop insurance.
Farmer ID - kisan ki pehchaan

About AgriStack:

  • AgriStack is designed as a farmer-centric Digital Public Infrastructure (DPI) to streamline services and scheme delivery to farmers. It comprises three key components:
    • Farmers' Registry
    • Geo-referenced village maps
    • Crop Sown Registry
  • The AgriStack is a part of the Digital Agriculture Mission (2021–2025) which aims at modernisation of Indian agriculture. The three DPIs to be built under the Mission are Agristack, Krishi Decision Support System, and Soil Profile Mapping. 

Key targets of AgriStack include:

  • Creating digital identities for 11 crore farmers over three years (6 crore in FY 2024-25, 3 crore in FY 2025-26, and 2 crore in FY 2026-27).
  • Launching the Digital Crop Survey nationwide, within two years, covering 400 districts in FY 2024-25 and all districts in FY 2025-26.

What is the PM KISAN scheme?

  • The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) Scheme is a Central Sector Direct Benefit Transfer (DBT) Scheme, under which, financial assistance of Rs.6000/- per annum is provided to all landholding farmer families across the country, subject to certain exclusion criteria relating to higher income strata.
  • Objective: To enable them to take care of expenses related to agriculture and allied activities as well as domestic needs.  
  • The amount is transferred in three 4-monthly installments of Rs. 2000/- each, directly into the bank accounts of the beneficiary farmers identified by the State/UT Governments.
  • Eligibility: Extended to all farmer families irrespective of the size of their landholdings. (Originally, landholding farmers having a farming area up to 2 hectares were eligible for the scheme).
  • Exclusions: 
    • Farmer families who pay income tax, with government employees and professionals like doctors etc. are excluded.
    • Former and current constitutional officeholders.
    • Previous and current Ministers/State Ministers, MPs/MLAs/SLCs/ Mayors former and present District Panchayat Chairpersons.
    • All serving or former officials and workers of Central/State Government Ministries/Offices/Departments and their field units.
    • All superannuated/retired pensioners whose monthly pension is Rs.10,000/- or higher (excluding Multi-Tasking Staff / Class IV/Group D employees).
  • Recently, a Parliamentary panel has recommended doubling the yearly payouts under the PM-Kisan to Rs 12,000 per annum from the present Rs 6,000.

Right to Food and Struggle with PDS

Context: The 2023 reports from Jharkhand and Odisha highlighted that a substantial number of households have been removed from the rolls of the Public Distribution System (PDS). A substantial number of households have found themselves removed from PDS rolls in parts of north, central and east India.

Relevance of the Topic: Mains: Challenges in Public Distribution System. 

Right to Food

  • The ‘right to food' was recognised as a fundamental right in the People’s Union of Civil Liberties vs Union of India case, 2001.
    • The right to food is not a fundamental right explicitly mentioned in Part III of the Indian Constitution, but it can be derived from Article 21.
  • The Indian Parliament enacted the National Food Security Act (NFSA) in 2013 to address food security. 
  • National Food Security Act (NFSA), 2013:
    • Provides affordable food-grains to roughly two-thirds of the Indian population.
      • 75% of Rural population
      • 50% of urban population
    • Entitlements: Provides rice, wheat or coarse grains (5kg/person/month) at Rs 3/kg, Rs 2/kg, and Rs 1/kg, respectively.
  • Targeted Public Distribution System:
    • Antyodaya (most vulnerable) people got free food grains (35 kg of food grains per household month).
    • Priority households (above Antyodaya level but below poverty line) had to pay at least half the minimum support price (MSP) being paid to the farmer.
    • Above poverty line households had to pay 90% of MSP.
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Problems in the Public Distribution System

1. Incomplete Enrolment and Inadequate Access:

  • Case Study of the Musahar community in Bihar: Musahars are extremely marginalised communities that have been pushed beyond the edge of destitution by the socio-politics of caste.
    • A number of Musahar households in Patna district do not have an active ration card. 
    • Even if they do have one, the card does not have the names of all the family members.
  • Issue with Biometric Verification:
    • Several people lost access to their monthly supply of ration ever since biometric verification was made mandatory at fair price shops (FPS). 
    • Individuals are forced to get a new ration card as after verification it emerges that their names have been struck off the PDS rolls. 

2. Corruption:

  • There are reports of cases where FPS dealers are releasing only four kilograms of food grain/person.
    • A below poverty line (BPL) household which has a Priority Household (PHH) ration card is entitled to five kilograms a person. 
  • The four kilograms of grain being issued is rice, which is the lowest quality of ‘Usna’ rice. No amount of wheat is issued.

3. Documentation with no Legal basis: 

  • Bureaucrats involved in the PDS mechanism are reported to claim unnecessary documents for issuing ration cards. E.g.,
    • In Bihar, citizens applying for a ration card using a paper-based application as well as through e-PDS portal are asked to submit:
      • Aadhaar details of the applicant and their family members
      • caste certificate
      • income certificate
      • residence certificate
    • Uttar Pradesh makes it mandatory to provide an income certificate.
    • Madhya Pradesh requires the submission of proof of residence.
  • The requirements of these certificates do not have any legal basis.
    • Neither the National Food Security Act (NFSA) of 2013 nor the PDS control order of 2015 explicate the requirement of such documents. 

4. Exploitation by Middlemen:

  • People from marginalised communities who seek to avail the benefits of PDS, neither have the resources nor the knowledge to interact with online processes.
  • This situation is aggressively exploited by middlemen who charge a sum of ₹3,000 to have a ration card made. 

5. Delays in Issuance of Ration Cards:

  • There is no guarantee that the applicants will get their ration card. There are cases of people whose applications have been pending for long (between 4-18 months).
    • The 2015 order states that ration cards should be issued within 30 days of the application being filled.
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Recommendations of Shanta Kumar Committee on PDS Reforms

  • Need for End to End Computerisation: Given that leakages in PDS range from 40 to 50 percent, Government should defer implementation of NFSA in states that have not done end to end computerisation; have not put the list of beneficiaries online for anyone to verify, and have not set up vigilance committees to check pilferage from PDS.
  • Reducing the Coverage: Reduce the current coverage of 67% of the population under NFSA to 40% (comfortably cover BPL families and some even above that).
  • Increased quota of Food grains: The amount of food grains should be increased to 7kg/person from the present 5kg grain per person.
  • Pricing: Antyodaya households can be given grains at Rs 3/2/1/kg for the time being, but pricing for priority households must be linked to MSP, say 50 percent of MSP
  • Timely Allocation: Targeted beneficiaries should be given 6 months ration immediately after the procurement season ends. This will save the consumers from various hassles of monthly arrivals at FPS and also save on the storage costs of agencies.
  • Cash Transfers: Gradual introduction of cash transfers in PDS, starting with large cities with more than 1 million population; extending it to grain surplus states, and then giving option to deficit states to opt for cash or physical grain distribution. This would lead to saving of Rs 30,000 crores.
  • Storage, movement and Transport of Food Grains: FCI should outsource its stocking operations to various agencies such as Central Warehousing Corporation, State Warehousing Corporation to bring down costs of storage. Covered and plinth (CAP) storage should be gradually phased out. The Movement of grains needs to be gradually containerised to reduce transit losses. 
  • Buffer Stocks: On an average, buffer stocks with FCI have been more than double the buffer stocking norms costing the nation thousands of crores of rupees loss without any worthwhile purpose being served. There has to be a comprehensive liquidation policy which gives sufficient flexibility to FCI to either export or sell the surplus stocks in the market.

Centre’s Share in States’ Revenue has surged

Context: Over the last decade, States have been relying more and more on transfers and grants from the Centre. The falling efficiency of States in collecting more taxes has deepened their dependency on the Centre.

Relevance of the Topic:Prelims: States’ sources of revenue- Key Facts, Trends Analysis. 

What are the sources of Revenue for States?

1. States’ share of Central Taxes:

  • According to the Constitution, the Union Government is required to share a part of all the tax revenue that it raises with State Governments. 
  • This part of the tax collection that the Central Government shares with State Governments is known as the States’ Share in Central Taxes.

2. States’ Own Tax Revenue (OTR):

  • There are many taxes that are either levied by State Governments, or where the collection goes directly to State Governments.
    • Except Goods and Services Tax (GST), the rates of such taxes are determined by State Governments. Hence, there is a variance across States. 
  • Goods and Services Tax (GST): 
    • Components of the total GST collection, known as State GST (SGST) and part of integrated GST (IGST) goes directly to State Governments.
  • State Excise Duty: 
    • Levied on the production of goods that are not under GST. 
    • After the introduction of GST, the main item on which State excise duty is applied is alcohol. 
  • Sales tax and VAT: 
    • There are certain items whose sale is not covered by GST. 
    • The sale of such items falls under the State sales tax or State value added tax (VAT). 
  • Stamps and Registration Duty: 
    • This is generally levied on the sale of land and/or immovable properties such as flats/houses/buildings.
  • Vehicle Registration Tax: 
    • Applied on the registration of new vehicles or in the case of a change in the ownership of a vehicle.
  • Entertainment Tax: 
    • This levy is generally applied on the sale of movie tickets, etc.

3. States’ Non-Tax Revenue:

  • Lease/sale of natural resources:
    • States can either sell or lease out natural resources for the economic purposes for which they receive receipts. 
    • Lease of minerals is a major source for many states, such as Odisha, Jharkhand and Chhattisgarh, among others. 
  • Economic services: 
    • There are certain services provided by the government for which it charges the user, such as - irrigation, health, education, forestry and wildlife, etc. 
    • The user charges are not done with the purpose of profit, and are generally much lower than the charges by the private sector. 
    • Nonetheless, they do provide some revenue to the government.
  • Sale of lotteries:
    • Some states engage in the activity of selling lotteries
    • The net proceeds from these goes to the government funds.
  • Interest receipts:
    • State governments can provide loans to certain entities like public sector undertakings (PSUs), local bodies, etc. 
    • Interest receipts are the interest received on such loans.
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Trends of States’ revenue share among different sources

  • Increasing share of Transfers from Centre: 
    • In the last decade (FY16 to FY25), 23-30% of the total revenue of States was collected from the Centre as transfers. 
    • However, in the 2000s and 2010-15, the share was 20-24%. 
  • Increasing share of Grants from Centre in States’ non-tax revenue:
    • 65-70% of the non-tax revenue of States was collected from the Centre as grants in the last decade.
    • In the 2000s and 2010-15, the share was lower at 55-65%.
  • Diminishing share of non-tax revenue:
    • Revenue from non-tax revenue, other than Central grants, has been diminishing. This share is likely to go below the 24% mark in FY25 for the first time in the past 25 years.
    • Interest receipts have not exceeded 5% of non-tax revenues in the last decade.
      • Compared to the 2000s and first half of 2010, when it formed 5-9% of non-tax revenue.
    • The share of dividends and profits garnered from State public sector enterprises has remained under 1%.
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  • Stagnant Own Tax Revenue:
    • States have also not done enough to efficiently collect taxes to increase their own tax revenue. 
    • For over a decade now, States’ own tax revenue as a share of their total revenue has remained considerably below 50%.
    • In the 2000s and in the early 2010s, it had crossed the 50% mark for many years or remained close to it.
  • SGST-driven Own-Tax Revenue:
    • While SGST accounted for 15% of the States’ total revenue in FY18, it currently makes up about 22%. 
    • Consequently, the share of own tax revenue, without the contribution from SGST, has declined from 34% to 28%.
    • What it implies: Share of States’ own tax revenue is not only consistently below the 50% mark, but also an increasing share of it is derived from SGST.
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  • A marked decline in ratio of select States’ own tax revenue to its GSDP:
    • For Tamil Nadu, the own tax revenue to GSDP ratio has gradually declined from 7.72% in FY13-15 to 6.17% in FY 22-24. This has also been the case in Karnataka, Kerala, Bihar, Delhi, and Madhya Pradesh, too. 
    • While the ratio has risen in Maharashtra, Manipur, Meghalaya, Odisha, and Uttarakhand, it has remained stagnant in other States.
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Concerns

  • The combination of these factors indicates increasing dependency of States on Central funds.
    • The Centre is playing a major role in the revenue earned by the States. 
    • However, it is also true that many States are not efficiently collecting taxes using avenues at their disposal.
  • While expenditure responsibilities have been rapidly spiralling, the nearly stagnant own tax revenue mobilisation impedes the States’ counter-cyclical expansionary fiscal measures in a sustained manner to boost aggregate demand in the economy.

Rupee Depreciation can be Slowed

Context: The exchange rate has changed from less than ₹4 a dollar in 1947 to more than ₹85/dollar in 2025. Given the higher inflation target in India than in the US, we need to accept depreciation of the rupee. However, we can, going forward, slow down the rate of depreciation. 

Relevance of the Topic: Prelims: Relationship b/w exchange rate, inflation and exports, Rupee Depreciation- Causes. 

What is Currency Depreciation?

  • Currency depreciation is a fall in the value of a currency in a floating exchange rate system.
    • It means that the rupee is now weaker than what it used to be earlier.
  • Rupee depreciation means that the rupee has become less valuable with respect to the dollar.
    • For instance, $1 used to equal Rs. 4 in 1947, now $1 is equal to Rs. 85.
    • This implies that the rupee has depreciated relative to the dollar i.e., it takes more rupees to purchase a dollar.
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Causes of Rupee Depreciation:

  • High Inflation Target: Currently, RBI has an inflation target of 4 per cent.
    • Persistent inflation weakens the value of rupee, causing its depreciation and decreasing its purchasing power.
  • Food Price Inflation: RBI has found it difficult to meet the accepted inflation target rate, mostly due to a big rise in food prices.
  • Competitiveness in Exports: A decline in India's competitiveness in production and exports weakens the rupee.
    • Factors such as high production costs, regulatory hurdles, and inadequate infrastructure contribute to reduced export performance.

How to control Rupee Depreciation?

  • Reducing inflation target: Shift from 4 per cent inflation target to 3 per cent target next year when inflation targeting will be up for a review.
    • A reduced inflation target is also desirable for the less well-off. So, there is a need to amend the mandate under inflation targeting.
    • This shift requires coordinated efforts by the Reserve Bank of India (RBI), the Ministry of Finance (MoF), and Parliament.
  • Controlling Money Supply: RBI must regulate the issuance of money to control inflation in the long term.
    • While this may reduce the RBI's dividend to the Ministry of Finance, alternative revenue sources or expenditure cuts can compensate for the shortfall.
  • Reducing Food Price Inflation:
    • Framing a policy of more free trade in food.
    • A calibrated policy of procurement, reserves, timely distribution, and a countercyclical tax-subsidy scheme can also help.
    • This necessitates collaboration among the Ministry of Agriculture, Ministry of Commerce and Industry, and MoF.
  • Enhancing Export Competitiveness:
    • Improving the competitiveness of Indian goods in foreign markets through steps like simplifying regulatory frameworks, removing entry barriers, etc.
    • Facilitating Ease of Doing Business.
  • Role of RBI:
    • RBI should intervene in the currency market, but do so only when it is absolutely necessary. 
    • It is also consistent with flexible inflation targeting.

In conclusion, at least for now it is advisable to accept the long-term fall in the value of the rupee vis-a-vis the dollar but we can move to a slower rate of depreciation. This requires some serious work by the central bank and other public authorities but it is doable.

India’s GDP growth projected to fall to a 4-year low: NSO

Context: The First Advance Estimates of the National Statistics Office (NSO) for FY 2024-25 show a fall in projected GDP growth to a 4-year low pace of 6.4%. This calls for a reality check for India’s economic growth trajectory. 

Relevance of the Topic: Prelims: GDP Growth- Trends, Components, Factors affecting GDP Growth rate. 

What is an Advance Estimate?

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  • Advance Estimates are essentially a forecast of what the government expects India’s economic output to be at the end of the financial year in March.
  • These estimates are made by extrapolating available data and past trends.

Data from NSO’s First Advance Estimates of GDP 2024-25:

  • Real GDP: expected to reach Rs. 184.88 lakh crores in FY 2024-25.
    • Provisional estimate of GDP for FY 2023-24 was Rs. 173.82 lakh crore.
  • Real GDP growth: expected to rise at a 4-year low pace of 6.4%.
    • For 2023-24, it was at 8.2%.
  • Real Gross Value Added (GVA): expected to rise by 6.4%.
    • For 2023-24, it increased by 7.2%.
  • Among 8 economic sectors, only 2 registered higher growth than last year:
    • Agriculture: expected to rise 3.8% from 1.4% last year.
    • Public Administration, Defence and Other Services: increased 9.1% from 7.8% in 2023-24.
  • Construction GCA Growth: pegged at 8.6% from 9.9% last year.
  • Manufacturing GVA Growth: expected to nearly halve from 9.9% in 2023-24 to 5.3% this year. 
  • GVA in Mining & Quarrying: expected to rise just 2.9% from 7.1% last year.
  • Gross Fixed Capital Formation (GFCF): expected to grow at a pace of just 6.4% compared to 9% rise in 2023-24. 
  • Private Final Consumption Expenditure: expected to expand 7.3% from 4% in 2023-24.
  • Government Final Consumption Expenditure: seen rising 4.1% from 2.5% last year. 
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How is GDP Calculated in India?

  • GDP is calculated by adding up all the money spent in the economy. 
  • There are 4 engines of GDP Growth:
    • Private Final Consumption Expenditure
    • Government Final Consumption Expenditure
    • Gross Fixed Capital Formation
    • Net Exports. 
image 73
  • Private Final Consumption Expenditure (PFCE):
    • It is calculated as the total spending by individuals.
    • It accounts for almost 60% of India’s GDP. 
  • Government Final Consumption Expenditure (GFCE):
    • Spending by governments to meet daily expenditures such as salaries, etc.
    • Accounts for 10% of GDP.
  • Gross Fixed Capital Formation (GFCF):
    • Spending towards boosting the productive capacity of the economy.
    • Includes investments by the government to build roads, companies building factories or buying office equipment, etc.
    • Accounts for around 30% of GDP.
  • Net Exports:
    • Resultant of Indians spending on imports and foreigners spending on Indian exports.
    • Since Indian exports < Indian imports, net exports for India are negative. 
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Factors holding back GDP Growth in India

  • Low growth rate of Private Spending:
    • What Indians spend in their personal capacity is the most vital determinant of GDP growth.
    • If this growth rate is low, it drags down the overall GDP. Further, it discourages investments in the economy.
  • Sluggish growth in Government spending:
    • Unlike other players in the economy, governments can potentially spend in excess of their incomes.
    • When the rest of the economy is struggling, governments are expected to borrow money and spend it in a manner to re-energize the economy.
    • However, Government’s own spending has grown just 4.2% in the current year, and an average of 3.1% since 2019.
  • Petering out of Investments growth:
    • Spending towards productive capacity increases if:
      • Private businesses find it profitable to expand capacity (in the hope of selling it to the public)
      • Governments boost capital expenditure (spending towards physical infrastructure).
    • In FY 2024-25, this spending has gone up by just 5.3% annually.
    • Investment growth in the economy has been fading away since 2014.
    • Unless private consumption rebounds, businesses will not invest in fresh capacity, regardless of tax incentives.

Thus, over a longer period, India’s real economy has grown at less than 5% per annum- almost half the rate at which it would need to if it is to become Viksit Bharat by 2047. 

Trends of Women’s Workforce Participation in India

Context: The National Sample Survey Office’s (NSSO) most recent annual report of Periodic Labour Force Survey indicates an increase in aggregate employment rates, after a prolonged period of decline since 2011-12. 

This is dominantly due to a significant rise in women’s work force participation. However, this spurt in women’s workforce participation must be interpreted with great caution.

Relevance of the Topic: Mains: Women’s workforce participation- Trends, Concerns, etc.

Analysis of Women’s Workforce Participation

  • Dramatic rise in women’s workforce participation:
    • Men’s work participation rates have risen slightly from 71.2% in 2017-18 to 76.1% in 2023-24. 
    • However, for women, it rose from 22% in 2017-18, to reach 40.3% in 2023-24. 
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  • Rural females vs. Urban females:
    • Women’s workforce participation increased in both rural and urban areas
    • The increase was particularly sharp in rural India. 
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  • Persistence of Jobless Growth:
    • NSSO includes ‘unpaid helpers in family enterprises’ in its classification of workers.
    • It is in this category where most of the increase in women’s “employment” occurs.
    • This indicates that the benefits of GDP growth have not translated into higher employment, hence persisting jobless growth.

Concerns with Data Classification

  • ILO’s definitions of work and employment make it clear that employment is ONLY that subset of work for which remuneration is received. 
  • Since “unpaid helpers” are clearly not the primary workers who would receive remuneration, they should not really be classified as “employed” at all.
  • Further, NSSO classifies those engaged in Codes 92 and 93 as “not in the labour force”, so they are excluded from the employment data.
    • Codes 92 and 93 include the activity classifications that cover unpaid work done within households.
    • Code 92: engaged in domestic duties — essentially care work within the household.
    • Code 93: domestic duties plus extended SNA activities like fetching fuelwood, fetching water, engaging in kitchen gardening and livestock and poultry rearing, etc.

Work Profile of Rural Women

  • By 2023-24, there was a dramatic decline in unpaid workers (Codes 92 and 93) to half of the 2017-18 level.
  • Significant increase in self-employment, which amounted to 95% of the increase in recorded “employment”.
    • So, the decline in the proportion of unpaid women workers is almost completely explained by the increase in self-employment.
  • The share of both regular and casual workers barely increased at all (together they account for less than 1/10th of rural women).
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Work Profile of Urban Women

  • 8 percentage point increase in women’s recorded work participation and a 6 percentage point decrease in unpaid workers. 
  • The increase in women’s recorded employment was split equally between regular workers and self-employed women. 
  • There was a decline in the proportion of both casual workers and unpaid helpers in family enterprises.
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Changes in Real Wages

  • Real wages for women regular workers fell in both rural and urban areas
    • This suggests that much of this was distress employment. 
    • This could well have been in domestic work and similar occupations (significant sources of employment in urban India for poor women). 
  • However, the decline in real incomes from self-employment for women was even greater.
    • This indicates a crowding of more women workers into relatively limited types of activities.
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Gender Gap in Earnings

  • The gender gap in earnings grew significantly over this period, particularly in rural areas.
  • The gap is shockingly high for self-employed workers.
    • Women receive only around 1/3rd of the incomes from self-employment that their male counterparts earn.
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Overall, this is hardly a picture of dynamism in labour markets that is leading to more employment of women.  It is necessary to move beyond that fairy tale to address the reality of women’s work in India.

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