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Time to recalibrate PM-KUSUM Scheme

Context: The PM KUSUM scheme has achieved significant results, however, in order to achieve its objectives, both the Centre and the State governments have to work in sync, while recalibrating the process of implementation.

Relevance of the topic:

Prelims: PM KUSUM Scheme.

Mains: PM KUSUM- Challenges and Recommendations. 

What is the PM KUSUM scheme?

PM-KUSUM Scheme
  • PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan) Scheme was launched by the Ministry of New and Renewable Energy in 2019.
  • It was launched in order to endow installation of off-grid solar pumps in rural areas and reduce dependence on grid, in grid-connected areas.
  • Objectives:
    • To enable farmers to set up solar power generation capacity on their arid lands and to sell it to the grid.
    • To increase the income of farmers by allowing them to sell surplus solar power to the grid.
  • Components:
    • Component A: 10,000 MW of decentralised ground-mounted grid-connected renewable power plants.
    • Component B: Installation of 20 lakh solar-powered agriculture pumps.
    • Component C: Converting 15 lakh agriculture pumps, already connected to the grid, into solar.

Significance of the Scheme:

  • Increase Access to Energy:
    • It incentivises the farmers to sell surplus solar energy to the states, which in turn will augment their income.
    • The scheme is expected to increase access to electricity in rural areas and provide a reliable source of energy for agriculture and other rural activities.
  • Contain Climate Catastrophe:
    • If farmers are able to sell surplus power, they will be incentivised to save power and, in turn, it will mean the reasonable and efficient use of groundwater.
    • Expansion of the irrigation cover by providing decentralised solar-based irrigation and moving away from polluting diesel.
    • When implemented fully, PM-KUSUM will lead to reducing carbon emissions by as much as 32 million tonnes of CO2 per annum.
  • Employment and Empowerment:
    • The scheme creates job opportunities in the installation, maintenance, and operation of solar power projects.
    • It empowers rural communities by giving them control over their own energy generation and distribution.

Challenges in Implementation:

  • Component-wise Progress:
    • Component A: Minimal progress due to lack of bidding guidelines and low feed-in tariffs.
    • Component B: Most successful, with 60% Central financial assistance and decentralised implementation in states like Rajasthan.
    • Component C: Limited traction due to lack of incentives for farmers already receiving cheap electricity.
  • Political Bias:
    • Divergence between Centre-State relations impacts scheme adoption. E.g., Bihar’s non-participation due to earlier political differences.
  • Operational Issues:
    • Inter-state Disparity E.g., Chhattisgarh and Rajasthan together account for half of two lakh solar pumps currently deployed in the country. 
    • Centralised implementation limits effectiveness.
    • Insufficient awareness campaigns and quality concerns for pumps.
    • Dependence on groundwater availability and irrigation challenges.

Way Forward

  • Decentralised Implementation:
    • Leverage local agencies for tailored execution.
    • Target linked financial assistance to reduce Inter-state disparity and address state-specific constraints.
  • Financial Incentives:
    • Increase Central assistance for Components A and C.
    • Introduce farmer-friendly payment options.
  • Policy Reforms:
    • Align agricultural subsidies with solar adoption to ensure farmer participation.
    • Promote dual-use models like Agro-PV (energy and farming integration).
    • Give up One Size Fits-all approach: Small and marginal farmers should be given a higher capital subsidy and long-term loans with interest subsidies.
  • Focus on Efficiency of Pumps: Solarising grid connected pumps must include replacement of the pump with more energy efficient newer age pumps. 
  • Awareness and Capacity Building: Wide-reaching campaigns to educate stakeholders. Training programs for farmers and implementing agencies.
  • Focus on Post-harvest losses: Use solar power for post-harvesting processes to promote local value addition and enhanced income levels.

By addressing implementation challenges, PM KUSUM can contribute significantly to climate action, energy security, and rural development. Its success depends on a holistic approach that integrates policy, technology, and local insights.

Urea Industry: Success Story

Context: Amid shortages in di-ammonium phosphate (DAP) and a general lack of manufacturing sector investments, the urea industry has seen significant installation of new production capacities and progress towards achieving the goal of Atmanirbharta.

Relevance of the Topic: Prelims: Basic understanding of Urea Industry- Present Status, Make vs Buy, etc.

Present Status of the Urea Industry

  • Domestic urea production:
    • Between 2011-12 and 2023-24, India’s domestic urea production has risen from 22 million to 31.4 million tonnes.
  • Urea Imports:
    • Imports fell from 7.8 mt to 7 mt after peaking at over 9.8 mt in 2020-21. 
  • The current fiscal has so far recorded a further 31.7% drop in imports.
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Read more: Fertilizer Subsidies: Mechanism and Challenges 

Benefits of Greenfield Projects in Urea Industry

  • Increased Production: The increase in urea production is attributed to six new plants launched in FY 2019 and later:
    • Three of Hindustan Urvarak & Rasayan Ltd (HURL) 
    • Chambal Fertilisers & Chemicals
    • Matix Fertilisers & Chemicals 
    • Ramagundam Fertilizers & Chemicals Ltd (RFCL)
  • Climate-friendly:
    • These greenfield plants run on natural gas (mostly imported) with an identical annual production capacity of 1.27 mt. 
  • Energy-efficient:
    • They are also relatively energy-efficient, requiring only about 5 giga-calories (GCal) to produce one tonne of urea. The earlier units consume between 5.5 and 6.5 GCal.
  • Favourable Location:
    • The new plants are located in the new Green Revolution- areas of eastern Uttar Pradesh, West Bengal, Bihar, Jharkhand and Telangana.
    • The older units such as the National Fertilizers Ltd’s (NFL) Bathinda, Nangal and Panipat catered solely to farmers in Punjab and Haryana.
  • Indigenous feedstock:
    • There is a seventh urea plant coming up in Talcher, Odisha.
    • Unlike the six gas-based units producing ammonia with technology licensed from US, Denmark and urea from Italy or Japan, Talcher Fertilizers Ltd’s project will use coal as the feedstock. The coal is from the Talcher mines. 

The Make vs. Buy debate

  • Arguments supporting “Buy”:
    • Investment:
      • New plants need an investment of around Rs 61,575 crore.
    • Price:
      • The price of imported urea in India is currently $370-403 per tonne.
      • Urea from domestic greenfield projects cost $493 per tonne. 
      • Thus it is cheaper to “buy” (import) than “make” urea in India. 
  • Arguments supporting “Make”:
    • Price:
      • After deducting the levies on the feedstock cost of domestic urea, the cost will come down to $427 per tonne.
    • Transportation:
      • The imported bulk urea arriving in vessels has to be discharged at the port, before bagging and reloading for dispatch to the consumption centres. 
      • Moving this urea to the northern and eastern hinterlands would involve an additional cost of $30-35/tonne.
      • That further narrows the gap between “buy” and “make”. 
    • Other Benefits:
      • Domestic production creates employment.
      • Boosts overall economic activity that accrues from Make-in-India, as compared to simply Import-into-India.

A different Atmanirbhar urea strategy of “making” more in Northern and Eastern India, while exploring greater “buy” options for Peninsular India can be done by the Government. This along with shutting down some of the older energy-inefficient plants and also curbing urea consumption can boost the urea industry while placing India on path to achieve its Panchamrit goals.

PM-KISAN: Highs and Lows

Context: The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), which provides yearly income support of ₹6,000 to eligible farmer families in three installments, has been through highs and lows both in terms of coverage and payout.

Relevance of the topic:

Prelims: Questions regarding PM-KISAN scheme.

Mains: Analytical question on schemes, their impact, lacunae and suggestions.

About PM KISAN

  • Pradhan Mantri Kisan Samman Nidhi (PM KISAN) scheme launched in 2018 provides an annual income support of Rs. 6000/- to eligible farmers in three installments.
  • Intended beneficiaries:
    • Originally, landholding farmers having a farming area up to 2 hectares were eligible for the scheme (around 80% of farmers in India). 
    • Later, in 2019 the scheme was extended to all farmers who owned land, irrespective of the size of their landholdings. 
  • Expected outcomes from scheme: 
    • Income support: The scheme was intended to benefit 14.5 crore farmers by providing them income support of Rs. 6000 annually. 
    • Reduction in farm distress by creating a buffer for the farmers during negative externalities like drought and crop failure.
    • Poverty alleviation: As 22% of Below poverty line are farmers (Situation Assessment Survey), income support will reduce poverty burden on farmers.
    • Demonstrating commitment towards farmers' benefit and doubling farmer’s income.
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Key Challenges in the Scheme Implementation

  • Does not address structural problems such as fragmentation of land holdings, higher dependence on monsoonal rainfall, poor marketing infrastructure (APMCs) etc. and hence, PM-KISAN is populist rather than reformist.
  • Promote Fragmentation of Landholdings: Farming households holding larger land parcels will try to split holdings to try to qualify for the benefits under the scheme.
  • Exclusionary: Excludes the landless agricultural workers, tenants, and sharecroppers.
  • Absence of land records may lead to exclusion of poor and vulnerable categories of farmers.
  • Inadequate financial support: The scheme offers Rs. 6000/- per annum to farmers equates to Rs. 17 per day per household that is substantially low to achieve goals like alleviation of farm poverty.
  • Under-utilised corpus: The fund allocated for the scheme was around Rs. 85000 crores but it remained under utilised since launch of scheme.  The scheme witnesses fluctuating beneficiaries, also the number is reducing from 2021-22 to 2023-24. 
  • Substandard than state schemes: Many state schemes like Telangana’s Rythu Bandhu and Odisha’s Kalia scheme provide better income support to farmers than the PM Kisan scheme, leading to limited enrollment of farmers.
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Suggestive Measures for better Implementation

  • Increasing support amount: The scheme can explore increasing support to promote enrollment in the scheme on the lines of Rythu Bandhu and Kalia scheme of states.
  • Expand beneficiary coverage: Scheme should increase coverage by adding landless tenants with substantial proof of tenancy agreement in scheme.
  • Adding benefits: Apart from income support, the scheme can be drafted as an umbrella support extending to medical expenses, crop insurance and credit assurance scheme rationalising other schemes in PM KISAN.
  • Strengthening implementation: Digitisation of land records and using digital records for identification of beneficiary can improve impact of scheme at ground level.

Conclusion: The PM-KISAN scheme, while a significant step toward supporting small and marginal farmers, requires increased financial aid, broader beneficiary inclusion, and efficient implementation for maximum impact. With effective execution, it can reduce farmer distress, boost rural economies, and enhance agricultural productivity, fostering socio-economic development in India's agrarian landscape.

Net Direct Tax collection likely to cross Budget estimates

Context: With strong growth in non-corporate tax, net direct tax collection is likely to cross budget estimates by more than ₹73,000-83,000 crore. However, tax buoyancy is likely to be lower than the last fiscal year (FY 2024) due to the revision of the nominal growth number.

Relevance of the Topic: Prelims: Basic idea about the trends, Tax Buoyancy, Tax Elasticity. 

Data on Net Direct Tax Collection

image 114
  • Net direct tax collection likely to cross budget estimates by more than ₹73,000-83,000 crore.
    • The budget presented in July 2024 pegged the net direct tax collection at ₹22.07 lakh crore for FY25. This requires a growth rate of 12.6% over the actual collection of ₹19.60 lakh crore in FY24.
    • However, data for the period between April 1 and December 17, 2024, showed that while the mop-up through advance tax after three installments grew by over 20%, the net collection is now 72% of the budget estimates.
  • Advance tax payments by corporations recorded over 16% growth. This, along with good growth in GST, is expected to help the government push the fiscal deficit lower than the budgeted estimate of 4.9% for the current fiscal.
  • With the rise in collections, the cost of tax collection is on a downward trend. It dipped to 0.44% in FY24 from 0.76% in FY21. 
  • Tax buoyancy is likely to be lower than the last fiscal due to revision of nominal growth number. Tax buoyancy could be in the range of 1.68–1.73 in FY25 against 1.86 in FY24.

Probable reasons for rise in Net Direct Tax Collections:

  • Ease of Compliance:
    • Simplified tax filing mechanism (like pre-filed Income Tax Returns, user-friendly online tax portal)
    • Integration of PAN with Aadhar has streamlined the verification process. 
  • Use ofTechnology:
    • Digital payment systems to file tax with simplified transactions.
    • e-verification and e-assesment processes. 
    • Faceless Assessment Scheme for greater transparency and efficiency in income tax assessments.
  • Rise in Incomes has also facilitated higher tax payments by individuals.
  • Simplification of Tax Rules:
    • Rationalisation of tax slabs, incentives for filing returns have led to voluntary compliance. E.g. ‘Honoring the Honest’ campaign. 
  • Decrease in cost of collection is attributed to:
    • Adoption of centralised processing centres (E.g., CPC Bengaluru) 
    • Automation of processes like return filing, scrutiny and refund issuance. 
    • Increase in the efficiency of tax administration. 
    • Formalisation of the economy. 

What is Tax Buoyancy?

  • Tax buoyancy is a ratio of change in tax revenue in relation to change in GDP of an economy. It measures how responsive a taxation policy is to growth in economic activities. 
  • Taxation policy with a tax buoyancy of over 1 will deliver more tax revenue following a positive change in GDP.
  • Lower the tax buoyancy, poorer is the tax collection in response to economic growth. 
  • The Central Government of India estimates a tax buoyancy of 1.1 for 2024-25 financial year.

Significance of Tax Buoyancy:

  • It shows an economy’s capacity to finance growing public expenditure with tax revenue.
    • Policy makers use the tax buoyancy ratio as a measure of their taxation policy’s reliability to deliver a steady flow of tax revenue. 
  • Buoyancy of tax policy helps to overcome economic exigencies.
    • A highly buoyant tax policy can help a government rely on tax collection despite sudden fluctuations in earnings from other sources.  For example, the planned direct tax buoyancy of India for FY25 is around 1.1. 
    • This will help the government meet expenditure even if its disinvestment targets are not met. 
  • Tax buoyancy as an indicator helps policymakers in designing pro-taxpayer taxationpolicy.
    • Higher tax rates can also negatively affect willingness to pay tax and increase tax evasion. Besides, a high rate of tax disrupts economic growth.
    • Policymakers can use the tax buoyancy indicator to increase tax collection without increasing tax rates.

What is Tax Elasticity?

  • Tax elasticity refers to the change in tax revenue relative to changes in the tax rate.
  • In simpler terms, if the government reduces the corporate income tax from 30% to 25% and the resulting change in tax revenue is observed, this reflects tax elasticity.

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.
image 111

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. 
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  • 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.