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India’s Retail Inflation hits 8-year low of 1.55% 

Context: India's retail inflation rate has dropped to 1.55% in July 2025, its lowest rate since June 2017 (lowest level in eight years), driven by a drop in food prices. 

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

Retail Inflation

  • Retail inflation reflects the cost of everyday goods and services bought for consumption purposes by households. It is measured by the Consumer Price Index (CPI).
  • Under the inflation-targeting regime (2016), the Reserve Bank of India is mandated to keep inflation within a 2%-6% band, and must explain to the government if it breaches either end for three consecutive quarters. 

Retail Inflation in India

  • India's retail inflation rate has dropped to 1.55% in July 2025, its lowest rate since June 2017.  
  • Inflation is well below the Reserve Bank of India's tolerance band of 2%-6% for the first time since January 2019.
  • Food prices have been the main driver for the drastic fall in inflation for the last eight months.
  • Concerns: A drop below 2% signals weak demand and can hurt farm incomes and rural spending. However, it is unlikely to trigger an immediate rate cut as policymakers may view the decline as temporary and driven by volatile food prices.
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Key government interventions to help lower Retail Inflation: 

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

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

What is the Consumer Price Index (CPI)?

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

With inflation now at its lowest since 2017, India has reinforced macroeconomic stability and created an enabling environment for sustainable growth. However, the steep fall in food prices can lower farmer incomes and directly impact rural consumption demand. 

ICICI Bank’s Minimum Average Balance Hike 

Context: ICICI Bank has sharply increased the Minimum Monthly Average Balance (MAB) for new savings accounts. This has triggered debate over financial inclusion as Public Sector Banks (PSBs) move towards zero-MAB policies. 

Relevance of the Topic: Prelims: About RBI's stand on Minimum Monthly Average Balance (MAB) Policy. 

ICICI Bank’s Minimum Average Balance Hike

  • ICICI Bank, India’s second-largest private lender, has sharply increased the Minimum Monthly Average Balance (MAB) requirement for new savings account customers effective 1 August 2025.
  • New MAB levels:
    • Metro & Urban: ₹50,000 (earlier ₹10,000) → 5× hike
    • Semi-Urban: ₹25,000 (earlier ₹5,000)
    • Rural: ₹10,000 (earlier ₹2,500) 
  • Exemptions:
    • Basic Savings Bank Deposit Accounts 
    • Pensioners’ accounts
    • Salary accounts
    • Customers who maintain savings plus fixed deposit amount of up to ₹2 lakh with the bank. 

If a customer fails to maintain the required MAB, the bank will levy a penalty equal to 6% of the shortfall amount or ₹500, whichever is lower. 

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RBI’s Position on Minimum Average Balance Policy:

  • The Governor of Reserve Bank of India (RBI) has clarified that Minimum Average Balance (MAB) requirements do not fall under RBI regulation. Banks are free to set their own MAB thresholds, with no regulatory cap on the amount.

Why did ICICI Bank do this?

  • Few customers have less than ₹50,000 MAB: Low-balance customers are not the bank’s core segment. High MAB customers are more likely to keep money parked long-term, providing a cheap source of funds.
  • Low-balance accounts = high cost and low returns: These accounts still use customer service, tech infrastructure, and compliance resources but generate less revenue.
  • Fraud risk: Lower-balance accounts see more mule account misuse (used for illegal fund transfers).
  • Free up resources: Better service for premium customers, tech upgrades, and more fee-based product launches.

Impact on ICICI Bank: 

  • Limited business impact: Very few current customers fall below the new threshold.
  • Applies only to new accounts; existing customers are unaffected.

Why the Backlash?

  • Seen as anti-financial inclusion: Many urban customers do not even earn ₹50,000/month. Demanding they keep almost an entire month’s income idle in a low-interest savings account feels exclusionary.
  • Contrast with PSBs: The hike comes while public sector banks (PSBs) are removing MAB requirements to promote financial inclusion. E.g., Multiple PSBs (PNB, BoB, Indian Bank, etc.) recently waived MAB penalties entirely.

E20 Blend Fuel: Benefits and Concerns

Context: India has mandated E20 petrol (20% ethanol, 80% petrol) and aims for E27 in the future, achieving the E20 milestone five years ahead of the original 2030 target. 

However, concerns are emerging over mileage loss, engine damage, and lack of consumer choice, especially for vehicles manufactured before 2023.

Relevance of the topic:

Prelims: About E20, Flex fuel vehicles.

Mains: E20 Fuel in India: Challenges, Concerns & Lessons from Brazil

Ethanol Blending

  • Ethanol Blending refers to the process of mixing ethanol, a biofuel derived from plant-based sources, with petrol to create a more sustainable and cleaner fuel. 
  • Ethanol is often produced from renewable sources such as corn, sugarcane, or other biomass. 
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India's Ethanol Blending Programme

The Government of India launched the Ethanol Blended Petrol Programme in 2003 to promote ethanol use in transportation fuel. 

  • 2003: EBP launched in 9 States & 4 UTs with 5% ethanol blend (E5).
  • 2013: National Policy on Biofuels notified.
  • 2018: National Policy on Biofuels revised — target of 20% blending by 2030.
  • 2021: The target of 20% blending advanced to 2025-26.
  • 2023: E20 fuel introduced in select cities.
  • 2025-26: Pan-India rollout of E20 planned.

Objectives: 

  • Reduce Crude Oil Import Bill: India imports >85% of crude oil needs. Blending ethanol with petrol helps reduce dependence on non-renewable fossil fuels. 
  • Enhance Energy Security: Diversify fuel sources.
  • Lower Carbon Emissions: Ethanol contains oxygen which can improve the combustion of fuel. This aids the complete burning of fuel and lowers emissions of certain pollutants like Carbon dioxide and carbon monoxide. 
  • Waste Utilisation: Use damaged grains, surplus rice and stubble will reduce waste. 
  • Boost Farmer Income: Assured procurement of surplus crops and farm residue will boost farmers' income. 

What is E20 Fuel? 

  • E20 is a fuel blend that comprises 20% ethanol produced from plant products such as sugarcane, rice, and maize, and 80 % gasoline. 
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Challenges and Concerns with E20 in India: 

  • Engine Compatibility Issues:
    • The majority of vehicles manufactured before 2023 are designed for E10 fuel only. 
    • Ethanol’s higher water content can corrode metals and damage non-ethanol-rated rubber seals, valves, and pistons.
    • Cold-start problems in winter due to ethanol’s higher ignition temperature.
  • Performance and Mileage Loss: Ethanol has a lower energy density (around 33% lower calorific value) than petrol and may cause a marginal decrease in mileage (fuel economy). 
  • Lack of Consumer Choice: Petrol pumps rarely disclose the blending percentage. No option for customers to buy pure petrol or lower blends like E10. 
  • No Price Incentive: Unlike Brazil, where ethanol is 25-35% cheaper, E20 in India is priced at parity with petrol, reducing consumer motivation.
  • Warranty and Liability Risks: Car manuals of popular models (Hyundai i20, Mahindra Thar, etc.) explicitly warn against using >10% ethanol; damage may void warranties.
  • Rapid Policy Transition: Moving from E10 to E20 in a short time frame has created adjustment challenges for both manufacturers and consumers.
  • Infrastructure and Awareness Gaps: Limited roll-out of flex-fuel compatible vehicles and inadequate readiness of service and repair networks to address ethanol-related issues. 
  • Feedstock and Environmental Concerns: High dependence on water-intensive crops like sugarcane for ethanol production may exacerbate water scarcity and raise food-versus-fuel debates.

Case Study: Brazil’s Ethanol Blending Success

  • Brazil is a global leader in ethanol fuel adoption, offering a valuable model for India’s E20 programme. It launched its Ethanol blending scheme (EBS) in 1975 in response to the global oil crisis. 

The scheme leveraged Brazil’s abundant sugarcane resources to create a sustainable alternative to petroleum fuels. Key points of Brazil’s EBS: 

  • Phased Rollout: Gradual progression from E10 to E27, alongside introduction of E100 (pure ethanol), avoiding sudden stress on existing vehicle stock.
  • Flex-Fuel Technology: Cars capable of running on any blend of petrol and ethanol; by the late 1980s 90% of new cars were ethanol-compatible.
  • Transparent Consumer Choice: Fuel pumps display ethanol content; consumers select blends based on price and preference.
  • Economic Incentives: Ethanol priced 25-35% lower than petrol at the pump.
  • Public Engagement: Strong awareness campaigns highlighting both environmental and performance benefits.

Way Forward

  • Phased Rollout: Introduce E15 as an intermediate step for older fleets before full E20 coverage.
  • Mandate Flex-Fuel Engines: All new vehicles should be compatible with higher ethanol blends.
  • Transparent Labelling: Display blending levels at every pump.
  • Introduce Price Incentives: Ensure ethanol blends are cheaper to encourage voluntary adoption.
  • Consumer Awareness Campaigns: Address myths, highlight benefits, and explain precautions.
  • Independent long-term studies on E20’s impact on older engines.

India’s ethanol push is a strategic step towards energy self-reliance and climate goals, but its success will depend on harmonising policy ambition with market readiness. 

Also Read: Impact of Ethanol Production on Environment 

The Rise of Herbicides 

Context: India’s crop protection chemical industry is undergoing a significant transformation, marked by the rapid growth of the herbicide segment.

Relevance of the Topic: Prelims: Crop protection chemicals (insecticides, fungicides, herbicides), Agricultural labour trends. 

Crop Protection Chemicals

  • Crop protection chemicals, commonly known as pesticides are substances used to protect crops from:
    • Insects (insecticides) E.g., White-backed plant hopper in paddy.
    • Fungal diseases (fungicides) E.g., Blast and sheath blight in rice.
    • Weeds (herbicides) Unwanted plants that compete with crops for resources.
  • These chemicals ensure improved crop health, higher productivity, and reduced input losses.

Current Market Snapshot

  • Total Organised Market Size : ₹24,500 crore (approx.)
  • Segment-wise Breakdown : 
    • Insecticides ₹10,700 crore
    • Herbicides ₹8,200 crore
    • Fungicides ₹5,600 crore
  • Herbicides are the fastest-growing segment, with over 10% annual growth, driven by labour shortages and evolving agricultural practices.
  • The market is heavily dominated by multinational corporations, with limited domestic presence: Bayer (15%, Germany), Syngenta and ADAMA, both owned by China’s Sinochem, Corteva (USA) etc. 
  • However, the herbicide segment has Indian players too, such as Dhanuka Agritech (estimated 6% share) and Crystal Crop Protection Ltd. 
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 Why is the usage of Herbicides booming?

  • Labour Shortage and Rising Wages:
    • Manual weeding is time-intensive (8-10 hours/acre).
    • Labour costs have risen from ₹326.2 (2019) to ₹447.6 (2024).
    • Availability of rural labour for strenuous manual work is declining.
  • Limitations of Mechanical Weeders: Power weeders are not effective in densely planted or deep-rooted weed areas.
  • Herbicides as Labour-saving Technology: Like tractors and harvesters, herbicides are seen as substitutes for manual labour.
  • Cost Comparison: Manual weeding (₹2,000+ per acre) is comparatively more expensive than using chemical herbicide (E.g., Sikosa): ₹850-900 per acre. 
  • Changing Patterns in Herbicide Usage
    • Traditional Practice: Post-emergent application – applied after weeds appear.
    • New Trend: Pre-emergent herbicides - Prevent weeds from sprouting.
    • Early post-emergent: Target weeds at early crop growth stage.
    • Pre-emergent herbicides account for ₹550 crore in ₹1,500 crore paddy herbicide market and 20% of ₹1,000 crore wheat herbicide market

This preventive approach marks a shift from reactive farming to strategic input use.

Challenges & Concerns: 

  • Multinational Monopoly: Unlike seeds and fertilisers (where Indian public/private players exist), the pesticide industry remains largely foreign-dominated. Sinochem Holdings Corporation (China) owns Syngenta & ADAMA; India lacks a comparable domestic giant.
  • Dependence on Imports: Heavy reliance on imported active ingredients and technologies. Need to strengthen indigenous R&D in crop chemistry.
  • Ecological Risks: Misuse of herbicides can harm non-target species, contaminate soil and water.Growing concerns about Paraquat toxicity and herbicide-resistant weeds.

Way Forward

  • Encourage indigenous innovation in agri-chemicals.
  • Incentivise public-private partnerships for research in biopesticides and sustainable crop protection.
  • Promote judicious use of herbicides with farmer education and regulation.

India’s pesticide market is shifting towards herbicides due to labour shortages and cost efficiency. While MNCs dominate, Indian firms are gaining ground through innovation. Strengthening local R&D and ensuring environmental safety are key to sustainable growth.

National Cooperative Policy 2025

Context: The Central Government has unveiled the National Cooperative Policy 2025. The government has urged States to announce their own cooperative policies by January 31, 2026, in alignment with the National Cooperative Policy. 

Relevance of the Topic:Mains: National Cooperative Policy 2025; Cooperatives: Benefits and Challenges. 

What are Cooperatives?

  • A cooperative is a voluntary association of individuals with common economic, social, and cultural needs and aspirations, who come together to pool resources for mutual benefit. It functions on democratic principles and emphasises collective ownership, shared profits, and participatory decision-making.
  • The 97th Constitutional Amendment (2011) gave constitutional recognition to cooperatives, adding Part IXB to the Constitution and inserting the term "Cooperatives" in Article 19(1)(c).
  • Types of Cooperatives: Primary Agricultural Credit Societies (PACS); Dairy cooperatives, Fisheries cooperatives, Urban Cooperative Banks, etc.
  • There are over 8.6 lakh registered cooperative societies in India covering 30 crore members, covering 99% of villages and 71% of rural households. 

Benefits of Cooperatives:  

  • Economic Inclusion: Help small farmers, artisans, and rural entrepreneurs access markets and finance.
  • Job Creation and Democratic Empowerment: Ensure grassroots participation in economic activities. With over 30 crore members, cooperatives remain a key socio-economic driver, especially in rural India.
  • Rural Development: Cooperatives enable rural credit, dairy, storage, and agro-processing.
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Challenges (As per Shivaji Rao Patil Committee): 

  • Lack of participatory character: Free rider problem where inactive members benefit without contribution. Dominated by elite members and politicians.
  • Restricted Coverage and Role: 
    • Equity infusion by the government enables the government to appoint board of directors leading to poor autonomy.  
    • State Cooperative Acts allow postponing elections and superseding boards. 
  • Regional Skew: Cooperatives are successful only in a few states like Karnataka, Gujarat, Maharashtra. Limited to single-purpose societies like PACs, reducing viability. 
  • Governance related issues: Poor regulation by Registrar of Cooperative Societies. Prevalence of Financial fraud, corruption etc.  
  • Lack of adequate capital as cooperatives cannot raise money from capital markets. Poor use of technology and lack of professional management. 

Government Initiatives for Cooperative Sector:  

  • Creation of Ministry of Cooperation (2021) to streamline cooperative growth, policymaking, and digitisation. 
  • Computerisation of PACs. 
  • Income tax relief: Reduction in MAT from 18% to 15% in Union Budget 2023-24. 
  • National Cooperative Database launched to create a real-time, unified registry of all cooperative societies. 
  • Banking Regulation (Amendment) Act, 2020 to strengthen regulation of urban cooperative banks. 
  • Cooperatives as buyers on GeM portal (Government e-Marketplace). 

National Cooperative Policy 2025:

  • Vision: To contribute to India’s collective ambition of becoming ‘Viksit' by 2047 through sustainable cooperative development.
  • Mission:
    • To create an enabling legal, economic, and institutional framework that will strengthen and deepen cooperative movement at grassroots level.
    • To facilitate transformation of cooperative enterprises into professionally managed, transparent, technology-enabled, vibrant, and responsive economic entities.
  • Need for a New Policy: The last cooperative policy was framed in 2002 which was outdated due to the radical shifts brought on by globalisation, digitisation, and socio-economic transformation.
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Key Highlights of National Cooperative Policy 2025:

Legislative and Institutional Reforms

  • Encourage States to amend cooperative laws (Cooperative Societies Acts and Rules) to enhance transparency, autonomy and ease of doing business.
  • Promote digitalisation of registrar offices and real-time cooperative databases.
  • Revive sick cooperatives with institutional mechanisms.

Financial Empowerment

  • Preserve and promote the three-tier Primary Agriculture Credit Societies (PACS) - District Central Cooperative Bank - State Cooperative Bank credit structure.
  • Promote cooperative banks and umbrella organisations (like National Urban Cooperative Finance & Development Corporation).
  • Enable cooperative banks to handle government businesses.

Business Ecosystem Development: 

  • Model cooperative villages with multipurpose PACS as growth engines.
  • Encouraging States/UTs to develop at least one model cooperative village.
  • Develop rural economic clusters (E.g., honey, spices, tea).

Future-Readiness & Technology: 

  • Develop a national ‘Cooperative Stack’ integrating with Agri-stack and databases.
  • Promote Open Network for Digital Commerce (ONDC) and Government e-marketplace (GeM) platform integration.
  • Encourage research and innovation through cooperative incubators and Centres of Excellence.

Inclusivity Measures: 

  • Active participation of youth, women, SC/STs, and differently-abled in cooperatives.
  • Model bye-laws for gender representation and transparent governance.

Sectoral Diversification: 

Promote cooperatives in new and emerging sectors such as:

  • Renewable energy,
  • Waste management,
  • Health and education,
  • Mobile-based aggregator services (E.g., for plumbers, taxi drivers),
  • Organic and natural farming,
  • Biogas and ethanol production, etc.

Implementation and Monitoring

A robust multi-tier implementation structure is proposed:

  • Implementation Cell within the Ministry of Cooperation with technical Project Management Unit support for effective and timely implementation of the policy.
  • The National Steering Committee on Cooperation Policy chaired by the Union Cooperation Minister will be constituted for overall guidance, inter-ministerial coordination, periodic policy review, etc.
  • Policy Implementation and Monitoring Committee headed by the Union Cooperation Secretary for coordination with States, troubleshooting implementation bottlenecks, periodic monitoring and evaluation, etc.

Bio-fortified Potatoes to hit Indian Market soon

Context: The Director-General of the International Potato Center (CIP), based in Peru, has announced that bio-fortified iron-rich potatoes will soon be available in Indian markets. 

Relevance of the Topic: Prelims: About Bio-fortification; Bio-fortified Potatoes; International Potato Center.

What is Bio-fortification?

  • Bio-fortification is a technique of increasing the nutritional value of crops using conventional breeding or biotechnology. E.g., adding iron or vitamins to potatoes.
  • It helps tackle hidden hunger especially in poor and rural communities.

Why Bio-fortified Potatoes?

  • Potato is the third most consumed food crop in the world after rice and wheat. Potatoes are rich in carbohydrates, but naturally low in micronutrients. Iron deficiency is a major concern in India, especially among women and children.
  • Bio-fortified iron-rich potatoes are aimed at addressing iron deficiency and hidden hunger. E.g., Sweet potatoes fortified with Vitamin A are already being used in Karnataka, West Bengal, Assam, and Odisha. 
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About the International Potato Center (CIP)

  • CIP is a leading international research organisation focused on tubular crops, especially potatoes and sweet potatoes.
  • Headquarters: Peru
  • Collaborates with national governments, research bodies, and private stakeholders.
  • CIP South Asia Regional Centre to be established in Agra, Uttar Pradesh.
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PM E-DRIVE scheme

Context: The PM E-DRIVE (Prime Minister Electric Drive Revolution in Innovative Vehicle Enhancement) scheme, launched in 2024 (initially for 2 years), has been extended by two years till March 2028. There will be no extra budget allocated to the extension and remaining funds out of the total outlay of ₹10,900 crore will be utilised. 

Relevance of the topic: Prelims- Key provisions of PM E-DRIVE scheme. 

About PM E-DRIVE scheme

  • The ‘PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE)’ came into effect on October 1, 2024, and will remain in force until March 31, 2026. 
  • Outlay: Rs 10,900 crore
  • Aim: To accelerate the adoption of electric vehicles (EVs), develop essential charging infrastructure, and establish a robust EV manufacturing ecosystem across the country. 
  • Initiative of: Ministry of Heavy Industries
  • The scheme replaces the earlier FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) Scheme of 2015.
About PM E-DRIVE scheme

Key Scheme Components:

The PM E-DRIVE scheme is implemented through the following key components:

  • Subsidies: Demand incentives for electric vehicles such as e-2 wheelers (e-2W), e-3 wheelers (e-3W), e-ambulances, e-trucks, and other emerging categories of EVs.
  • Grants for creating capital assets: Funding will be provided for the acquisition of electric buses (e-buses), the establishment of a comprehensive network of charging stations, and the upgrading of the Ministry of Heavy Industries (MHI) testing facilities.
  • Administration of the Scheme including IEC (Information, Education & Communication) activities and fee for project management agency (PMA).
PM E-DRIVE scheme
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Eligible Categories:

  1. Two Wheelers: The scheme aims to incentivize approximately 24.79 lakh electric two-wheelers (e-2Ws). Only e-2Ws equipped with advanced batteries are eligible for this incentive. Both commercially registered and privately owned e-2Ws can benefit from the scheme.
  2. Three-wheelers: To incentivize around 3.2 lakh electric three-wheelers (e-3Ws), covering registered e-rickshaws/e-carts or L5 category vehicles. Only those e-3Ws with advanced battery technology are qualified for the demand incentive. The scheme is solely applicable to e-3Ws used for commercial purposes.
  3. e-Ambulances:
    • Allocation of Rs 500 crore to promote comfortable patient transport.
    • Standards: Performance and safety standards to be formulated with MoHFW, MoRTH, and other stakeholders.
  4. e-Buses:
    • Allocation of Rs 4,391 crore for procurement of 14,028 e-buses for STUs/public transport agencies.
    • Demand Aggregation: Managed by CESL in cities with populations over 40 lakh.
    • Preferences: Given to cities/states replacing old STU buses through authorized scrapping centers (RVSFs).
  5. e-Trucks: Fund of Rs. 500 crore allocated to promote the adoption of electric trucks to reduce CO2 emissions. Only those holding a scrapping certificate from MoRTH-approved vehicle scrapping centers (RVSF) are eligible for the incentives.
  6. Public Charging Stations (EVPCS): To establish a robust network of public charging stations, including 22,100 fast chargers for e-4Ws, 1,800 for e-buses, and 48,400 for e-2Ws and e-3Ws. These charging points to be installed in key cities with high electric vehicle penetration and along select highways.
  7. Modernisation of Testing Agencies: Allocation of Rs 780 crore to upgrade and modernize testing agencies under the Ministry of Heavy Industries (MHI) to equip them with new and emerging technologies, thereby promoting green mobility.

Other key provisions of the scheme: 

  • Beneficiaries of the Scheme: 
    • The scheme primarily targets electric two-wheelers (e-2Ws) and three-wheelers (e-3Ws) registered for commercial use. Privately or corporately owned e-2Ws are also eligible. 
    • EVs purchased by government departments are not qualified for demand incentives, preventing the transfer of funds within government bodies.
  • e-Vouchers to avail incentives: The Ministry of Heavy Industries (MHI) is introducing e-Vouchers for EV customers to avail the demand incentive under the scheme.
    • The scheme portal will generate an e-KYC Aadhaar FACE authenticated e-Voucher for the customer at the time of purchase. 
    • This e-voucher will be signed by the buyer as well as the dealer and uploaded on the PM E-DRIVE portal to claim reimbursement of demand incentives under the scheme.

Benefits: 

  • Environmental Impact: Reduce transportation’s environmental footprint and improve air quality with sustainable transportation solutions.
  • Facilitate establishment of essential EV charging infrastructure.
  • EV Industry Growth: Promote a competitive and resilient domestic EV manufacturing sector and strengthen the EV supply chain.
  • Spur investment in the EV sector and create employment opportunities along the value chain.

Inter-State trade on electronic National Agriculture Market (e-NAM) declined in FY25

Context: As per the latest government data, the inter-State trade volume on the electronic-National Agriculture Market (e-NAM) saw a sharp decline of 78% during FY25. 

Relevance of the topic:

Prelims: Key facts about electronic National Agriculture Market (e-NAM).

Mains: electronic National Agriculture Market (e-NAM): Implementation Challenges.

About electronic National Agriculture Market (e-NAM)

  • The Government of India launched the electronic National Agriculture Market (e-NAM) in 2016. 
  • It is a pan-India electronic trading portal that integrates existing physical wholesale mandis and markets across the country to create a unified national market for agricultural commodities. 
  • Implemented by: Small Farmers Agribusiness Consortium (SFAC), under the aegis of Ministry of Agriculture and Farmers’ Welfare.
  • Objectives: 
    • Integration of APMCs through a common online market platform to facilitate pan-India trade in agriculture commodities.
    • Providing farmers better price for their produce through a transparent auction process based on quality of produce along with timely online payment. 
    • Removing information asymmetry between buyers and sellers and promoting real time price discovery based on actual demand and supply.

Difference between e-NAM and the existing Mandi System

  • e-NAM is not a parallel marketing structure but rather a device to create a national network of physical mandis which can be accessed online.
  • It seeks to leverage the physical infrastructure of the mandis through an online trading portal, enabling buyers situated even outside the Mandi/ State to participate in trading at the local level.    
  • e-NAM offers a “plug-in” to any market yard existing in a State (whether regulated or private).  

As of June 2025, over 1520 Mandis are onboarded on e-NAM portal. The total value of agricultural produce traded on the e-NAM portal till the date stands at ₹4.3 lakh crore.                       

Implementation Challenges faced by e-NAM

  • Low penetration: Only ~23% of the APMCs across the country are connected using e-NAM, making this facility available to only 25% of farmers in India. 
  • State-level Licensing & APMC Laws: Agricultural marketing is a state subject; many states do not allow reciprocal licence recognition which restricts outside traders. Only a few states have amended their APMC Acts to allow inter-State trade via e‑NAM. As a result, the inter-State trade volume on e-NAM is low, and even declining.
  • Poor participation of farmers: Most of the small farmers are reluctant to participate in e-NAM, because:
    • Small farmers still prefer to sell their produce to local intermediaries as an obligation towards the input credit provided by them.
    • Digital payments made under e-NAM are a barrier to the repayment of informal loans that farmers have taken from commission agents.
    • Limited awareness of the e-NAM scheme and its benefits among the farmers. 
  • Infrastructural gaps: Inadequate infrastructure such as e-gate passes (entry and exit), quality assaying labs, and underdeveloped IT Infrastructure inhibited the efficient functioning of e-NAMs.
  • Resistance by Traders and Middlemen as the online system is more accountable and would bring them under the ambit of tax.

Way Forward

  • Creating an enabling infrastructure: The mandi should take the responsibility to arrange for logistics and transportation that would facilitate inter-mandi trading on e-NAM. This could be done by outsourcing the tasks related to logistics to a third party.
  • Part-cash and part-online payments to farmers: Farmers at the initial stage should get an option to receive payment partly in cash and the remaining in their bank account. E.g., Madhya Pradesh model. 
  • Liberal licensing:
    • States should take proactive steps to liberalise trading licences within their jurisdiction to boost inter-State trade, and enable provisions in APMC Acts for reciprocal recognition of mandi licenses, unified licences etc.  
    • The existing license of the traders should be upgraded to a unified license that lets them trade across any mandi in the country. The fees to upgrade the license should be nominal. 
  • Ban on conventional trade and mandating the traders to shift to e-NAM.
  • Providing Incentives to farmers and traders like Agri-input supply coupons etc. to encourage them to participate in e-NAM.

The government plans to rollout e-NAM 2.0 to integrate logistics providers and provide last‑mile logistics. The main features of e-NAM 2.0 would be bank account validation, eKYC features using Aadhaar and onboarding of assaying, grading, logistics and other value added service providers. 

Informalisation within the Formal Sector 

Context: In recent decades, India has witnessed a sharp rise in the use of contract labour within the formal manufacturing sector.

Relevance of the Topic: Prelims: Concept of Contractualisation. Mains: Informalisation with formal sector - Reasons, Impact, Way Forward.

According to the Annual Survey of Industries (ASI), the share of contract workers in the manufacturing workforce has doubled from 20% in 1999-2000 to 40.7% in 2022-23. 

This trend reflects the informalisation of the formal sector, raising concerns over worker exploitation, wage inequality, and declining productivity.

What is Contractualisation?

  • It refers to the employment of workers on temporary, often third-party contracts, rather than permanent, directly employed roles. 

Why Firms Prefer Contract Labour? 

  • Operational Flexibility: Allows firms to hire or fire workers based on market demand.
  • Cost Savings: Wages and benefits are significantly lower than for permanent workers.
  • Regulatory Evasion: Firms bypass rigid labour laws and industrial regulations.
  • Short-Term Efficiency: Contract workers may fill temporary skill gaps or meet seasonal demand.

However, these apparent benefits mask deeper structural challenges and long-term inefficiencies.

Challenges associated with Contractualisation: 

  • Legal Exclusion & Vulnerability: Contract workers are generally excluded from key protections under the Industrial Disputes Act, 1947, such as safeguards against arbitrary dismissals and retrenchment. Hired through third-party contractors, they lack bargaining power and often face exploitative work conditions.
  • Wage Disparities: In 2018-19, on an average, the contract workers earned 14.47% less than regular employees. In some sectors, employers' labour cost on contract workers was up to 85% lower than on regular workers.
  • Impact on Labour Productivity: Though intended to provide flexibility, over-reliance on contract labour can undermine productivity, especially in labour-intensive and small-to-medium enterprises. ASI Plant-Level Data (1999-2019) shows that Contract Labour-Intensive (CLI) enterprises had 31% lower productivity than Regular Labour-Intensive (RLI) enterprises.

Why Productivity Declines?

  • Principal-Agent Problem: Contractors may not align with the firm's long-term interests.
  • Moral Hazard: Low job security may lead to worker disengagement.
  • Poor skill development: Frequent exit and replacement of workers in a company or industry over a short period of time prevents skill development and innovation.
  • No On-the-Job Training: Firms avoid investing in temporary workers.

Exceptions:  

  • Labour productivity was 5% higher in high-skill Contract Labour-Intensive (CLI) enterprises when compared to their low-skill counterparts, with the productivity advantage increasing significantly to 20% in large high-skill CLI enterprises. 
  • Similarly, large-size capital-intensive CLI enterprises recorded a 17% gain in labour productivity. 

However, such types of enterprises account for only about 20% of the total formal manufacturing. The remaining 80% of the enterprises were adversely affected by contractualisation.

Policy Landscape and Reforms:

Labour Code on Industrial Relations 2020: 

  • The code allows firms to hire non-regular workers on fixed-term contracts directly without third party contractors. Aims to provide greater flexibility in hiring and firing. 
  • It also seeks to curb the exploitation of non-permanent workers by mandating the provision of basic statutory employment benefits. 
  • Yet to be fully implemented; trade unions fear it may further increase informalisation.

Pradhan Mantri Rojgar Protsahan Yojana (2016-2022):

  • Aim: To incentivise job creation in the formal sector by bearing employer’s contribution (12%) to Employees’ Pension Scheme (EPS) and Employees’ Provident Fund (EPF). 
  • Though over one crore employees benefitted from the scheme, it was discontinued in 2022.

Way Forward

  • Policymakers can incentivise firms to adopt reasonably longer fixed-term contracts by offering concessions in social security contributions or subsidised access to government skilling programmes. This could enhance workforce stability and support skill accumulation, while also assuaging labour union fears about the potential rise in the precarious employment. 
  • Reviving and extending support under the PMRPY could help curb the misuse of contract labour and promote formalisation in the manufacturing sector.

RBI's Financial Inclusion Index hits 67 in FY25

Context: The Reserve Bank of India’s Financial Inclusion Index (FI Index) improved to 67 in March 2025 from 64.2 in March 2024.

Relevance of the Topic: Prelims: Key facts about Financial Inclusion Index. 

Financial Inclusion Index

  • Financial Inclusion Index (FI Index) captures the extent of financial inclusion across the country. The comprehensive index includes data from various sectors such as banking, investments, insurance, postal services, and pensions, making it a comprehensive measure of financial inclusion in the country.
  • The index captures information on various aspects of financial inclusion in a single value ranging between 0 and 100, where 0 represents complete financial exclusion and 100 indicates full financial inclusion.
  • The FI Index comprises of three broad parameters:
    • Access (having a weight of 35% in the index)
    • Usage (weight 45%)
    • Quality ( weight 20%). Quality parameter captures the quality aspect of financial inclusion as reflected by financial literacy, consumer protection, and inequalities and deficiencies in services.
  • The weight of each parameter comprises various dimensions, which are calculated based on a number of indicators.
  • The Index has been constructed without any base year and as such it reflects cumulative efforts of all stakeholders over the years towards financial inclusion. 
  • RBI published the first FI index in 2021 for FY21 (FI Index 53.9). 
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Decoding the rise in FI Index

  • As per RBI, the improvement in FI Index in FY25 is largely due to usage and quality dimensions, reflecting deepening of financial inclusion, and sustained financial literacy initiatives. 
  • India has made significant strides in expanding financial inclusion through initiatives like:
    • Pradhan Mantri Jan Dhan Yojana: Under the scheme, over 558 million accounts have been opened in rural and semi-urban areas. Notably, 311 million of these accounts have been opened in the name of female beneficiaries. 
    • JAM Trinity: The pillar of financial inclusion is JAM (Jan Dhan, Aadhaar, Mobile) trinity which has expanded the coverage of direct benefit transfers. 
    • Unified Payments Interface (UPI) and Aadhaar-enabled Payment System (AePS)
    • Payments Banks; Business Correspondent Model
    • Pradhan Mantri Mudra Yojana 
    • Pradhan Mantri Jeevan Jyoti Bima Yojana 
    • Pradhan Mantri Suraksha Bima Yojana 
    • Atal Pension Yojana
    • Sukanya Samriddhi Yojana
    • Stand Up India Scheme 
    • Financial Literacy Programmes like Pradhan Mantri Gramin Digital Saksharta Abhiyan. 

Also Read: Financial Inclusion 

Index of Eight Core Industries

Context: The Index of Eight Core Industries grew at 1.7% in June 2025, as compared to 5% in June 2024. IIP had registered a growth of mere 0.5% in April 2025, its lowest in the last eight months.  The output of eight core infrastructure sectors makes up 40% of the country's industrial production. 

Relevance of the Topic: Prelims: Key facts about Index of Eight Core Industries.

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Index Of Eight Core Industries

  • Index of Eight Core Industries (ICI) measures combined and individual performance of production of eight core sectors in India, comprising- coal, crude oil, natural gas, petroleum refinery products, fertilisers, steel, cement and electricity. 
  • These eight core industries constitute 40.27% of the total index of industrial production (IIP).
  • This index is prepared by the Office of the Economic Advisor, Ministry of Commerce and Industry.
  • It is published monthly with the base year as 2011-12.

Weightage of different sectors in the Index:

image 148
  • Highest Weightage: Refinery products.
  • Lowest Weightage: Fertilisers.

India’s Silent Crisis: Poor Soil Health and Hidden Hunger

Context: Despite achieving food self-sufficiency, India continues to face widespread malnutrition largely due to declining soil health and imbalanced fertiliser use.

Relevance of the topic:

Prelims: Key facts and schemes related to Food security and Soil Health.

Mains: State of Soil Health and its impact.

India’s Progress in Food Security

Once dependent on food imports under the US PL-480 programme in the 1960s, India has today become self-sufficient in food production: 

  • In FY25, India exported 20.2 million tonnes (MT) of rice in a global market of 61 MT. 
  • India runs the world’s largest food distribution programme, the PM-Garib Kalyan Yojana (PMGKY), providing  5 kg of free rice or wheat per person per month to more than 800 million people. 
  • The Food Corporation of India holds about 57 MT of rice- the highest stock in 20 years and nearly four times the buffer norm of 13.54 MT as of July 1, 2025.

Poverty has receded significantly: 

  • The extreme poverty head count (those earning less than $3/day at 2021 PPP) dropped from 27.1% in 2011 to just 5.3% in 2022.

Persistent Challenge of Malnutrition: 

  • Despite food self-sufficiency, malnutrition remains a major concern. The National Family Health Survey (NFHS 5) (2019-21) reports that : 
    • 35.5% of children under five years of age are stunted, 
    • 32.1% are underweight, and 
    • 19.3% are wasted. 
  • One critical and often overlooked factor behind malnutrition is the health of soils. 

Status of Indian Soils

  • Less than 5% of Indian soils have high or sufficient nitrogen (N). 
  • Only 40% have sufficient phosphate (P).
  • Only 32 % have sufficient potash (K).
  • Just 20% are sufficient in soil organic carbon (SOC) - a critical component of soil fertility and nutrient absorption
  • Our soils also suffer from a deficiency of sulphur, as well as micronutrients like iron, zinc and boron.

Imbalanced Fertiliser Use:  

  • For example, In Punjab, nitrogen use exceeds recommendations by 61%, while potassium use is short by 89%, and phosphorus use is short by 8%.
  • Only 35-40% of Nitrogen from granular urea is absorbed by crops, the rest is either released into the atmosphere as nitrous oxides or leaches into groundwater, contaminating it with nitrates and making it unsafe for consumption.
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Impacts of Agriculture in Nutrient-deficient Soils

  • Crops grown on nutrient-deficient soils often mirror those deficiencies, leading to a silent but pervasive form of malnutrition in humans. E.g., Deficiency of zinc in soils results in low zinc content in cereals like wheat and rice, which in turn is linked to childhood stunting.
  • Imbalanced use of fertilisers leads to soil degradation and suboptimal agricultural productivity. 
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The Indian Council for Research on International Economic Relations (ICRIER) and OCP Nutricrops (Moroccan state-owned fertiliser production company) have committed to collaborating to improve soil health in India. The collaboration aims to develop, implement, and scale region-specific, data-driven soil nutrition solutions that enhance crop productivity while improving their nutritional profile.

Way Forward

To restore soil health and improve both crop and human nutrition, India needs a paradigm shift-

  • Shift from indiscriminate fertiliser use to science-based soil nutrition management.
  • Promote rigorous soil testing to guide fertiliser application.
  • Implement customised fertilisation strategies aligned with specific soil and crop needs.
  • Link to Sustainable Development Goals (SDGs) - Improving soil nutrition advances SDG-2 (Zero Hunger) and SDG-13 (Climate Action). 

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