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Parbati-Kalisindh-Chambal Eastern Rajasthan Canal Project

Context: The Detailed Project Report (DRP) on Parbati-Kalisindh-Chambal Eastern Rajasthan Canal Project submitted by Rajasthan will be analysed by various Central agencies.

Relevance of the Topic: Prelims: Key facts about Parbati-Kalisindh-Chambal Eastern Rajasthan Canal Project; key facts about important locations. 

About Parbati-Kalisindh-Chambal Eastern Rajasthan Canal Project

  • PKC-ERCP is a river interlinking project aimed at addressing the water scarcity challenges in the eastern region of Rajasthan.
  • The project will cover 13 districts of Rajasthan and a population of approximately 2.5 crore people.
  • Key details:
    • Water source: ERCP plans to utilise the surplus water from the Chambal basin (particularly Kalisindh, Parvati and Chambal rivers) and redirect it to water-deficient sub-basins such as Banas, Gambhiri, Banganga, and Parbati.
    • Proposed infrastructure: Infrastructure will include a canal, Doongri Dam and associated reservoir.
  • Significance of ERCP: 
    • Water availability: Rajasthan is an arid and semi-arid region facing significant water shortages. ERCP is intended to improve availability in water scarce regions to reduce dependence on erratic rainfall.
    • Irrigation management: The project aims to boost irrigation facilities in 2 lakh hectares in the region, thereby increasing agricultural productivity and supporting the livelihood of farmers.
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Challenges and concerns related to the project

  • Environmental impact: The project involves construction of the Doongri dam and reservoir which will lead to the submergence of regions of the Ranthambore Tiger Reserve. 
  • Restrain biodiversity movement- The reservoir will divide North Ranthambore and south Ranthambore leading the barrier in the migration corridor of species in reserve.
  • Interstate dispute: Neighbouring states like Madhya Pradesh have raised the sharing of Chambal water, this may lead to potential legal and political disputes regarding water sharing.
  • Delays in implementation: The project is witnessing delays as it does not have National project status. Further, environmental activism and poor political will is also delaying the project.
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Way Forward

  • Securing National Project status: Intensifying dialogue with the central government to recognize ERCP as a national project may accelerate the development
  • Dialogue with neighbours: Rajasthan government should have proper dialogue with Madhya Pradesh government to build consensus over water sharing agreement of Chambal.
  • Alternate green corridor: Detailed Environmental Impact Assessment should be conducted to find an alternate green corridor for migration of the species in Ranthambore Tiger reserve.
  • Using technology: A proper planning of identifying water resources and long term impact should be predicted by using geo-spacial satellites and hydraulic modeling.
  • Community participation: ERCP will impact tribals like Van Gujjars of Ranthambore Tiger reserve region. These communities should be considered under planning of the project to evaluate the alternate livelihood for them. 
  • Focus on micro-irrigation: ERCP will only provide water but the focus should be on effective utilisation of the water. Therefore, micro-irrigation projects like sprinkler and drip should be promoted in the region.

About Tiger Reserves in Rajasthan

  • Ranthambore Tiger Reserve: 
    • Located in Sawai Madhopur region of Rajasthan.
    • It is nestled between Aravali in the West and Vindhya ranges in the East side.
    • Banas river flows through the reserve. Banas is a tributary of Chambal river.
  • Sariska Tiger Reserve (Alwar): Situated in the Aravalli Hills, Sariska is known for its efforts in tiger relocation and conservation. It also houses historical ruins like the Kankwari Fort.
  • Mukundra Hills Tiger Reserve (Kota): A newer reserve established in 2013, it spans the Mukundra Hills and aims to expand tiger habitats in Rajasthan.
  • Ramgarh Vishdhari: It is the fourth Tiger reserve of Rajasthan and 52nd Tiger reserve of the nation declared in 2022. Mej river, a tributary of Chambal flows through this region. Famous for Monitor Lizards.

Anti-tank guided missile Nag Mark-2

Context: India has successfully conducted field evaluation trials of indigenously-developed third-generation anti-tank guided missile Nag Mark-2. The trials were conducted at the Pokhran field range in Rajasthan, where the missile showcased exceptional precision and reliability.

Relevance of the Topic: Prelims: Key facts about Nag Mk-2.

About Nag Mark-2 Missile

  • Nag Mk-2 is an indigenously made all-weather, fire-and-forget, lock-on after launch, anti-tank guided missile (ATGM). 
  • Developed by: Defence Research and Development Organisation (DRDO).
  • Nag Mk-2 missile is launched from the NAMICA (Nag Missile Carrier).
    • NAMICA is an anti-tank armored vehicle or tank destroyer vehicle used by the Indian Army to launch anti-tank missiles. 
    • NAMICA is based on SARATH BMP-II. SARATH BMP-II is an amphibious infantry combat vehicle (ICV) used by the Indian Army. 
  • Estimated Range of Nag Mk-2 missile: 7 to 10 kilometres.
    • It is a significant improvement over Nag Mark 1, which has a 4-kilometre range.
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Key features:

  • Third-Generation Fire-and-Forget Technology: Enables precision targeting with minimal operator intervention post-launch.
  • Versatile Performance: Capable of neutralising modern armoured vehicles, equipped with explosive reactive armour (ERA).
  • High-explosive anti tank (HEAT) warhead: The missile has a tandem HEAT warhead for increased destructive power.
  • Platform Compatibility: Successfully integrated with Nag Missile Carrier (NAMICA), enhancing battlefield mobility and deployment flexibility.

Significance:

  • Underscored India's growing capabilities in anti-tank warfare and enhances Indian Army's ability to counter evolving armour threats.
  • Reaffirms India's commitment to achieving self-reliance in defence manufacturing. 

Makaravilakku Festival

Context: Makaravilakku was celebrated at the Sabarimala temple in Kerala, coinciding with Makara Sankranti on 14th January 2025. 

Relevance of the Topic:Prelims: Key facts about Makaravilakku Festival; Sabarimala Temple. 

About Makaravilakku Festival

  • Makaravilakku is an annual festival held in Kerala at the Sabarimala temple, dedicated to Lord Ayyappa.
  • The festival marks the culmination of a rigorous 41-day pilgrimage (which begins in mid-November and ends on Makara Sankranti) to honor Lord Ayyappa.
  • On this day, Lord Ayyappa is believed to have manifested in the form of a divine light, marking the arrival of prosperity and happiness.
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Rituals:

  • 41-Day Pilgrimage (Vratham): 
    • Devotees who wish to participate in the Makaravilakku festival must observe a 41-day vratham which has strict conduct like celibacy, fasting, and wearing black or saffron clothing. 
    • The pilgrimage represents a period of self-purification, discipline, and devotion.
  • Makara Jyothi (divine light):
    • Makaravilakku or Makara Jyothi is one of the central elements of the festival.  
    • It is believed to be the divine light (symbolic presence) of Lord Ayyappa, and it appears at a specific spot near the temple in the evening. 
  • Grand Thiruvabharanam procession:
    • On Makaravilakku day, the sacred Thiruvabharanam, the royal ornaments of Lord Ayyappa are carried by a procession that moves from the Pandalam Palace to the Sabarimala temple, accompanied by chanting and music. 
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About Sabarimala Temple

  • Sabarimala Sree Ayyappan Temple is a Hindu temple devoted to Lord Ayyappan, also known as Dharma Shasta.
  • According to Hindu mythology, Lord Ayyappa is the son of Lord Shiva and Lord Vishnu (Vishnu in his incarnation as Mohini). 
  • It is one of the largest annual pilgrimage sites in the world, with an estimate of over 10 to 15 million devotees visiting every year. 
  • The temple practices prohibit the women between the ages of 10 and 50 years from accessing the temple premises.
    • In 2018, the Supreme Court of India invalidated the prohibition on female entry inside the temple. 

Geographical location: 

  • Location: Sabarimala hill, Pathanamthitta district, Kerala. 
  • The temple is surrounded by 18 hills in the Periyar Tiger Reserve.
  • The temple is located on the banks of the river Pamba.
  • Pamba River (Pampa River/ Dakshina Bhageerathi) is one of the longest river in Kerala after Periyar and Bharathappuzha.
  • During ancient times, it was called 'River Baris'. 

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.

What is rat-hole mining?

Context: Recently, nine workers were trapped in a flooded coal mine in Assam’s Dima Hasao district. Bodies of four of the workers have been recovered, and rescue work is still ongoing.

Relevance of the Topic: Prelims: Key facts about Rat Hole Mining.

Rat Hole Mining

  • The term “rat hole” refers to the narrow pits dug into the ground, typically just large enough for one person to descend and extract coal. 
  • A rat-hole mine involves digging of very small tunnels, usually only 3-4 feet deep, in which workers, more often children, enter and extract coal. Rat-hole mining is broadly of two types – side-cutting and box-cutting.
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  • Rat hole mining is prevalent in the Northeastern States, especially in Meghalaya.

Why is it prevalent in North-eastern India?

Despite the presence of coal reserves, commercial mining is not practiced in the North-Eastern regions because of terrain’s unsuitability and nature of coal deposits. 

  • The coal seam is extremely thin, and methods like open-cast mining are economically unviable.
  • The coal found in the North-East contains lots of sulfur and this type of coal is categorized as bad quality of coal. Thus discourages big ticket private investments.
  • Being a tribal state where the 6th Schedule applies, all land is privately owned, and hence coal mining (like limestone mining) is done by private parties which do not have capacity of big investment.
  • Further, these mines are considered as gold chest by the locals which provides employment and prospect of money for the population of these backward area without much investment.

Demerits

Damage to Ecology:

  • Unregulated rat mining leads to land degradation, deforestation, and water with high concentrations of sulphates, iron, and toxic heavy metals, low dissolved oxygen, and high biochemical oxygen demand.
  • Ecology - Piling of coals along roadside have caused severe issues of air and water pollution. Off road movements in and around mining area has resulted into damaged ecology. A petition to NGT by Assam’s All Dimasa Students’ Union has claimed that rat-hole mining in Meghalaya had caused the water in the Kopili river (it flows through Meghalaya and Assam) to turn acidic.
  • Risk to lives - Asphyxiation because of poor ventilation, flooding of mines during rainy season, and sudden collapse due to unscientific digging has caused loss of life to individuals.

Present Status

  • The National Green Tribunal (NGT) has banned rat-hole mining in 2014, and retained the ban in 2015. 
  • The ban was on grounds of the practice being unscientific and unsafe for workers.
  • The Meghalaya High Court appointed Justice (Retired) BP Katakey committee to recommend the measures to be taken by the state in compliance with the directions issued by the Supreme Court and National Green Tribunal (NGT). This committee noted that despite the ban, illegal mining continues with large cache of coals reaching to the markets unhindered.

Z-Morh Tunnel

Context: The Prime Minister of India inaugurated the Z-Morh tunnel in Sonmarg area of the UT Jammu and Kashmir.

Relevance of the Topic: Prelims: Location based questions in Prelims.

About Z-Morh Tunnel

  • Z-Morh tunnel is situated between Gagangir and Sonamarg in Jammu & Kashmir. 
  • The 6.5 km long tunnel provides a year-round alternative to the Zojila Pass (Zojila Pass connects Srinagar and Leh). 
  • Purpose: 
    • Connectivity: The tunnel will facilitate tourism, trade, and military logistics in the region.
    • Strategic importance: Together with the adjacent Zoji-La Tunnel, this geostrategically important tunnel on the Srinagar-Leh national highway provides year-round all-weather connectivity to Baltal (Amarnath cave), Kargil and other places in Ladakh.
About Z-Morh Tunnel

About Zojila Tunnel Project

  • The Zojila Tunnel is a 13.14 km-long, all-weather tunnel connecting Srinagar and Leh, bypassing the Zojila Pass. 
  • It ensures year-round connectivity, boosts tourism, enhances military logistics, and reduces travel time from 3 hours to 15 minutes. 
  • It fosters regional development despite challenging high-altitude construction conditions and is expected to be completed by 2026.

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

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  • 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.

What are Small Language Models?

 Context: Small Language Models (SLMs) are a perfect artificial intelligence system for a country like India, where the scope of Artificial Intelligence (AI) adoption is immense but resources are constrained. 

Relevance of the Topic:Prelims: Basic understanding of terms like Large Language Models, Small Language Models.  

What is a Language Model?

  • A language model is the core component of modern Natural Language Processing (NLP). It is a statistical model that is designed to analyse the pattern of human language and predict the likelihood of a sequence of words or tokens.
  • Large language models (LLMs) are AI systems capable of understanding and generating human language by processing vast amounts of text data (has at least one billion or more parameters). E.g., ChatGPT (by Open AI), Gemini (Google), Llama (Meta). 
Language Model

What is a Small Language Model (SLM)?

  • Small Language Models (SLMs) are compact AI systems designed for natural language processing tasks. 
  • SLMs typically have fewer than 1 billion parameters (ranges from millions to a few billion parameters), making them more efficient in terms of computational resources and energy consumption.  
  • SLMs are capable of performing various NLP tasks such as text generation, translation, and sentiment analysis, with potentially reduced capabilities compared to larger models. 

Benefits of Small Language Model:

  • Ideal for specialised tasks: SLMs are cheaper to run and maintain and ideal for specific use cases. For a company that needs AI for a set of specialised tasks, a large AI model is not required.
  • Lesser training time: Training small models requires less time, less computation and smaller training data.
  • High inference speeds: SLMs have faster inference speeds (reduced latency due to fewer parameters) because of their smaller size. This is beneficial for real-time applications where quick responses are crucial. E.g., chatbots or voice assistants.
  • Use fewer resources: Their smaller size allows for deployment on edge devices, can run offline on smaller devices like mobile phones or embedded systems, making them valuable for applications where resources are limited or privacy is a concern.
    • In India, where the scope of AI adoption is immense but resources are constrained, SLMs are perfect.
image 113

Examples of Small Language Model

  • Microsoft Phi (the latest Phi-3-mini has 3.8 billion parameters).
  • LLaMA 3 (by Meta)
  • Gemma (by Google)

Limitations of Small Language Model

  • Less capable of handling complex tasks: Smaller size of SLMs limits their ability to capture and process large amounts of contextual and nuanced information, hence, making them unsuitable for highly intricate tasks, like detailed data analysis or advanced creative writing. 
  • Less accuracy and creativity: Their reduced scale (limited data training) restricts the richness of their outputs, leading to less imaginative or less varied responses, compared to LLMs. 
  • Bias and reduced Performance: Since SLMs operate on fewer parameters and smaller datasets, they are more prone to bias.

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. 

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