Economy

RBI Expands Collateral-Free Credit: A Boost for India’s MSME Growth Engine

Context: To strengthen credit flow to small businesses, the Reserve Bank of India (RBI) has proposed raising the ceiling for collateral-free bank loans to MSMEs. Alongside this, RBI has also proposed permitting bank lending to Real Estate Investment Trusts (REITs) under strict prudential safeguards. The move is aimed at deepening formal credit access while maintaining financial stability.

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What is the New Collateral-Free Loan Proposal?

The RBI has proposed doubling the collateral-free loan limit for MSMEs from ₹10 lakh to ₹20 lakh. This is a significant reform because many micro and small enterprises lack land, property, or fixed assets that banks usually demand as collateral.

The proposal encourages banks to shift towards cash-flow based lending, where credit decisions are made using:

  • business turnover,
  • repayment behaviour,
  • digital transaction history, and
  • viability of the enterprise.

This approach reduces overdependence on asset-backed lending and improves inclusion of first-generation entrepreneurs.

The reform also aligns with Priority Sector Lending (PSL) norms and complements credit guarantee frameworks, which reduce bank risk while improving MSME access to affordable loans.

Why This Matters for MSMEs

MSMEs are often described as the backbone of the Indian economy but face a major financing bottleneck.

  • India’s MSME sector faces an estimated credit gap of ₹20–25 lakh crore, largely due to collateral constraints.
  • Around 40–45% of micro enterprises depend on informal lenders, leading to high interest costs and financial vulnerability.
  • MSMEs employ around 11 crore people, meaning easier credit directly supports wage stability, expansion, and job creation.

Thus, expanding collateral-free lending can promote formalisation, productivity growth, and resilience of small firms.

Status of MSMEs in India

  • India has about 6.3 crore MSMEs, and nearly 99% are micro enterprises (Udyam data).
  • They contribute nearly 30% to GDP and around 45% to manufacturing output.
  • MSMEs account for about 43–45% of India’s merchandise exports, making them essential for global competitiveness.

Other Measure: Bank Lending to REITs

RBI has also proposed allowing banks to lend to REITs, enabling regulated credit flow into income-generating commercial real estate. This could strengthen infrastructure financing and support real estate formalisation.

However, to avoid systemic risk, RBI proposes prudential controls such as:

  • exposure limits,
  • risk weights,
  • due diligence norms, and
  • concentration safeguards.

Conclusion

By expanding collateral-free lending and promoting cash-flow based assessment, RBI’s proposal can significantly improve MSME credit access, reduce dependence on informal finance, and support employment growth.

If supported by strong monitoring and credit discipline, it can become a key driver of inclusive industrial expansion.

RBI’s Digital Fraud Relief Plan: New Safety Net for Small-Value Victims

Context: The Reserve Bank of India (RBI) has proposed a compensation framework for victims of small-value digital frauds, aiming to restore trust in digital payments and strengthen consumer protection. The proposal focuses on fraud cases up to ₹50,000, which account for nearly 65% of all digital fraud incidents.

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Key Features of the Proposed Compensation Framework

The scheme provides compensation for eligible victims of digital fraud up to ₹25,000, or 85% of the loss, whichever is lower. This design ensures meaningful relief while preventing misuse.

A major reform is the inclusion of cases involving inadvertent credential sharing, provided the act was not mala fide. Earlier liability rules often excluded compensation when negligence was involved. This reflects a more citizen-friendly approach, recognising that fraudsters increasingly use deception-based tactics such as phishing and fake customer care calls.

To discourage habitual carelessness, the relief will be available only once per customer, creating a balance between protection and accountability.

Liability Sharing: “Skin in the Game” Model

The proposed framework distributes the financial burden among stakeholders:

  • Customer: Bears 15% of the loss as a deductible, encouraging continued vigilance.
  • Bank: Contributes a proposed ~15%, incentivising stronger cybersecurity and fraud detection systems.
  • RBI: Covers the remaining ~70% through a central fund, subject to the compensation cap.

This approach ensures shared responsibility rather than shifting the entire cost to one entity.

Funding through the Depositor Education and Awareness (DEA) Fund

Compensation payouts will be financed through the Depositor Education and Awareness (DEA) Fund, which currently holds a surplus of around ₹85,000 crore.

About the DEA Fund

  • Established by RBI in 2014 under Section 26A of the Banking Regulation Act, 1949.
  • Banks transfer balances of unclaimed/inoperative accounts for 10+ years into the fund.
  • Depositors retain the right to reclaim their money with interest; transfer does not extinguish ownership.
  • RBI pays interest on the transferred amount, which banks must pass to depositors upon settlement.
  • The fund is primarily meant for depositor awareness programmes, but is now proposed to support fraud compensation.

RBI has also launched the UDGAM portal, enabling citizens to search unclaimed deposits across banks, improving transparency.

Significance of the Proposal

The framework can strengthen confidence in digital transactions, particularly for small users, senior citizens, and first-time digital adopters. It also aligns with India’s push for a secure digital economy under UPI-based payments and fintech expansion.

Conclusion

RBI’s proposed compensation mechanism is a major step towards consumer-centric digital governance. If implemented effectively, it can reduce financial distress from small frauds while promoting stronger banking security and responsible user behaviour.

Economic Survey 2025–26: Mapping India’s Growth with Disciplined Swadeshi

Context: The Economic Survey 2025–26 was tabled in Parliament by the Union Finance Minister ahead of the Union Budget 2026. The Survey introduces the core idea of “Disciplined Swadeshi”—a calibrated development strategy that rejects inward-looking protectionism while firmly integrating India into global supply chains with domestic strength and competitiveness.

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About the Economic Survey

The Economic Survey of India is the Ministry of Finance’s annual flagship publication that reviews macroeconomic performance over the previous year and presents policy-oriented insights.

  • Prepared by: Economic Division, Department of Economic Affairs (DEA) under the Chief Economic Advisor
  • Presented since: 1950–51 (separately from the Budget since 1964)
  • Legal Status: Non-statutory and non-binding
  • Contents: Macroeconomic trends, sectoral performance, thematic chapters, and statistical annexures

Key Highlights of Economic Survey 2025–26

1. State of the Economy

India remains the fastest-growing major economy:

  • Real GDP growth (FY26): 7.4%
  • FY27 outlook: 6.8–7.2%
  • Medium-term potential growth revised upward to 7%

Growth is increasingly consumption-driven:

  • Private Final Consumption Expenditure (PFCE) rose to a 12-year high of 61.5% of GDP
  • Rural demand improved due to strong agriculture, while urban demand was supported by stable employment

Investment momentum continued:

  • Gross Fixed Capital Formation (GFCF) grew 7.6%, sustaining around 30% of GDP

2. Fiscal Developments

Fiscal consolidation progressed alongside growth:

  • Fiscal deficit: 4.8% (FY25); 4.4% target for FY26
  • Revenue receipts increased to 9.2% of GDP, reflecting higher tax buoyancy
  • Direct tax base expanded to 9.2 crore ITR filers
  • GST collections rose 6.7% YoY to ₹17.4 lakh crore (Apr–Dec 2025)

Quality of expenditure improved:

  • Effective Capital Expenditure increased to 4.0% of GDP
  • General Government debt-to-GDP declined by 7.1 percentage points since 2020

3. Monetary Management and Financial Inclusion

  • RBI policy stance: Neutral
  • Repo rate cut by 125 bps since Feb 2025 to 5.25%
  • Banking health improved: GNPA at a multi-decadal low of 2.2%

Financial inclusion deepened:

  • PM Jan Dhan Yojana: 55.02 crore accounts, majority in rural/semi-urban areas
  • Capital market participation crossed 12 crore investors, with women ~25%

4. Inflation and Prices

  • Retail inflation averaged a historic low of 1.7% (Apr–Dec 2025), driven by food deflation
  • Core inflation remained elevated at 4.62%, largely due to global precious metal prices
  • Lower food and fuel inflation boosted household purchasing power

5. Agriculture and Allied Sectors

  • Agriculture growth (FY26): 3.1%
  • Horticulture output (362.08 MT) exceeded foodgrains (357.7 MT) for the second year
  • Fish production surged 142% in a decade, reaching 188.7 lakh tonnes

6. Industry and Infrastructure

  • Industrial GVA growth projected at 6.2%, led by manufacturing
  • Rail electrification reached 99.1% of broad-gauge routes
  • India became the 3rd largest domestic aviation market, with 164 operational airports
  • DISCOMs recorded a positive PAT of ₹2,701 crore for the first time
  • High-speed highway corridors expanded to 5,364 km

7. Services Sector

  • Share in GDP: 53.6% (H1 FY26)
  • Growth (FY26): 9.1%
  • Attracted over 80% of FDI inflows (FY23–FY25)
  • Services exports reached $387.5 billion, ranking 7th globally

8. External Sector

  • Forex reserves: $701.4 billion, covering 11 months of imports
  • India’s share in global exports: 1.8% (merchandise) and 4.3% (services)
  • Remittances: $135.4 billion (3.5% of GDP)
  • External debt: $746 billion; sovereign external debt < 5% of total government debt

9. Social Infrastructure and Employment

  • Unemployment rate declined to 4.9% (Q3 FY26)
  • Female LFPR rose to 41.7%
  • Multidimensional Poverty reduced to 11.28%
  • Social sector spending increased to 7.9% of GDP
  • e-Shram portal registered 31+ crore unorganised workers

Conclusion

The Economic Survey 2025–26 presents a confident picture of India’s economy—growth with stability, inclusion, and resilience—anchored in the philosophy of Disciplined Swadeshi, balancing domestic capability with global integration.

From Imports to Independence: India’s Pulse Self-Reliance Drive

Context: The Union Agriculture Minister launched the National Self-Reliance in Pulses Mission from the Food Legumes Research Platform (FLRP), Madhya Pradesh—signalling a structural shift from import dependence to a resilient, farmer-centric pulse economy.

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Why Pulses Matter

Pulses are central to India’s nutrition security, soil health, and climate resilience. As rain-fed, nitrogen-fixing crops, they reduce fertiliser dependence, improve soil fertility, and provide affordable protein to millions. Yet, despite being the world’s largest producer and consumer of pulses, India remains a major importer—exposing domestic markets to global price volatility and forex risks.

Core Design of the Mission

The Mission adopts a seed-to-market value-chain approach, integrating research, farm practices, procurement, processing, and organised marketing.

  • Cluster Model: Contiguous cultivation clusters enable collective input supply, uniform agronomy, and direct linkage with processors—lowering costs and market frictions.
  • Decentralised Seed System: States and farmer networks can release and distribute location-specific varieties, accelerating adoption of high-yielding, climate-resilient seeds.
  • Research–Farmer Bridge: The FLRP connects ICAR–ICARDA research with farmers for rapid field validation of disease-resistant and early-maturing varieties.
  • Value Addition: Emphasis shifts from raw pulses to branded, protein-rich products, boosting farm incomes and rural employment.

Structural Challenges

  • Shrinking Area: Pulses acreage declined from 29.3 million ha (2016–17) to ~27.4 million ha (2023–24).
  • Low Productivity: Yields hover around 850–900 kg/ha, well below the global average of 1,200–1,300 kg/ha due to rain-fed dependence and input gaps.
  • Import Dependence: India imported ~2.8–3 million tonnes annually (2022–24); FY25 imports may touch 6.5–6.8 million tonnes, with yellow peas forming ~30%.
  • Price Volatility: In bumper years, market prices often fall 20–30% below MSP, discouraging cultivation.
  • Processing Deficit: Less than 10% of output is processed near farm gates, eroding farmers’ price share.

Roadmap to Self-Reliance

  • 1,000 Pulse Mills: Up to ₹25 lakh subsidy per unit for decentralised milling, cutting transport costs and creating jobs.
  • Farmer Incentives: Quality seed kits plus ₹10,000/ha assistance for model farming in clusters.
  • Targeted R&D: Yield gains in chana, tur, urad, moong, and lentil through pest-resistant, short-duration varieties.
  • Cooperative Federalism: States to prepare agro-climatic roadmaps aligned with national goals.

Strategic Significance

Achieving pulse self-reliance will strengthen food and nutritional security, stabilise prices, reduce import bills, and make Indian agriculture more climate-smart.

If implemented with predictable MSP procurement, assured markets, and robust extension services, the Mission can convert India’s protein deficit into a protein dividend.

India’s Rising Fiscal Capacity: What a 19.6% Tax–GDP Ratio Signals

Context: A recent assessment estimates India’s overall tax-to-GDP ratio at 19.6% in FY2024, covering both Centre and States. This marks steady improvement in domestic resource mobilisation, reflecting expanding formalisation, improved compliance, and stronger direct tax collections.

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Key Trends

  • Central Gross Tax Revenue: ~11.2% of GDP in FY24; projected 11.7% in FY25.
  • Direct Taxes: Ratio reached a 15-year high of 6.64% in FY24; likely to rise to 6.7% in FY25.
  • Tax Buoyancy: Long-term buoyancy at 1.1, meaning tax revenues grow slightly faster than nominal GDP.
  • Global Position: India’s ratio is above many emerging economies (e.g., Malaysia, Indonesia) but below the OECD average (~34%).

Understanding the Tax-to-GDP Ratio

  • Definition: Share of total tax revenue in a country’s nominal GDP.
  • Formula: Total Annual Tax Revenue ÷ Nominal GDP.
  • Fiscal Capacity Indicator: Shows the state’s ability to mobilise domestic resources.
  • Economic Signal: Higher ratios imply a broader tax base and formal economy.
  • Global Benchmark: The World Bank suggests 15% as a tipping point for sustainable development.

Positive Implications

  • Fiscal Stability: Reduces dependence on borrowing; supports fiscal consolidation.
  • Public Investment: Enables higher capital expenditure on infrastructure and welfare.
  • Redistributive Role: Rising direct taxes strengthen progressive redistribution.

Potential Risks

  • Consumption Drag: Excessive taxation may reduce disposable incomes.
  • Inflationary Effects: High indirect taxes (GST, excise) can raise prices.
  • Investment Concerns: Over-taxation could deter investment or trigger capital relocation.

Tax Buoyancy Explained

  • Meaning: Responsiveness of tax revenue growth to changes in nominal GDP.
  • Formula: % Change in Tax Revenue ÷ % Change in Nominal GDP.
  • Buoyancy > 1: Revenue grows faster than the economy due to better compliance or base expansion.
  • Buoyancy < 1: Collections lag, indicating evasion, exemptions, or informality.
  • Sustained buoyancy above 1 gradually raises the tax-to-GDP ratio.

Greenland’s Hidden Treasure: Critical Minerals, Energy Wealth and Arctic Geopolitics

Context: Greenland is emerging as a key geopolitical and economic hotspot due to its vast reserves of critical raw materials, strategic minerals, and hydrocarbon potential—resources that are increasingly valuable in the global clean-energy transition and intensifying Arctic competition. As climate change accelerates ice melt, access to these deposits is increasing, creating both opportunity and risk.

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Why Greenland Matters

Greenland is the world’s largest non-continental island, located between the Arctic and Atlantic Oceans, functioning as a strategic bridge between North America and Europe. Nearly 80% of Greenland is covered by the world’s second-largest ice sheet (after Antarctica).

While geographically part of North America, it is an autonomous territory within the Kingdom of Denmark, with internal self-government but Danish control over foreign policy, defence, and currency.

Importantly:

  • Greenland is under NATO Article 5 protection
  • It is not part of the European Union
  • Hosts the Pituffik Space Base, crucial for US and NATO Arctic security

Greenland’s Resource Wealth

1) Hydrocarbon Potential

According to the USGS, Greenland may hold about 31 billion barrels of oil-equivalent hydrocarbons in onshore northeast areas, including ice-covered regions. Sedimentary basins, particularly the Jameson Land Basin, are viewed as among the most promising oil–gas zones, often compared to Norway’s hydrocarbon-rich shelf.

2) Critical Minerals and Rare Earth Elements (REEs)

Greenland is predicted to contain around 40 million tonnes of dysprosium and neodymium, potentially meeting over 25% of projected future global demand. These are essential for:

  • Wind turbines
  • EV motors
  • defence electronics
  • advanced communication systems

3) Special Minerals and Metals

Greenland also hosts:

  • diamond-bearing kimberlite pipes
  • native iron lumps
  • lead, copper, zinc and iron (often in ice-free basins)

Why is Greenland So Resource-Rich? (Geological Explanation)

Greenland’s geology spans nearly 4 billion years, containing some of the oldest rocks on Earth. This long geological history enabled repeated mineral-forming events.

Uniquely, Greenland experienced all three major resource-generating geological pathways:

  1. Mountain Building (Orogeny):
    Compression created fractures and fault zones that allowed formation of deposits like gold, graphite, and gemstones.
  2. Rifting:
    Repeated rifting (including during the Atlantic opening ~200 million years ago) formed sedimentary basins, ideal for hydrocarbons and metals.
  3. Volcanism and Hydrothermal Activity:
    Igneous intrusions and hydrothermal fluids concentrated REEs like niobium, tantalum, ytterbium and terbium.

Climate Change Link: Opportunity vs Emissions Trap

Climate change is unlocking Greenland’s deposits at an unprecedented pace.

  • Since 1995, Greenland has lost ice over an area roughly the size of Albania
  • Exposed terrain is expanding mining feasibility

However, there is a major contradiction:

  • Ice melt enables extraction
  • but large-scale extraction—especially oil and gas—could worsen emissions, accelerating warming

Greenland is warming about four times faster than the global average, and its ice melt contributes significantly to global sea-level rise. The melting ice also affects the Atlantic Meridional Overturning Circulation (AMOC), impacting weather patterns worldwide.

Geopolitical Significance: The Arctic Chessboard

Pituffik Space Base (Thule Air Base)

  • Northernmost US military base
  • Located ~1,200 km north of the Arctic Circle
  • Operational year-round despite harsh conditions
  • Critical for:
    • ballistic missile early warning
    • satellite tracking
    • space monitoring for US/NATO
  • Renamed from Thule Air Base in 2023, reflecting Greenlandic heritage
  • Established under a 1951 US–Denmark defence agreement

Strategic Competition

Resource access and new shipping lanes are increasing interest from major powers:

  • the US and NATO (security + supply chain resilience)
  • China (critical minerals and polar routes)
  • Russia (Arctic militarisation and dominance)

Thus, Greenland has become central to:

  • critical mineral diplomacy
  • Arctic security strategy
  • climate governance debates

Economic Dimension

Greenland’s economy is still highly dependent on:

  • fishing (≈90% of exports)
  • Denmark’s annual subsidy (≈20% of GDP)

Mining and energy extraction could provide revenue and autonomy, but risks damaging Arctic ecosystems and indigenous livelihoods if poorly regulated.

Conclusion

Greenland’s rising importance reflects the intersection of geology, climate change, and geopolitics. Its mineral reserves could strengthen global clean-energy supply chains, but extraction in the Arctic must be balanced with climate responsibilities.

In the coming decades, Greenland is likely to remain a focal point of resource competition, strategic security planning, and environmental debate.

From Waste to Wealth: India’s Shift Towards a Circular Economy

Context: India’s rapid urbanisation and consumption-led growth have stretched its linear “take–make–dispose” waste management model to the brink. Transitioning to a circular waste management model, where waste is minimised, reused, recycled, and converted into resources, is now essential for environmental sustainability, resource security, and green growth.

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India’s Waste Management Landscape

India generates nearly 1.70 lakh tonnes of municipal solid waste daily, projected to touch 165 million tonnes annually by 2030.

However, only 55–70% of collected waste is scientifically processed, leaving over 16 crore tonnes of legacy waste across 2,450 active dumpsites.

The challenge is magnified by sectoral waste streams. India ranks third globally in e-waste generation, with volumes rising 15–20% annually. Around 150 million tonnes of construction and demolition (C&D) waste are generated each year, often dumped illegally. Plastic waste, estimated at 9 million tonnes annually, is dominated by single-use plastics, creating persistent ecological risks.

Legal and Policy Framework

The Constitution empowers urban local bodies under Article 243W to manage sanitation and solid waste, while Article 51A(g) places a fundamental duty on citizens to protect the environment.

The Environment (Protection) Act, 1986 acts as the umbrella law for waste governance. Key rules include:

  • Solid Waste Management Rules, 2016: mandate source segregation into wet, dry, and hazardous waste.
  • Construction and Demolition Waste Management Rules, 2025: introduce Extended Producer Responsibility (EPR) and recycling targets.
  • Plastic Waste Management Amendment Rules, 2025: mandate QR-based digital tracking and minimum recycled-plastic content.

Why a Circular Model Matters

A circular economy can unlock ₹3.5 trillion annually by 2030 and generate 10 million green jobs by 2050.

Material recovery from e-waste, batteries, and end-of-life vehicles reduces dependence on imported raw materials and critical minerals.

Processing 50% of wet waste through bio-methanation can generate ₹2,460 crore annually while cutting over 10 million tonnes of CO₂-equivalent emissions. Scientific remediation of dumpsites can free 10,000+ hectares of urban land, while Refuse-Derived Fuel (RDF) can replace 10–30% of fossil fuels in industries. Recycling C&D waste conserves virgin minerals and lowers infrastructure costs.

Key Challenges

Despite its promise, the circular transition faces hurdles. NITI Aayog estimates an investment need of USD 50–80 billion over the next decade, beyond the capacity of most municipalities. Policy fragmentation across ministries weakens enforcement, while low user charges and volatile recycled-material prices undermine financial viability.

Further, nearly 90% of waste handling is done by informal workers without legal protection, and rising consumerism erodes traditional repair-and-reuse practices.

Government Initiatives

  • Swachh Bharat Mission (Urban) 2.0: remediation of 2,400+ dumpsites by October 2026.
  • Cities Coalition for Circularity (C-3): city-level collaboration platform.
  • GOBAR-dhan Scheme: converts biodegradable waste into CBG and manure.
  • Extended Producer Responsibility (EPR): shifts recycling costs to producers.
  • Mission LiFE: promotes sustainable lifestyles.
  • Waste to Wealth Mission: deploys technologies for resource recovery.

Conclusion

A circular waste economy is not merely an environmental imperative but a strategic pathway for India’s urban resilience, climate action, and economic transformation.

Banks Enter India’s Pension Asset Space

Context: In a significant reform in India’s pension ecosystem, the Pension Fund Regulatory and Development Authority (PFRDA) has approved a framework permitting banks to sponsor pension fund entities for managing assets under the National Pension System (NPS). This marks a shift from the earlier, limited role of banks as service facilitators to active participants in pension asset management.

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What Has Changed?

Until now, Scheduled Commercial Banks functioned mainly as Points of Presence—responsible for onboarding NPS subscribers, collecting contributions, and providing customer services. Under the new framework, eligible banks can now establish and sponsor a Pension Fund Manager (PFM), enabling them to directly manage retirement savings invested through NPS.

Eligibility for this expanded role will be aligned with RBI prudential norms, including minimum net worth, market capitalisation, governance standards, and overall financial soundness.

This ensures that only stable and well-capitalised banks enter the pension fund management space.

About the National Pension System (NPS)

The National Pension System is a voluntary, defined-contribution retirement scheme regulated by PFRDA. It is open to all Indian citizens and Overseas Citizens of India aged 18–70.

Key features include:

  • Subscriber Choice: Individuals can select their Pension Fund Manager and asset allocation mix.
  • Portability: A Permanent Retirement Account Number (PRAN) remains valid across jobs and locations.
  • Investment Structure: Contributions are professionally invested across equities, government securities, corporate bonds, and select alternative assets, generating market-linked returns.

Withdrawal and Annuity Provisions

At the normal retirement age of 60:

  • Government subscribers may withdraw up to 60% of the accumulated corpus tax-free.
  • At least 40% must be invested in an annuity purchased from PFRDA-empanelled providers, providing a taxable monthly pension.
  • For non-government subscribers, recent reforms permit lump-sum withdrawal of up to 80%, offering greater flexibility.

Role of PFRDA

The Pension Fund Regulatory and Development Authority functions as the statutory pension regulator under the Ministry of Finance.

Established as an interim body in 2003 and granted statutory status through the PFRDA Act, 2013, it aims to promote old-age income security.

PFRDA regulates pension funds, sets investment and governance norms, benchmarks performance, and administers key schemes such as NPS, Atal Pension Yojana (APY), Unified Pension Scheme (UPS), and NPS Vatsalya.

Why This Matters

Allowing banks to manage pension assets can deepen competition, improve fund management expertise, and enhance long-term returns for subscribers.

At the same time, RBI-aligned eligibility norms help safeguard retirement savings by ensuring prudential oversight and financial stability.

Breaking Ground: Why Land Acquisition Slows India’s Infrastructure Push

Context: Land acquisition has emerged as the single largest bottleneck in India’s infrastructure projects reviewed under PRAGATI (Pro-Active Governance and Timely Implementation). Government data show that land acquisition alone accounts for 35% of project delays, while environmental clearances and right-of-way (RoW) issues together contribute to 73% of delays nationwide. This underscores a persistent governance challenge at a time when India is scaling up capital expenditure to fuel economic growth.

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What is Land Acquisition?

Land acquisition refers to the government’s power to acquire private land for public purposes such as roads, railways, defence, industrial corridors, urban infrastructure, and social projects.

In India, this process is governed by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (LARR) Act, 2013.

Key safeguards under the Act include:

  • Social Impact Assessment (SIA): Mandatory assessment of impacts on livelihoods, infrastructure, and local communities before acquisition.
  • Consent Norms: Prior consent of 80% of affected families for private projects and 70% for Public–Private Partnership (PPP) projects.
  • Compensation Framework:
    • 4× market value in rural areas
    • 2× market value in urban areas
  • Solatium: An additional 100% of compensation to account for the involuntary nature of acquisition.

While these provisions strengthen fairness and transparency, they also lengthen timelines and increase project costs.

Why Does Land Acquisition Cause Delays?

Several structural and administrative factors contribute to delays:

  • Lengthy Procedures: SIA studies, public hearings, and consent processes are time-consuming.
  • Litigation Risks: Disputes over valuation, consent, and rehabilitation often lead to prolonged court cases.
  • Federal Complexity: Land is a State subject, leading to uneven implementation across states.
  • Social Resistance: Inadequate trust, fear of livelihood loss, and displacement concerns fuel opposition.

India’s Expanding Infrastructure Landscape

Despite these hurdles, India’s infrastructure push is unprecedented:

  • Capital Investment: The Union Budget 2025–26 allocated ₹11.21 lakh crore (3.1% of GDP) for capital expenditure.
  • Roads: Second-largest road network globally; 1,46,145 km of National Highways (2024).
  • Railways: 99.2% electrification of the Broad Gauge network by 2025.
  • Aviation: Third-largest domestic aviation market after the US and China.
  • Ports & Shipping: Under Sagarmala 2.0, cargo handling reached 1,630 MT, improving India’s global shipment ranking from 44th to 22nd.
  • Urban Transport: Third-largest metro network globally, spanning 1,013 km across 23 cities.
  • Rural Water: Jal Jeevan Mission achieved 80% rural tap water coverage by early 2025.

Way Forward

To reconcile rapid infrastructure growth with social justice:

  • Digitise Land Records: Reduce disputes through clear titling.
  • Time-bound SIAs: Standardise and streamline assessment timelines.
  • Negotiated Settlements: Promote land pooling and consent-based models.
  • Stronger Rehabilitation: Ensure livelihood security to build trust.

Farmer Suicides in India: Patterns, Causes and Policy Gap

Context: A 28-year analysis of NCRB data (1995–2023) reveals that farmer suicides in India remain a persistent, regionally concentrated crisis, with a sharp resurgence in 2023 after nearly a decade of decline. The pattern underscores deep structural vulnerabilities in Indian agriculture that welfare measures have only partially mitigated.

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Scale and Long-Term Trends

Between 1995 and 2023, about 3.94 lakh farmers and agricultural labourers died by suicide—an average of ~13,600 deaths annually. The crisis peaked during 2000–2009, accounting for nearly 1.54 lakh deaths, with 2002 recording the highest single-year toll (17,971).

After 2010, suicides declined steadily, coinciding with expanded rural wage employment. However, 2023 marked a reversal, with 10,786 suicides, a ~75% jump over 2022. Notably, the profile has shifted: agricultural labourers (6,096) now outnumber cultivators (4,690), signalling distress beyond landholding farmers.

Regional Concentration

The crisis is geographically skewed. Maharashtra (4,151) and Karnataka (2,423) together accounted for the largest share in 2023. Over the long term, southern and western India contribute ~72.5% of total farmer suicides.

Andhra Pradesh and Telangana together have recorded ~1.7 lakh deaths over 28 years, reflecting chronic vulnerability in rainfed, cash-crop-dependent regions.

Role of Welfare Interventions

Post-2010 declines align with welfare expansion, especially MGNREGA, which provided alternative income during agrarian stress. Some states demonstrated sharp turnarounds: Kerala reduced suicides from 1,118 (2005) to 105 (2014), and West Bengal reported zero cases by 2012—highlighting the importance of income smoothing and social protection.

Structural Drivers of Distress

  • Rainfed Vulnerability: ~52% of India’s net sown area is rainfed, disproportionately linked to suicides.
  • Debt Trap: ~50% of agricultural households are indebted; average debt exceeds ₹74,000.
  • Trade Exposure: Post-1990s liberalisation reduced income support amid rising import competition.
  • Input Cost Inflation: Fertiliser, seed, and pesticide costs rose >300% since the early 2000s, while real farm incomes stagnated.

Way Forward

  • Income Assurance: Expand MSP procurement beyond rice–wheat; pilot price-deficiency payments.
  • Risk Protection: Reform PM Fasal Bima Yojana with automatic, weather-triggered payouts.
  • Rainfed Resilience: Scale integrated farming systems (millets–pulses–livestock) under NICRA in cotton belts.
  • Labour Security: Stabilise wages for agricultural labourers; replicate Kerala’s Ayyankali Employment Guarantee during lean seasons.

Bank Frauds in India: Fewer Cases, Bigger Losses

Context (RBI): The Reserve Bank of India in its Report on Trend and Progress of Banking in India 2024–25 highlights a paradox: fraud cases declined sharply, but the total amount involved surged, pointing to concentration of risk in high-value advances.

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Key Findings from the RBI Report

  • Overall Trend:
    Fraud cases declined to 23,879 in FY25 from 36,052 in FY24, but the value jumped to ₹34,771 crore from ₹11,261 crore.
  • Court-Linked Reclassification:
    A major spike arose from 122 cases worth ₹18,336 crore, re-reported after compliance with the Supreme Court’s principles of natural justice requiring borrower hearings.
  • H1 FY26 Snapshot (Apr–Sep):
    Cases fell to 5,092 (from 18,386), while the amount involved rose to ₹21,515 crore.
  • Digital Frauds:
    Card and internet frauds constituted 66.8% of cases by number in FY25, reflecting high-frequency, low-value incidents.
  • Loan (Advances) Frauds:
    Advances-related frauds accounted for about 33.1% of the total amount by value, despite fewer cases.
  • Bank-Group Pattern:
    • Private banks: 59.3% of cases
    • Public Sector Banks (PSBs): 70.7% of the total amount involved

Why the Number of Frauds Fell

  • Digital Transaction Controls:
    AI-based monitoring, velocity checks, and risk-based authentication across core banking platforms have curtailed small-value fraud attempts.
  • Stronger KYC Regime:
    Mandatory re-KYC, video-based customer identification, and centralised KYC records reduced impersonation and mule accounts.
  • Early Warning Systems (EWS):
    Automated alerts for unusual account behaviour enabled faster freezing of suspicious transactions, aided by account-level dashboards.
  • Consumer Awareness:
    SMS alerts, helplines, and nationwide cyber awareness campaigns improved customer response time to fraud attempts.

Why Value of Frauds Rose Sharply

  • Legacy Loan Frauds:
    Large corporate and consortium loan frauds often surface after forensic audits, inflating total values in a single year.
  • Reclassification Impact:
    Earlier under-reported or disputed cases were re-examined and reported afresh, adding high-ticket amounts.
  • Concentration in Advances:
    Credit-related frauds involve large exposure sizes, unlike retail digital frauds that are frequent but low in value.

Way Forward

  • Risk-Based Supervision:
    Intensify scrutiny of large-value advances using dynamic risk-scoring and borrower heat maps.
  • Unified Fraud Intelligence:
    Integrate fraud registries across banks and non-banks for real-time red-flag sharing through interoperable platforms.
  • Digital Payment Safeguards:
    Introduce cooling-off periods and beneficiary verification for first-time or high-risk transactions.
  • Board-Level Accountability:
    Mandate periodic fraud-risk reviews by bank boards with fixed response timelines and governance dashboards.

India’s Increasing Push for Free Trade Agreements

Context: Amid slowing global growth, supply-chain disruptions, and rising geopolitical uncertainty, India is actively signing Free Trade Agreements (FTAs) as part of a strategic shift to secure markets, investments, and technology in a volatile global order.

Free Trade Agreement (FTA)

An FTA is a binding trade pact between countries or economic blocs that reduces or eliminates tariffs, quotas, and other trade barriers to promote cross-border trade in goods and services.

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Why India Is Pushing FTAs

1. Market Access for Exports

FTAs provide preferential access to overseas markets, benefiting labour-intensive sectors.
Example: The India–UAE CEPA offers duty-free access for about 90% of Indian exports, leading to a 12% export rise in the first year.

2. Investment Gains

Stable trade rules under FTAs attract long-term foreign investment.
Example: The India–EFTA Trade and Economic Partnership Agreement (TEPA) commits $100 billion of investment over 15 years.

3. Improved Competitiveness

Lower tariffs on inputs help India integrate into global value chains.
Example: Under the India–ASEAN FTA, Indian textile exports to ASEAN grew by 15%.

4. Expansion of Services Trade

Modern FTAs increasingly cover services and mobility.
Example: The proposed India–UK FTA seeks improved market access for Indian professionals in IT and healthcare.

5. Geopolitical Alignment

FTAs act as strategic stabilisers by strengthening partnerships with key regions. Agreements with QUAD partners, the EU, and Indo-Pacific countries reinforce India’s strategic position.

6. Technology Access

Trade agreements facilitate access to advanced technologies.
Example: The India–Australia ECTA improves access to renewable energy and critical mineral technologies.

Key Concerns in India’s FTA Strategy

  • Trade Imbalances: Imports under pacts like AITIGA have outpaced exports.
  • Low Utilisation: Only about 25% of exporters use FTA benefits due to complex rules and paperwork.
  • Rules of Origin (RoO) Misuse: Risk of third-country goods entering India via FTA partners.
  • Non-Tariff Barriers (NTBs): Strict standards in developed markets limit real market access.
  • Domestic Vulnerability: Dairy and farm sectors fear competition from subsidised producers abroad.
  • Sustainability Pressures: Measures like the EU’s CBAM add carbon-related costs to exports.
  • Overdependence Risk: Excessive bilateralism may weaken India’s multilateral bargaining power.

Way Forward

  • Simplify & Digitise RoO to cut compliance costs and prevent misuse.
  • Support MSMEs through export facilitation and awareness programmes.
  • Align PLI Schemes with FTA objectives to boost high-value manufacturing.
  • Improve Trade Logistics via ports, ICDs, and customs digitalisation.
  • Sectoral Strategy: Push strengths (services, textiles, gems) while protecting sensitive sectors.
  • Sustainability Readiness: Prepare industry for NTBs and carbon regulations.
  • Regular FTA Reviews: Modernise older FTAs like AITIGA to correct imbalances.

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