GS Paper 3

SHANTI Act & Nuclear Liability Debate

Context: As reported by The Hindu, the SHANTI Act, passed during the Winter Session of Parliament, marks a decisive shift in India’s nuclear energy policy. It opens the nuclear power sector to private participation and substantially modifies the liability architecture under the Civil Liability for Nuclear Damage Act (CLNDA), 2010. While aimed at boosting investment and capacity, the Act has revived concerns over liability dilution, safety incentives, and victim compensation.

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Key Features of the SHANTI Act

  • Private Sector Entry: Ends the Union government’s monopoly by allowing private entities to operate nuclear power plants.
  • Supplier Indemnity: Removes the operator’s right of recourse, preventing operators from suing suppliers for defective equipment.
  • Liability Caps:
    • Operator liability capped between ₹100 crore – ₹3,000 crore.
    • Total accident liability capped at 300 million SDR (~₹3,900 crore).
  • Omission of Clause 46 (CLNDA): Victims can no longer seek remedies under other civil or criminal laws beyond the Act.
  • Regulatory Framework: Gives statutory backing to the Atomic Energy Regulatory Board (AERB), but member selection remains linked to a committee constituted by the Atomic Energy Commission (AEC).

Liability and Safety Concerns

Supplier Indemnity Debate

  • Evidence from Past Accidents: Major nuclear disasters were linked to design and engineering flaws—
    Chernobyl (reactor instability), Three Mile Island (control room failures), Fukushima (containment and flood protection gaps).
  • Distorted Safety Incentives: Indemnifying suppliers weakens pressure for rigorous quality control and accountability.
  • Risk Transfer: Liability shifts from suppliers → operators → State/victims, diluting the polluter-pays principle.

Liability Cap vs Potential Damage

  • Scale Mismatch:
    • SHANTI Act cap: ~₹3,900 crore
    • Fukushima damages: ~₹46 lakh crore
  • Compensation Deficit: Even the Convention on Supplementary Compensation (CSC) funds would cover <1% of catastrophic loss.
  • Absolute Liability Dilution: Relaxation for “grave natural disasters” weakens India’s traditionally strict hazardous industry liability regime.

Way Forward

  • Liability Rebalancing: Restore calibrated supplier accountability through hybrid liability models used in select OECD countries.
  • Regulatory Independence: Strengthen AERB autonomy to prevent regulatory capture, on lines of the US NRC and France’s ASN.
  • Safety Investment Mandate: Enforce stronger multi-hazard resilience and disaster preparedness, reflecting post-Fukushima global standards.

Institutional Background

  • Atomic Energy Regulatory Board (AERB)
    • Established: 1983, under the Atomic Energy Act, 1962
    • Role: Licensing, safety oversight, decommissioning approvals
    • Position: Functions under the Department of Atomic Energy (DAE)
  • Atomic Energy Commission (AEC)
    • Established: 1948
    • Role: Policy direction and strategic control of India’s nuclear programme
    • Oversees: BARC, NPCIL, AERB
    • Chaired by: Secretary, DAE

Eyes in Orbit: India’s Private Leap in Space Surveillance

Context: India’s private satellite Aerospace First Runner (AFR) achieved a major milestone in Space Situational Awareness (SSA) by tracking and imaging the International Space Station (ISS) from orbit — the first publicly known case of an Indian private satellite performing space-to-space imaging (“in-orbit snooping”).

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India’s First Private Non-Earth Imaging Satellite

The AFR satellite marks a shift in India’s space ecosystem from state-led missions to private-sector deep-space capabilities. Built by Azista BST Aerospace (ABA), an Indo-German joint venture, the 80-kg satellite was launched in June 2023 aboard SpaceX’s Transporter-8 mission into a Sun-Synchronous Orbit (SSO).

Though primarily designed as an optical Earth-observation satellite with panchromatic and multispectral cameras, AFR demonstrated the ability to track and image another satellite — the International Space Station — from orbit. This capability, termed Non-Earth Imaging (NEI) or space-to-space imaging, involves satellites observing objects in orbit rather than Earth.

Strategic Significance for Space Situational Awareness

Space Situational Awareness (SSA) refers to tracking and monitoring all objects in Earth’s orbit to ensure safe and secure space operations. AFR’s achievement has major implications:

  • Orbital surveillance: Ability to inspect satellites, space debris, or hostile spacecraft.
  • Collision avoidance: Imaging and tracking improve orbital safety and debris mitigation.
  • Strategic security: Dual-use potential for defence, intelligence, and anti-satellite monitoring.
  • Private capability: Demonstrates India’s growing commercial space competence under IN-SPACe reforms.

With global satellite numbers rising rapidly (over 9,000 active satellites), SSA has become a critical domain for space-faring nations.

Technical Profile of AFR

  • Mass: ~80 kg small satellite
  • Orbit: Sun-Synchronous Orbit (~500–600 km altitude)
  • Payload: Wide-swath optical cameras (panchromatic + multispectral)
  • Primary Role: Earth observation (agriculture, disasters, urban planning)
  • Advanced Capability: Space-to-space imaging (ISS tracking)

The ability to reorient optical sensors to image another fast-moving orbital object requires precise attitude control, tracking algorithms, and orbital mechanics modelling — indicating high technological maturity for a private satellite.

Applications Beyond Space Surveillance

While SSA is the headline achievement, AFR continues to support conventional Earth-observation uses:

  • Crop health and precision agriculture
  • Disaster mapping and damage assessment
  • Urban infrastructure monitoring
  • Environmental and land-use analysis

Thus, AFR demonstrates the convergence of civil, commercial, and strategic space capabilities in India’s emerging private space sector.

India’s Expanding Private Space Ecosystem

Since the 2020 space reforms, India has enabled private players through:

  • IN-SPACe regulatory facilitation
  • Commercial launch access (ISRO infrastructure)
  • Foreign collaboration and manufacturing
  • Small-satellite market participation

AFR’s success positions India among a small group of nations capable of operational space-to-space imaging, a frontier technology in orbital security.

Conclusion

The AFR satellite’s in-orbit imaging of the ISS marks a watershed moment for India’s private space sector and SSA capability. It signals India’s transition from Earth observation to orbital domain awareness, strengthening both commercial competitiveness and strategic autonomy in space.

India’s Aerospace Manufacturing Push: Growth Potential and the Skills Challenge

Context: India’s aerospace sector is witnessing rapid expansion due to rising air travel demand, defence modernisation, and global supply-chain diversification. However, despite record growth and strategic opportunities, a serious engineering skills gap may slow India’s ambition to emerge as a major aerospace manufacturing hub.

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India’s Aerospace Manufacturing Landscape

India is currently the world’s third-largest aviation market, and its domestic demand is projected to require nearly 3,300 new aircraft by 2044. This expanding fleet requirement creates a long-term opportunity for aircraft manufacturing, component production, and aviation services.

The market for aerospace parts manufacturing in India is expected to reach $21.5 billion by 2030, supported by increasing localisation and global OEM interest.

Another high-potential segment is the Maintenance, Repair and Overhaul (MRO) industry. India’s MRO sector is projected to become a $4 billion industry by 2031, gradually shifting away from dependence on foreign servicing hubs and moving towards becoming a domestic aviation service centre.

A major milestone in private manufacturing is the Tata–Airbus Final Assembly Line (FAL) established in Vadodara, Gujarat. It is India’s first private aircraft assembly line and will manufacture 40 C-295 transport aircraft, strengthening indigenous defence aviation capacity.

Government Initiatives Supporting Aerospace Manufacturing

India has adopted several policy measures to strengthen aerospace production and attract investment:

  • Positive Indigenisation Lists: The Ministry of Defence issued five lists covering 5,000+ items, banning imports and creating assured demand for domestic firms.
  • Defence Industrial Corridors: Dedicated corridors in Uttar Pradesh and Tamil Nadu provide subsidised land and plug-and-play infrastructure for aviation and defence industries.
  • Boost to MRO Competitiveness: The GST rate on MRO services was reduced from 18% to 5%, along with place-of-supply reforms, making Indian MRO hubs more attractive globally.
  • FDI Liberalisation: Up to 74% FDI is permitted under the automatic route in defence manufacturing, encouraging global OEMs to establish production units in India.
  • SRIJAN Portal: Enables firms to identify defence and aviation items earlier imported by PSUs, supporting reverse engineering and local production.
  • Procurement Reforms: The Defence Acquisition Procedure (DAP) and procurement orders increasingly mandate domestic content requirements.

Key Challenge: Engineering Skills Gap

Despite policy push, India faces shortages in specialised aerospace talent such as:

  • avionics engineers
  • precision manufacturing specialists
  • composites and materials experts
  • quality assurance and certification professionals

Without addressing this gap through targeted training and industry-academia integration, India may struggle to compete with established global aerospace ecosystems.

Conclusion

India has the market demand, policy support, and strategic advantage to become a global aerospace manufacturing hub. However, success will depend on building a skilled workforce, expanding certification capacity, and integrating deeper into global aerospace supply chains.

Indian Scientific Service (ISS): Towards Expert-Led Policymaking

Context: As highlighted by The Hindu, the growing technical complexity of governance—spanning artificial intelligence, climate change, biotechnology, and nuclear safety—has revived the debate on creating an Indian Scientific Service (ISS). The proposal aims to institutionalise evidence-based, expert-led policymaking within the Indian administrative framework.

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Current Framework of Scientific Services

India’s governance architecture continues to be dominated by generalist administrators, even in highly technical domains.

  • Generalist Hegemony: Scientific departments are largely headed by IAS officers, often leading to gaps in domain-specific leadership.
  • Fragmented Recruitment: Unlike the Civil Services Examination, scientific recruitment is decentralised across bodies such as CSIR, ISRO, and ICMR, limiting inter-sector mobility.
  • Restrictive Conduct Rules: Scientists are governed by CCS (Conduct) Rules, 1964, prioritising administrative compliance over independent inquiry.
  • Reactive Utilisation: Scientific expertise is mostly invoked during crises rather than embedded in long-term policy design.
  • Vertical Immobility: Technical experts often face a “glass ceiling,” with final decision-making resting with generalist administrators.

Arguments in Favour of an Indian Scientific Service

  • Regulatory Agility: A specialised cadre can better regulate “black-box” technologies such as AI, genomics, and quantum systems.
  • Diplomatic Leverage: Scientific negotiators enhance India’s position in global forums on climate finance, nuclear safeguards, and health security.
  • Institutional Memory: A permanent scientific cadre ensures continuity in long-gestation R&D and mission-mode projects.
  • Innovation Culture: Separate service rules can legitimise risk-taking, treating failure as part of innovation.
  • ‘Lab to Land’ Translation: ISS officers can bridge research outputs with scalable public welfare programmes.

Arguments Against the ISS

  • Administrative Siloisation: A separate cadre may weaken coordination between scientists and executive administrators.
  • Technocratic Tunnel Vision: Excessive reliance on technical logic may underplay socio-economic and political realities.
  • Bureaucratic Expansion: A new service may increase fiscal costs and procedural complexity.
  • Research Dilution: Scientists risk being overburdened with administrative work.
  • Existing Alternatives: Lateral Entry already offers flexible, targeted expertise without creating a permanent cadre.

Way Forward

  • Embedded Cadre Model: Place scientific officers within ministries instead of creating a rigid vertical.
  • Statutory Safeguards: Protect scientific integrity and the right to record dissent.
  • Unified Training: Establish a Policy–Science Bridge at LBSNAA.
  • Legislative Support: Create a scientific advisory unit attached to Parliament.
  • Phased Rollout: Pilot ISS in sectors like Public Health and Disaster Management before expansion.

NITI Aayog’s Methane Roadmap: Decarbonising India’s Waste Sector

Context: NITI Aayog’s report “Scenarios Towards Viksit Bharat and Net Zero – Sectoral Insights: Waste” identifies the waste sector as a methane-intensive emissions source. Although it contributes a small share of India’s overall greenhouse gas emissions, its climate impact is significant due to methane’s high warming potential. The report outlines strategies to decarbonise waste systems and support India’s long-term Net Zero pathway.

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Waste Sector Emissions Profile

The waste sector contributes only about 2.56% of India’s total GHG emissions, yet it remains disproportionately damaging because of methane dominance. Methane (CH₄) has a global warming potential nearly 25 times higher than CO₂, making its control crucial for near-term climate gains.

A key finding is that nearly 74% of waste-sector emissions originate from wastewater systems, highlighting gaps in sewage collection, treatment infrastructure, and anaerobic decomposition management.

Under the Net Zero Scenario (NZS), waste-sector emissions are projected to decline by around 95.9%, reaching only 10.9 MtCO₂e by 2070, provided aggressive methane mitigation and circular waste management are implemented.

Strategic Pillars for Waste Sector Decarbonisation

NITI Aayog proposes multiple transformation pillars:

1. Universal Methane Recovery

Achieve 100% methane recovery by 2040, especially from industrial wastewater. Sewage treatment should prioritise anaerobic processes integrated with energy recovery systems to prevent methane leakages.

2. Decentralised Circularity

Biodegradable waste should be processed through bio-methanation and Bio-CNG production, stabilising per capita waste generation while converting waste into clean fuel.

3. Wastewater Reuse Expansion

Sewerage coverage should expand towards 85% national coverage, along with large-scale reuse of treated wastewater in agriculture, industry, and urban services.

4. Legacy Waste Remediation

India must accelerate scientific closure of open dumpsites and shift towards engineered sanitary landfills, reducing methane release from decaying organic waste.

5. IoT-Based Monitoring

A unified national waste-data architecture using IoT-enabled sensors can support real-time monitoring, transparency, and regulatory compliance.

Aerobic vs Anaerobic Treatment

  • Aerobic treatment uses oxygen and produces mainly CO₂, with relatively lower methane emissions.
  • Anaerobic treatment generates methane, but if methane is captured, it enables biogas recovery and higher energy efficiency.
    Thus, anaerobic systems are preferable only when paired with strict methane capture mechanisms.

Key Challenges

  • Weak segregation and only 75–78% collection efficiency
  • Sewage generation of 72,000 MLD, but treatment capacity only 31,000 MLD
  • Presence of 3,000+ dumpsites, continuously emitting methane
  • Infrastructure gaps in STPs, landfills, and scientific processing systems

Way Forward

NITI Aayog recommends methane recovery expansion through schemes like SATAT, improving segregation via SBM (Urban) 2.0, scaling STPs under AMRUT, and strengthening rural circular economy models through GOBAR-dhan.

Conclusion

Waste sector decarbonisation is a high-impact climate strategy for India. Methane mitigation through wastewater reform, circular bioenergy systems, and scientific dumpsite remediation can deliver rapid emission cuts and support the Net Zero vision.

RBI Draft Guidelines for Loan Recovery Agents: Strengthening Borrower Protection

Context: As reported by The Hindu, the Reserve Bank of India (RBI) has issued comprehensive draft guidelines to regulate the conduct of bank employees and loan recovery agents. These directions aim to curb coercive recovery practices, safeguard borrower dignity, and strengthen ethical standards in credit recovery. The guidelines will apply to all Commercial Banks, including Regional Rural Banks (RRBs) and Small Finance Banks, and are proposed to come into force from 1 July 2026.

Key Highlights of the Draft Guidelines

  1. Civil and Ethical Conduct
    Banks and their agents must interact with borrowers strictly in a civil manner. Harassment, abusive language, intimidation, or threats are explicitly prohibited, reinforcing fair debt collection norms.
  2. Contact Restrictions
    Recovery-related calls or visits are permitted only between 8:00 AM and 7:00 PM. Agents are barred from contacting borrowers during sensitive personal occasions such as bereavement, weddings, or medical emergencies.
  3. Authorisation and Transparency
    Before assigning a recovery agent, banks must inform borrowers in writing. Agents must carry a valid authorisation letter and identity card during visits, ensuring transparency and accountability.
  4. Agent Certification and Training
    All recovery agents must undergo ethical debt collection training and obtain certification from the Indian Institute of Banking and Finance (IIBF), professionalising recovery practices.
  5. Privacy Protection
    The guidelines reinforce the borrower’s Right to Privacy. Agents may communicate only with the borrower or guarantor, and not with family members, neighbours, or workplace colleagues.
  6. Grievance Redressal First
    Banks can refer recovery cases to agents only after resolving pending borrower grievances, preventing premature or unfair recovery action.
  7. Incentive Structure Reform
    Banks must redesign incentive mechanisms to ensure they do not encourage aggressive or unethical recovery behaviour.

Significance

  • Borrower Dignity: Curtails harassment and coercion in loan recovery.
  • Consumer Protection: Aligns banking practices with constitutional privacy principles.
  • Institutional Accountability: Shifts responsibility squarely onto banks for agent conduct.
  • Ethical Credit Culture: Encourages trust-based lending and repayment systems.

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.

Rat-Hole Mining: A Persistent Environmental and Human Tragedy in Meghalaya

Context: A deadly explosion at an illegal rat-hole coal mine in Thangkso, East Jaintia Hills (Meghalaya) killed 27 workers, once again exposing the continued prevalence of this hazardous practice despite a National Green Tribunal (NGT) ban imposed in 2014 and reiterated in 2015. The incident has triggered renewed enforcement and judicial scrutiny.

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What is Rat-Hole Mining?

Rat-hole mining is a primitive and unsafe coal extraction method involving narrow pits and tunnels—often up to 300–400 feet deep—dug manually using pickaxes, shovels, and baskets. It is mainly practised in Meghalaya, with sporadic instances in Assam, to extract coal from thin seams.

Types

  • Side-Cutting: Horizontal tunnels dug into hill slopes.
  • Box-Cutting: Vertical pits followed by horizontal galleries to reach coal seams.

Why Does It Persist Despite the Ban?

  • Economic Compulsion: Daily wages of ₹800–1,200, far higher than average MGNREGA wages (~₹250/day), attract vulnerable workers.
  • Geological Constraint: Over 90% of coal seams are thinner than 2 metres, making mechanised mining economically unviable.
  • Weak Enforcement: Between 2014–2018, Meghalaya Police recorded 477 violations of the NGT ban, indicating low deterrence.
  • Political–Bureaucratic Nexus: Despite prohibition, illegal coal trade continued; coal exports worth ₹700+ crore annually (pre-2019) point to systemic regulatory capture.
  • Migrant Labour Dependence: In major accidents, 60–70% of victims were migrants from Jharkhand, Assam, and neighbouring regions, driven by distress employment.

Environmental and Human Costs

  • Fatal Accidents: Frequent cave-ins, flooding, and explosions.
  • Water Pollution: Acid mine drainage contaminates rivers, affecting agriculture and drinking water.
  • Ecological Damage: Deforestation, land subsidence, and biodiversity loss.
  • Human Rights Concerns: Exploitative labour conditions, absence of safety gear, and lack of legal protection.

Measures Taken to Curb the Practice

  • Criminal Enforcement: FIRs under culpable homicide, MMDR Act, and Explosive Substances Act; arrests of mine owners and operators.
  • Judicial Oversight: Meghalaya High Court took suo motu cognisance and appointed the Justice (Retd.) B.P. Katakey Committee (2022) to monitor illegal mining.
  • Judicial Prohibition: NGT’s 2014 ban (upheld by the Supreme Court) declared rat-hole mining unscientific, unsafe, and environmentally destructive.

Way Forward

  • Alternative Livelihoods: Expand skill training, MSME support, and public works to reduce economic dependence.
  • Scientific Mining Framework: If mining is permitted, enforce regulated, mechanised, and environmentally compliant methods.
  • Stronger Enforcement: Dedicated mining police units, real-time surveillance, and faster prosecutions.
  • Labour Protection: Inter-state coordination to protect migrant workers and curb trafficking.

Health Impacts of Plastics: A Growing Global Public Health Challenge

Context: A global lifecycle assessment published in The Lancet Planetary Health has issued a strong warning that plastic-related emissions are emerging as a major public health threat. By quantifying health impacts across the entire plastics lifecycle—extraction, production, use, disposal, and open burning—the study highlights the scale and urgency of plastic pollution beyond environmental damage.

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Key Findings of the Study

  • Doubling of Health Burden: Under business-as-usual trends, plastic-related emissions are projected to cause more than a twofold increase in Disability-Adjusted Life Years (DALYs) by 2040, indicating severe population-level health impacts.
  • Delayed Production Peak: Global plastic production is unlikely to peak before 2100, prolonging exposure to toxic emissions and increasing cumulative health risks.
  • First Global Lifecycle Estimate: The study provides the first comprehensive global quantification of health impacts across the entire plastics lifecycle using DALYs as a common metric.
  • Chemical Opacity: Lack of transparency and non-disclosure of plastic chemical compositions limits accurate health risk assessment and weakens evidence-based policymaking.

DALYs Explained:
Disability-Adjusted Life Years (DALYs) combine years of life lost due to premature death and years lived with illness or disability, capturing the total health burden on society.

Major Health Impacts Identified

  • Air Pollution Exposure: Plastic production and open burning release fine particulate matter (PM₂.₅), increasing risks of asthma, chronic respiratory diseases, cardiovascular disorders, and premature mortality.
  • Toxicity-Induced Illnesses: Hazardous chemicals such as additives, stabilisers, and by-products released throughout the plastics lifecycle are linked to cancers, endocrine disruption, and long-term non-communicable diseases.

Key Recommendations by the Lancet Study

  • Reduce Virgin Plastic Production: Advocates deep cuts in primary (new) plastic manufacturing, especially for non-essential and single-use products.
  • Adopt Full Lifecycle Policies: Urges governments to regulate plastics from fossil fuel extraction to disposal and environmental leakage.
  • Ensure Chemical Transparency: Calls for mandatory disclosure of chemical compositions to strengthen health risk assessments and regulatory frameworks.
  • Global Coordinated Action: Emphasises fast-tracking a legally binding Global Plastics Treaty to address pollution and associated health impacts worldwide.

Significance

The findings reposition plastic pollution as a public health emergency, not merely an environmental concern. By linking plastics to rising disease burdens, the study strengthens the case for preventive regulation, international cooperation, and sustainable material transitions, aligning environmental protection with human health outcomes.

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