US Issue Level 2 Travel Advisory for India

Context:

The US State Department issued a Level 2 Travel Advisory for India, urging citizens to exercise increased caution due to rising violent crime and terrorism threats.

About US Issue Level 2 Travel Advisory for India:

What it is?

A Level 2 advisory is part of the US State Department’s 4-level travel alert system that advises citizens on international travel risks. Level 2 means “Exercise Increased Caution”.

Published by: US Department of State, Bureau of Consular Affairs.

Four Categories of US Travel Advisories:

Level 1 – Exercise Normal Precautions

Level 2 – Exercise Increased Caution

Level 3 – Reconsider Travel

Level 4 – Do Not Travel

Key Issues in Latest Advisory on India:

Violent Crime and Sexual Assaults:

Reports of rape and violent attacks at tourist destinations have risen.

The advisory urges travellers, especially women, to avoid solo travel.

Terrorism Threats:

Terror attacks may occur without warning in crowded spaces — markets, public transport hubs, religious places, and government buildings.

Restricted access for US officials in parts of eastern Maharashtra, Telangana, and West Bengal due to Naxalite presence.

High-Risk Areas Identified:

Jammu & Kashmir: Do not travel due to terrorism and unrest.

India–Pakistan Border: Do not travel due to armed conflict risk.

Central & Eastern India (e.g., Chhattisgarh, Jharkhand): Terror threats by Naxalite groups.

Manipur: Avoid due to ethnic violence.

Northeastern states: Reconsider travel to parts of Arunachal Pradesh, Sikkim, and remote border regions due to insurgent activity.

Operation Spider’s Web

Context:

executed Operation Spider’s Web, its largest drone offensive, destroying $7 billion worth of Russian aircraft.

About Operation Spider’s Web:

What is Operation Spider’s Web?

Operation Spider’s Web is a high-precision, long-range drone operation launched by Ukraine targeting Russian airbases deep within enemy territory.

Nations Involved:

Ukraine: Executing the offensive through its military and intelligence agencies.

Russia: The target of the drone assault, which affected strategic airpower assets.

Objective:

To cripple Russia’s strategic bomber fleet, especially aircraft capable of launching cruise missiles and nuclear payloads.

To showcase deep-strike capability and shift tactical momentum ahead of peace negotiations.

India Green Economy Potential

Context:

A recent NLB Services report forecasts that India will generate 7.29 million green jobs by FY28 and 35 million by 2047.

About India Green Economy Potential:

What is the Green Economy?

A green economy refers to economic activities that reduce environmental risks, improve ecological sustainability, and generate employment through low-carbon, resource-efficient, and inclusive growth.

Key Highlights from the Report

Green Jobs Projection:

India is expected to generate 7.29 million green jobs by FY 2027–28.

The total number of green jobs could reach 35 million by 2047.

Green Economy Value Forecast:

The green economy is projected to reach a value of $1 trillion by 2030.

By 2070, it could grow to $15 trillion, supporting India’s net-zero ambitions.

Potential Trends in Employment

Tier II and Tier III Cities: These are projected to generate 35–40% of the green jobs by FY28, especially in sectors like sustainable agriculture, logistics, and warehousing.

Evolving Skill Requirements:

Increasing demand for hands-on green technology skills.

There is a growing need for digital literacy, especially in AI, Blockchain, and IoT applications.

Strong focus on industry-academia partnerships to align curricula with sustainability and climate goals.

Viksit Bharat Meets Green Growth

Context: 

India’s ambitious goal of becoming a developed nation (Viksit Bharat) by 2047 and achieving net-zero emissions by 2070 has brought green growth into focus.

Balancing rapid economic development with sustainable practices is critical to ensuring long-term prosperity and environmental resilience.

Idea of Viksit Bharat:

Goal: Transform India into a fully developed economy by 2047, with sustained high growth and inclusive development.

Key objectives: High GDP growth (over 8%), world-class infrastructure, poverty elimination, and social equity.

Pillars: Digital revolution, industrial strength, innovation, and climate resilience.

Global positioning: Aim for India to become a leading geopolitical power and technology hub.

How Green Growth Fuels India to Viksit Bharat:

Job creation: Green sectors are expected to generate 50 million new jobs by 2070 (WEF’s Mission 2070 report).

Economic value addition: Estimated $1 trillion in additional economic value by 2030 from green investments.

Energy security: Reduces dependency on 85% crude oil imports, stabilizing the economy.

Export competitiveness: Decarbonized manufacturing helps avoid future carbon penalties (potential $150 billion annual loss by 2040).

Measures Taken by Government So Far:

National Green Hydrogen Mission: Targets 5 MMT of green hydrogen production annually by 2030.

500 GW renewable energy goal: To be achieved by 2030; currently progressing with 180+ GW installed.

Production Linked Incentive (PLI): Launched for solar modules, advanced battery storage, and green technologies.

Budget 2025 provisions: Announced 100 GW nuclear energy plan, grid-scale battery production support.

Challenges:

High Carbon Dependency: Coal accounts for 55-60% of power generation, with demand peaking only by 2030-2035.

Funding Gaps: Requires $290 billion in renewable energy investments by 2030, posing financial challenges.

Skill Deficit: Need to train 3.7 million skilled workers for the renewables sector by 2030.

Climate Risks: Extreme heat could reduce GDP by 2.5-4.5% by 2030, impacting agriculture and labor productivity.

Policy Implementation: Balancing fast growth with green transition requires careful planning and execution.

Way Ahead:

Holistic Strategy: Combine renewable energy capacity-building with climate adaptation measures and ecosystem development.

Demand-Side Focus: Provide farmers and MSMEs access to affordable, climate-resilient technologies and green finance.

International Collaboration: Partner with global experts for technical support, skill development, and innovative financing.

Innovation: Invest in green hydrogen, grid modernization, and carbon capture technologies to drive sustainable growth.

Policy Tools: Use carbon pricing, green bonds, and blended finance models to incentivize decarbonization.

Conclusion:

Green growth and the vision of Viksit Bharat are not opposing paths but complementary goals. Accelerating green investments and building resilient infrastructure will drive sustainable growth. A well-planned green transition will place India on a stronger global footing by 2047.

AI Kosha

Context:

The Ministry of Electronics & IT (MeitY) launched AI Kosha, a secured AI datasets platform, along with the IndiaAI Compute Portal and other initiatives to accelerate AI innovation and research in India.

The initiative, announced on the IndiaAI Mission’s anniversary, aims to democratize AI access, enhance AI competency in governance, and support AI startups and research.

About AI Kosha

What is AI Kosha?

AI Kosha is a secure AI innovation platform designed to provide seamless access to datasets, models, and AI development tools. It serves as a centralized repository to enable AI research and innovation in India.

Developed By- Ministry of Electronics & Information Technology (MeitY) under the IndiaAI Mission.

Key Features

AI Dataset Repository: Hosts over 300 datasets and 80+ AI models for research and development.

AI Sandbox Environment: Provides an integrated development environment (IDE) with tools and tutorials for AI model training.

Content Discoverability: Uses AI-readiness scoring to help researchers identify relevant datasets.

Security & Access Control: Features data encryption (at rest & in motion), API-based secure access, and real-time malicious traffic filtering.

Permission-Based Access: Allows tiered access for different user groups like researchers, startups, and government bodies.

Benefits of AIKosha

Accelerates AI Research: Provides high-quality datasets and pre-trained models, reducing time for AI development.

Enhances AI Innovation: Enables startups, researchers, and enterprises to develop AI solutions with real-world data.

Strengthens AI Security: Promotes ethically sourced, consent-based datasets, ensuring responsible AI practices.

Boosts Public Sector AI Adoption: Supports government AI applications in governance, healthcare, and education.

Limitations

Limited Dataset Variety: Initial datasets are sourced from government and research institutions, reducing availability of real-world commercial data.

Access Restrictions: Strict security protocols may limit ease of data retrieval for private-sector innovators.

Early Stage Development: AIKosha is still evolving, and wider industry participation is required for expansion.

Parvatmala Pariyojana

Context:

The Cabinet Committee on Economic Affairs (CCEA) approved two major ropeway projects in Uttarakhand under the Parvatmala Pariyojana, connecting Govindghat-Hemkund Sahib (12.4 km) and Sonprayag-Kedarnath (12.9 km).

About Hemkund Sahib Ji:

Location: Situated in the Chamoli district of Uttarakhand, at an altitude of 4,632 meters in the Garhwal Himalayas.

Connectivity: Currently accessible via a 21-km trek from Govindghat, soon to be connected via ropeway.

Features:

One of Sikhism’s holiest shrines, dedicated to Guru Gobind Singh Ji.

Also, a gateway to the Valley of Flowers, a UNESCO World Heritage Site.

About Parvatmala Pariyojana:

What is Parvatmala Pariyojana?

A National Ropeways Development Programme aimed at boosting ropeway connectivity in hilly areas.

Launched In:

Announced in the Union Budget 2022-23 by the Ministry of Road Transport and Highways (MoRTH).

Ministry:

Implemented by MoRTH under the National Highways Logistics Management Limited (NHLML).

Aim:

To enhance connectivity in difficult terrains and reduce travel time in hilly areas.

To promote eco-friendly and cost-effective transport solutions.

To boost tourism and the local economy by facilitating better access to remote locations.

Key Feature:

200+ Ropeway Projects Planned: Over the next five years with a budget of ₹1.25 lakh crore.

Public-Private Partnership (PPP) Model: Encourages private sector participation for economic viability.

Monocable & Tricable Gondola Technology: Ensures high capacity, better efficiency, and safety.

Hybrid Annuity Mode (HAM) Support: 60% construction funding by the government, making projects more feasible.

Make in India Initiative: Focus on indigenous manufacturing to boost local industries.

Multi-Utility Benefits: Ropeways to be used for tourism, urban transport, and logistics in remote areas.

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Income-Tax Bill, 2025

Context

The Income-Tax Bill, 2025, was introduced in Parliament to replace the Income-Tax Act, 1961, aiming for a simplified structure, clearer language, and reduced litigation.

A key highlight is the introduction of the ‘tax year’ concept, replacing the existing ‘assessment year.’ However, while the Bill streamlines provisions, experts argue that it lacks major structural changes in compliance and penalties.

Key Provisions of the Bill

Introduction of the ‘Tax Year’ Concept – The ‘assessment year’ has been removed, and the ‘tax year’ now aligns with the financial year (April 1 – March 31). For businesses or newly set up professions, the tax year begins from their establishment date.

Expanded Definition of Income – Virtual digital assets (VDAs) like cryptocurrency and NFTs are now considered capital assets, similar to land, shares, and bullion, affecting tax calculations.

Simplified and Concise Drafting – The Bill reduces the number of provisos and cross-references, making it easier to interpret without relying on multiple sections and rules.

Consolidation of Tax Compliance Requirements – Provisions related to TDS, assessment timelines, dispute resolution, and deductions have been tabulated for easier access.

Removal of Outdated Exemptions – Provisions like Section 54E (capital gains exemption for pre-1992 asset transfers) and redundant sections from past amendments have been eliminated.

Integration of Other Tax Laws – Provisions from Wealth Tax and rules for inventory valuation and revenue recognition for service contracts have been incorporated within the Bill for uniformity.

Advantages associated with the Bill

Better Readability and Clarity – The removal of complex legal language and cross-references makes it easier for taxpayers to understand their liabilities.

More Organized Tax Structure – Tax deductions, exemptions, and compliance timelines are now grouped into schedules and tables, reducing confusion.

Alignment with Digital Economy – Tax laws now recognize virtual digital assets (VDAs) as taxable capital assets, making tax regulations more contemporary.

Faster Compliance and Processing – Consolidation of tax rules reduces administrative delays, making compliance more efficient.

More Comprehensive Framework – The Bill integrates rules from other tax laws, such as wealth tax and inventory valuation, avoiding the need for separate legislation.

Challenges and Concerns

Minimal Structural Reforms – The Bill largely retains existing tax policies, offering no significant changes in compliance burdens or penalty structures.

Potential for Increased Litigation – While the Bill simplifies text, some broad terms remain undefined, leaving scope for legal disputes.

Digital Privacy Concerns – Authorities now have expanded search and seizure powers, including the ability to override passwords to access emails and digital accounts.

Lack of Taxpayer Relief Measures – The Bill does not address concerns related to high compliance costs, dispute resolution inefficiencies, or tax burden reductions.

Uncertainty Over Implementation – The transition from ‘assessment year’ to ‘tax year’ could create confusion, requiring businesses to adjust their tax planning strategies.

Way Forward

Strengthen Digital Privacy Protections – The Bill should include judicial oversight for digital searches to prevent misuse of government powers.

Improve Dispute Resolution Frameworks – Mediation mechanisms should be introduced to reduce tax litigation and resolve cases faster.

Clarify Tax Definitions – Key terms like “risk management strategy” in assessments should be clearly defined to avoid legal ambiguity.

Introduce Compliance Relief Measures – Reducing documentation requirements and providing simpler tax return processes can ease taxpayer burdens.

Ensure Smooth Transition to Tax Year System – Clear guidelines are needed to help businesses adjust to the new tax year model without compliance confusion.

Conclusion

The Income-Tax Bill, 2025, marks a shift toward simplification and modernization, but it lacks deep structural reforms. The new tax year concept and removal of outdated provisions are steps forward, yet privacy concerns and litigation risks remain. To maximize its effectiveness, the government must ensure transparency, reduce compliance burdens, and introduce stronger taxpayer protections.

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Taxing Virtual Digital Assets

Context:

The Income Tax Bill, 2025, classifies Virtual Digital Assets (VDAs) as property and capital assets, bringing them under capital gains taxation and regulatory scrutiny.

The bill imposes a 30% tax on VDA transfers, 1% TDS on transactions, and mandates reporting, ensuring transparency and preventing financial misuse.

About Taxing Virtual Digital Assets:

What are Virtual Digital Assets (VDAs)?

Virtual Digital Assets (VDAs) refer to digitally represented assets that use blockchain or cryptographic technology for transactions.

Defined under Section 2(111) of the Income Tax Bill, 2025, VDAs include cryptocurrencies, NFTs, and similar digital assets.

Types of VDAs:

Cryptocurrencies: Bitcoin, Ethereum, Ripple, Solana, etc.

Non-Fungible Tokens (NFTs): Unique digital collectibles and assets.

Stablecoins: Crypto assets pegged to fiat currencies (e.g., USDT, USDC).

Tokenized Assets: Digital representations of real-world assets (e.g., tokenized stocks, real estate).

Reasons Behind the Proposal to Tax Virtual Digital Assets:

Aligning with Global Practices: Countries like the U.K., U.S., Australia, and New Zealand tax crypto assets as property or securities.

Revenue Generation: High trading volumes in crypto markets present a new tax revenue stream for the government.

Preventing Tax Evasion: Unreported crypto gains pose a risk of black money accumulation and illicit transactions.

Ensuring Regulatory Oversight: Tracking large crypto transactions through 1% TDS and mandatory reporting reduces financial misuse.

Reducing Financial Fraud & Risks: Unregulated crypto trading can lead to fraud, Ponzi schemes, and investor losses.

Challenges in Taxing Virtual Digital Assets:

Lack of Comprehensive Regulations: Taxation is in place, but market regulation, investor protection, and enforcement mechanisms remain weak.

Absence of Deductions: Unlike other assets, crypto investors cannot claim deductions for transaction fees, mining costs, or commissions.

High Tax Burden: Flat 30% tax discourages retail investors and crypto startups from participating in the market.

Compliance Complexity: Mandatory TDS and reporting requirements increase the burden on traders, exchanges, and businesses.

Global Crypto Mobility: Investors may move funds to tax-friendly countries, reducing India’s potential tax revenue.

Way Ahead:

Comprehensive Regulatory Framework: Establish clear rules for investor protection, fraud prevention, and stablecoin regulations.

Balanced Taxation: Introduce progressive tax rates and allow deductions for transaction costs to improve compliance.

Strengthening Enforcement: Enhance AML (Anti-Money Laundering) and KYC (Know Your Customer) norms to prevent misuse.

International Collaboration: Align policies with G20 and FATF recommendations to create a harmonized global crypto taxation model.

Consumer Awareness & Protection: Educate investors on risks, legal obligations, and compliance requirements for safer participation.

Conclusion:

The taxation of Virtual Digital Assets under the Income Tax Bill, 2025, is a major step toward regulatory clarity, ensuring financial transparency and government oversight. A balanced approach integrating taxation, financial regulation, and consumer rights is necessary to build a secure and inclusive digital asset ecosystem.

Economic Survey Latest News

The Economic Survey 2024-25, tabled in Parliament by Finance Minister Nirmala Sitharaman, highlights deregulation, strategic investments, artificial intelligence (AI), climate adaptation, and inclusive policies as key pillars for economic growth.

The report underscores the need for private-sector-led innovation, ease of doing business, and a shift in regulatory mindset to propel India’s economy forward.

Deregulation as a Growth Stimulus

The Survey advocates a "Deregulation Stimulus", urging the government to minimize bureaucratic red tape and allow businesses to focus on innovation. It calls for:

Shifting from a "guilty until proven innocent" regulatory approach to a trust-based system.

Simplifying policies to make them more transparent and accessible.

Boosting Strategic Investments for Economic Competitiveness

With global trade growth slowing down, the Survey emphasizes domestic and foreign investments to maintain India’s economic momentum. It highlights:

Encouraging private sector investments to strengthen domestic supply chains.

Attracting foreign capital to enhance competitiveness.

Climate Change: Focus on Adaptation Over Mitigation

India’s energy transition strategy must prioritize adaptation rather than just emission reduction, according to the Survey. Key recommendations include:

Diversifying energy sources while balancing economic and environmental sustainability.

Expanding public transportation as an efficient alternative to private electric mobility.

Avoiding over-reliance on imported resources for energy security.

Artificial Intelligence: Driving India’s Tech Innovation

Recognizing AI’s potential, the Survey suggests:

Establishing AI Centres of Excellence (CoE) in top educational institutions.

Creating a 1 lakh crore financing corpus to support AI research and private-sector innovation.

Acknowledging that AI may not be a universal solution for a labor-intensive economy like India.

The Survey promotes a balanced approach to AI adoption, ensuring employment preservation while leveraging automation for economic gains.

Health and Nutrition: Tackling Processed Food Consumption

The report raises concerns about the rising consumption of ultra-processed foods (High in Fat, Salt, and Sugar - HFSS) among Indian youth. It recommends:

External Trade and Economic Challenges

The Survey warns of potential trade restrictions that could impact India’s export growth. Key risks include:

Rising global protectionism affecting market access.

Widening current account deficit due to import dependencies.

Geopolitical uncertainties influencing trade agreements.

To mitigate these risks, India must focus on self-reliance in strategic sectors and expanding domestic consumption.

State of the economy

Gross Domestic Product (GDP):  The Economic Survey has estimated real GDP growth between 6.3% to 6.8% in 2025-26.

In 2024-25, India’s real GDP is estimated to grow by 6.4%.  To become a developed nation by 2047, India would require sustained economic growth of around 8% every year for at least a decade. 

Inflation:  Retail inflation decreased from 5.4% in 2023-24 to 4.9% in 2024-25 (April-December).  This has been driven by reduction in input prices.

Agriculture and allied activities    

Agriculture sector has recorded an annual average growth rate of 5% between 2016-17 and 2022-23. 

Crop yields in India are considerably lower compared to other countries.  This highlights the need for improvements in productivity.  Crop productivity is linked to on-farm and post-harvest inputs including access to quality seeds, better irrigation facilities, and improvements in soil health.

Industry

The industrial sector grew by 6.2% in 2024-25, driven by robust growth in the electricity and construction sectors.  Industrial growth declined to 3.6% in the second quarter of 2024-25 due to factors such as: (i) slowdown in manufacturing exports due to intensified trade competition and industrial policies of major trading nations, and (ii) unprecedented levels of monsoon which slowed down activities such as mining and construction.

Gujarat, Maharashtra, Karnataka, and Tamil Nadu account for around 43% of the total industrial gross state value added

Services sector

The services sector has grown an at average rate of 8.3% between 2022-23 and 2024-25.  Its contribution to total gross value added has increased from 51% in 2013-14 to about 55% in 2024-25. 

Conclusion: Towards "Viksit Bharat 2047"

The Economic Survey 2025 presents a bold vision for India's growth, focusing on deregulation, investment-driven expansion, AI innovation, climate adaptation, and inclusive development.

By fostering a trust-based business environment, promoting private sector-led growth, and addressing climate and social challenges, India aims to build a competitive and resilient economy on its path to "Viksit Bharat 2047".

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Pay Commission

Context:

The Union Cabinet, chaired by Prime Minister, has approved the establishment of the 8th Pay Commission, aiming to revise the salaries of nearly 50 lakh central government employees and allowances for 65 lakh pensioners.

About Pay Commission:

What it is: A body established by the Central Government to review and recommend changes to the salary, allowances, and pension structures of central government employees and pensioners.

Established by: Department of Expenditure, Ministry of Finance, Government of India.

Aim:

Ensure fair compensation for government employees.

Recommend formulas for revising Dearness Allowance (DA) and Dearness Relief (DR) to offset inflation impacts.

Functions:

Review pays and allowances of central government employees.

Suggest structural changes to enhance governance.

Ensure financial sustainability of salary revisions.

History of Pay Commissions:

1st Pay Commission:

Year: 1946

Headed by: Srinivasa Varadachariar

Long Working Hours Debate

Context:

Proposals such as a 90-hour workweek, presented by L&T Chairman S.N. Subrahmanyan, have sparked controversy, highlighting concerns about workplace culture, employee well-being, and productivity.

Proposal for long working hours:

Prominent business leaders in India, including Narayana Murthy, S.N. Subrahmanyan, and Bhavish Aggarwal, have called for extended work hours.

They argue that increasing workweeks could drive economic growth and emulate post-war recovery strategies seen in countries like Japan and Germany.

The proposals suggest a model of 70–90 hours per week to enhance productivity and global competitiveness.

Positives of long working hours:

Boosts Output: Extended hours could increase work volume and project completion speed.

E.g. Manufacturing industries in India show higher outputs during peak seasons with overtime work.

Economic Growth: Longer hours contribute to higher GDP by increasing workforce participation and productivity.

E.g. India’s IT sector thrives on high-pressure deadlines to meet global client demands.

Skill Development: Extended work periods provide opportunities for employees to acquire and refine skills.

E.g. Startups in Bengaluru often use extended work hours for rapid upskilling.

Job Security: Employees who commit to long hours may gain better job stability in competitive industries.

E.g. Contract workers in construction projects benefit from extended work schedules.

Workplace Resilience: A culture of hard work builds resilience and adaptability.

E.g. Infosys employees working extra hours during critical projects led to client retention.

Limitations of long working hours:

Health Risks: Extended hours lead to physical and mental health issues like burnout and stress.

E.g. A Pune-based Ernst & Young employee reportedly died from workplace stress in 2024.

Declined Productivity: Fatigue from overwork reduces focus, creativity, and overall efficiency.

E.g. Reports from the ILO link long hours to lower productivity in South Korea.

Poor Work-Life Balance: Excessive work hours strain personal relationships and reduce social engagement.

E.g. Employees in Japan’s “karoshi” culture face rising loneliness and depression.

High Attrition Rates: Long hours increase turnover rates as employees seek balanced work environments.

E.g. India’s IT sector experienced talent migration to companies offering flexible hours.

Negative Societal Impact: Overwork culture discourages family building and community participation.

E.g. Japan’s aging population is partially attributed to its demanding work culture.

Way ahead:

Balanced Work Hours: Introduce flexible working models that balance output with personal well-being.

E.g. Indian startups implementing hybrid work schedules enhance productivity.

Employee Wellness Initiatives: Promote mental and physical health programs in workplaces.

E.g. TCS offers stress management workshops for employees.

Enhanced Efficiency: Encourage tools and technologies to optimize work processes.

E.g. AI-driven project management tools reduce workload in India’s IT sector.

Cultural Shift: Foster a mindset valuing quality of work over quantity.

E.g. Microsoft’s four-day workweek experiment in Japan boosted productivity.

Legislative Safeguards: Introduce labor laws to regulate maximum working hours.

E.g. India’s existing laws under the Factories Act provide for limited work hours.

Conclusion:

A balanced approach to work hours, focusing on efficiency rather than mere quantity, is vital for sustainable growth. Organizations must value employee well-being to foster creativity and innovation. As the Indian workforce evolves, promoting smarter work practices will create healthier workplaces and drive long-term success.

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World Economic Forum Reports

Context:

The World Economic Forum has recently released two reports named “Global Cybersecurity Outlook 2025” and “Global Risks Report 2025.”

About Global Cybersecurity Outlook 2025:

Published by: World Economic Forum (in collaboration with Accenture).

Aim: To examine the cybersecurity trends impacting economies, societies, and organizations.

Key Features:

Escalating Cyber Threats: Highlights the sophistication of cybercrime amid geopolitical tensions and emerging technologies.

Widening Cyber Resilience Gap: Smaller organizations face seven times higher struggles compared to 2022, while larger organizations show improvement.

Regional Disparities: 42% in Latin America and 36% in Africa lack confidence in cybersecurity preparedness, compared to 15% in Europe and North America.

Public vs. Private Sector: 38% of public-sector entities report inadequate resilience versus 10% of private organizations.

Workforce Gap: Nearly 49% of public-sector organizations lack sufficient cybersecurity talent.

About Global Risks Report 2025:

Published by: World Economic Forum.

Aim: To analyze and prioritize global risks across immediate, short-to-medium, and long-term horizons for informed decision-making.

Key Features:

Global Risks Perception Survey (GRPS): Insights from over 900 global experts.

Timeframe Analysis:

Immediate (2025): Focuses on urgent risks like cyber threats and geopolitical instability.

Short-to-Medium Term (2027): Examines risks tied to technological adoption and resource scarcity.

Long Term (2035): Considers emerging risks such as climate resilience and demographic shifts.

Sectoral Impact: Highlights the vulnerabilities of public infrastructure, supply chains, and critical services.

Regional Variances: Identifies differences in preparedness across continents, emphasizing the need for localized strategies.

In-depth Risk Themes: Provides focused analyses on selected high-priority risk categories.

Rupee Depreciation

Context:

The Indian rupee recently experienced a sharp decline in value against the US dollar after a period of relative stability.

What is Devaluation?

Devaluation refers to the deliberate downward adjustment of a country’s currency value against foreign currencies, typically carried out by the central bank. It is used to enhance export competitiveness and reduce trade deficits but may increase the cost of imports and domestic inflation.

What is Depreciation of Rupee?

Depreciation of the rupee occurs when its value declines relative to foreign currencies in the open market. Unlike devaluation, which is a policy-driven move, depreciation is influenced by market forces such as supply-demand dynamics, capital flows, and global economic conditions.

Reasons Behind the Recent Decline in Rupee Value:

Internal Factors:

Rising Inflation: Higher domestic prices reduced the real value of the rupee. And inflation-driven production costs made Indian exports less competitive.

Widening Trade Deficit: Increased imports, particularly of crude oil, led to higher demand for foreign currencies.

Fiscal Deficit: Persistent fiscal imbalances put downward pressure on the rupee.

Policy Ambiguity: Frequent shifts in RBI’s exchange rate policy led to market uncertainty.

External Factors:

Capital Outflows: Foreign investors withdrew funds amid global economic uncertainties and rising US interest rates.

Geopolitical Tensions: Conflicts like the Russia-Ukraine war affected global energy prices, increasing India’s import bill.

Global Economic Slowdown: Lower global demand for exports added to the rupee’s woes.

US Dollar Strength: Aggressive rate hikes by the US Federal Reserve strengthened the dollar, making the rupee weaker.

Consequences of Falling Rupee:

Increased Import Costs: The weakening rupee makes crude oil, electronics, and raw materials costlier, worsening India’s current account deficit.

Inflationary Pressures: Rising import costs elevate domestic inflation as businesses pass on increased input costs to consumers.

Export Competitiveness: While cheaper rupee benefits exports initially, high input costs due to inflation negate these advantages over time.

Capital Flight: A depreciated rupee reduces investor confidence, prompting foreign investors to withdraw capital from Indian markets.

Impact on Borrowing: External debt denominated in foreign currencies becomes more expensive, increasing repayment burdens on the government and businesses.

Measures to Restore the Value of Rupee

Monetary Policy Measures:

Foreign Exchange Intervention: RBI can sell forex reserves in the market to manage demand-supply imbalances and stabilize the rupee.

Interest Rate Hikes: Higher repo rates make Indian investments attractive, encouraging foreign inflows and strengthening the rupee.

Currency Swap Agreements: Bilateral agreements with other countries can reduce reliance on the dollar and stabilize foreign currency flows.

Fiscal Policy Measures

Reducing Import Dependency: Enhance domestic production of high-demand imported goods, such as crude oil substitutes, to lower import bills.

Boosting Exports: Offer incentives and subsidies to exporters to increase foreign currency earnings and improve the trade balance.

Infrastructure Development: Develop efficient logistics and supply chains to reduce production costs, enhancing overall competitiveness.

Encouraging Foreign Investments: Implement policies to attract long-term FDI, creating a stable environment for investors.

Way Ahead:

Comprehensive Policy Framework: Introduce a well-defined and stable exchange rate policy to reduce volatility and build investor confidence.

Strengthening Domestic Production: Support programs like ‘Make in India’ to reduce reliance on imports and improve self-reliance.

Managing Inflation: Use targeted fiscal and monetary tools to maintain price stability and control inflation.

Diversified Forex Reserves: Accumulate a mix of currencies in forex reserves to minimize dependence on the US dollar and reduce vulnerabilities.

Conclusion:

A stable rupee is vital for economic growth, fiscal stability, and global competitiveness. While immediate interventions are essential, long-term strategies focusing on domestic production, export growth, and robust policy frameworks will ensure sustained economic resilience.

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Differential Pricing

Context:

The Central Consumer Protection Authority (CCPA) has issued notices to Ola and Uber over alleged differential pricing based on the type of smartphone used by consumers.

About Differential Pricing:

What Is Differential Pricing?

Differential Pricing is a strategy where businesses set varying prices for the same product or service based on factors like location, demand, customer demographics, or purchasing behavior. This dynamic approach allows businesses to optimize revenues while catering to different market segments.

Why Companies Use Differential Pricing:

Maximize Revenue: Tailored pricing helps capture maximum consumer willingness to pay.

E.g. Airlines charging more for last-minute bookings.

Boost Market Penetration: Lower initial prices attract customers in new markets.

E.g. Introductory offers for new product launches.

Encourage Bulk Purchases: Volume-based pricing clears inventory faster.

E.g. Discounts on combo deals.

Increase Profit Margins: Higher prices during peak demand maximize profitability.

E.g. Hotel rates during major events.

Compete Locally: Adjusting prices to match local purchasing power.

E.g. Mobile apps offering region-specific pricing.

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“When-Listed” Platform

Context:

SEBI plans to introduce a “when-listed” platform to regulate pre-listing share trading, aiming to curb grey market activities and protect investor interests.

About the ‘When-Listed’ Platform:

What it is: A regulated platform for trading unlisted shares between IPO allotment and official listing.

Developed by: Securities and Exchange Board of India (SEBI) in collaboration with stock exchanges.

Aim: To reduce grey market trading, ensure transparency, and provide a regulated avenue for pre-listing share transactions.

Features:

Allows trading of IPO-allotted shares before official listing.

Operates within the T+3 timeline (allotment to listing).

Replaces informal grey market trading with a formal, regulated mechanism.

Significance:

Enhances market transparency and investor protection.

Curbs volatility and speculative activities in the grey market.

Formalizes pre-listing trading, reducing risks for retail investors.

Urad and Tur Imports

Context:

The Indian government reported a significant increase in Urad imports from Brazil, reaching over 22,000 metric tonnes.

 The Ministry of Consumer Affairs highlighted Brazil’s potential as a major supplier of Urad and Tur for India, benefiting from different cropping seasons that align with India’s crop demands.

About Urad:

 Scientific name: Vigna mungo, commonly known as black gram.

 Origins: Native to South Asia; widely cultivated and highly valued in India.

 Culinary use: Essential in Indian cuisine, often used as a dal and paired with rice or curry.

 Season: Grown in both Kharif and Rabi seasons in India.

 Global cultivation: Also grown in tropical regions like the Caribbean, Fiji, Myanmar, and Africa, introduced by Indian immigrants.

About Tur:

 Scientific name: Cajanus cajan, known as toor dal or pigeon pea.

 Origins: Indigenous to the Eastern Hemisphere; cultivated widely in tropical and semi-tropical regions.

 Culinary use: Commonly consumed as a staple in South Asia, Southeast Asia, and Africa.

 Global spread: Cultivated in Latin America and the Caribbean, widely use

One Rank One Pension

Context:

Prime Minister Narendra Modi commemorated a decade of the One Rank One Pension (OROP) scheme, highlighting it as a tribute to the dedication and sacrifices of India’s veterans and ex-service personnel.

About One Rank One Pension (OROP) Scheme:

• Definition: OROP ensures that uniform pensions are paid to personnel retiring in the same rank with identical service lengths, regardless of when they retired.
• Implementation year: The government approved OROP in 2015, with benefits retroactively effective from July 1, 2014.
• Pension Re-fixation: Pensions are re-fixed based on the average of the minimum and maximum pensions of 2013 retirees of the same rank and service length.
• Arrears: Arrears are paid in four half-yearly instalments, except for family pensioners and Gallantry awardees, who receive it in one instalment.
• Future revisions: Pensions will be re-fixed every five years.
• Nodal agency: Department of Ex-Servicemen Welfare, Ministry of Defence.

Production Linked Incentive Scheme

Context:

India’s Production Linked Incentive (PLI) Scheme, launched in 2020, aims to transform the country’s manufacturing sector into a global hub by encouraging investments, innovation, and self-reliance.

What is the PLI Scheme?

The PLI Scheme incentivizes companies (domestic and foreign) to manufacture in India by offering financial rewards based on incremental production and revenue over five years. Initially targeting three industries, it was later expanded to 14 critical sectors to drive import substitution, employment generation, and high-tech industrial development.

Features and Sectors Covered

Features:

Performance-driven financial incentives.

Promotes advanced technologies and economies of scale.

Focus on self-reliance and boosting exports.

Encourages job creation and import substitution.

Sectors Covered:

Large-scale electronics manufacturing (LSEM).

Pharmaceuticals and medical devices.

Automobiles and auto components.

Telecom and networking products.

Renewable energy and solar PV modules.

Advanced chemistry cell (ACC) batteries.

White goods, drones, textiles, food products, and specialty steel.

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PAN 2.0

Context:

A day after the Cabinet Committee on Economic Affairs approved PAN 2.0, the Income Tax Department issued a detailed clarification on the project.

Comparison of PAN and PAN 2.0:

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India and Fertilizer Imports

Context:

With conflicts in Ukraine and Gaza escalating, global concerns about the stability of fertilizer supplies have intensified. India, highly dependent on imports for various fertilizers, is now considering strategies to enhance domestic production and reduce its reliance on foreign sources.

India’s fertilizer imports:

Current dependence: India relies on imports for about 20% of its urea, 50-60% of diammonium phosphate (DAP), and 100% of muriate of potash (MOP).

Primary import sources: Major import partners include China, Russia, Saudi Arabia, UAE, Oman, Iran, and Egypt.

Source: Standing Committee on Chemicals and Fertilizers Report, August 2023.

India’s fertilizer production:

Production by Type   

Urea: 250.72 LMT;

Di-Ammonium Phosphate (DAP): 42.22 LMT;

Nitrogen, Phosphorus, And Potassium (NPK): 89.67 LMT;

Single superphosphate (SSP): 53.34 LMT;

Muriate of Potassium (MOP): Exclusively imported

Agricultural Growth Data

Context:

India’s agricultural sector has seen improved growth over the last two decades, with a notable acceleration during the tenure of the Modi-led NDA government, according to a NITI Aayog paper.

Agricultural growth data: (Source: NITI Aayog, Ramesh Chand and Jaspal Singh)

Key highlights of Sub – sectors:

NOTE: Try to memorise data table and its trend. In case of difficulty in memorising go for graph which can fetch you same value addition to your answer.

State-wise Performance (2014-15 to 2022-23)

Top Performers (4%+ Annual Growth): Madhya Pradesh, Telangana, and 11 other states.

Lagging States: Punjab (2% growth), Haryana (3.4%), West Bengal (2.8%).

Policy Implications

Market-led Diversification: Emphasis on livestock, fisheries, and horticulture has driven agricultural growth.

Uneven Distribution: Benefits of growth are not equally distributed, with field crops still lagging despite minimum support price interventions.

Need for Technology and Demand-Side Focus: Improved production technologies and demand factors are more crucial than government price interventions for sustai

SEBI rules to curb F&O

Context: 

The Securities and Exchange Board of India (SEBI) recently introduced significant reforms in the equity index derivatives (futures and options, F&O) framework to curb speculative trading, protect retail investors, and improve market stability.

Recent SEBI Reforms and Their Implications:

Recalibration of Contract Size for Index Derivatives:

Reform: The minimum contract size for index derivatives has been increased to 15 lakh (from the earlier 5-10 lakh), effective November 20, 2024.

Implication: This raises the entry barrier, ensuring that participants have sufficient risk tolerance, reducing speculative trading by small retail investors.

Impact: It will discourage small traders from taking excessive risks, encouraging more responsible trading.

Upfront Collection of Options Premium:

Reform: From February 1, 2025, trading members must collect the options premium upfront from buyers.

Implication: It reduces the misuse of leverage in options trading, enforcing financial discipline and reducing the risk of defaults.

Impact: This measure protects investors from over-leveraged positions, preventing potential market volatility.

Rationalization of Weekly Expiring Derivatives Products:

Reform: Only one benchmark index per exchange will offer weekly expiring derivatives, starting November 20, 2024.

Implication: Limits frequent speculative trades that create short-term volatility, especially on expiry days.

Impact: Reduces speculative pressure, promoting market stability.

Intra-Day Monitoring of Position Limits:

Reform: From April 1, 2025, SEBI will monitor position limits intra-day, not just end-of-day.

Implication: Prevents excessive speculative positions from being built up during the day.

Impact: Real-time compliance ensures smoother and more stable market functioning.

Removal of ‘Calendar Spread’ Treatment on Expiry Day:

Reform: Effective February 1, 2025, calendar spread benefits will not be available on the day of contract expiry.

Implication: Forces traders to execute rollovers earlier, reducing speculation on the day of expiry.

Impact: Eases volatility and stabilizes derivative prices during expiration.

Increase in ‘Tail Risk’ Coverage on Expiry Day:

Reform: An additional ‘Extreme Loss Margin’ of 2% will be levied on short options contracts on expiry day.

Implication: Provides greater protection against extreme market movements.

Impact: Reduces the risk of significant losses due to rare market events, improving market resilience.

How these reforms impact India:

Curbing speculation: Larger contract sizes and upfront premium collection reduce excessive speculation, particularly by small traders.

Market stability: Limiting speculative positions and lowering intra-day volatility enhances market stability, attracting long-term investors.

Protecting retail investors: The reforms safeguard retail investors from significant losses due to aggressive short-term trading.

Promoting capital growth: A focus on disciplined investment strategies supports capital formation and sustainable economic growth.

International Big Cat Alliance (IBCA)

Context:

India officially joined the International Big Cat Alliance (IBCA), a global initiative launched by Prime Minister Modi on April 9, 2023, during the 50th anniversary of Project Tiger.

The IBCA aims to conserve big cats like tigers, lions, and cheetahs. India is among four founding members, alongside Nicaragua, Eswatini, and Somalia. With headquarters in India, the alliance will collaborate with 24 countries and nine organizations to protect big cats and their habitats, promoting sustainable resource use and addressing climate challenges.

About Global Alliance for Big Cats:

Context:

India has proposed to launch a mega global alliance to protect big cats and assured support over five years with guaranteed funding of $100 million (over Rs 800 crore).

About International Big Cat Alliance (IBCA)

Role of Methane in Climate Change

Context:

Methane, though short-lived (12 years), traps 84 times more heat than CO2 over 20 years, making it a powerful greenhouse gas.

What is Methane?

It is an Odorless, colourless, and flammable gas; the second-largest contributor to global warming after Carbon Dioxide and the primary contributor to the formation of ground-level ozone.

Way Forward

To address methane emissions, several strategies can be employed. Adopting sustainable agricultural practices, such as precision farming and conservation tillage, can reduce emissions from agriculture. Methane-capturing technologies in livestock operations and landfills can capture and convert methane into usable energy. Implementing rice cultivation techniques like System of Rice Intensification (SRI) and Direct Seeded Rice (DSR) can cut methane from rice paddies. Additionally, promoting biogas production from organic waste offers a renewable energy source and helps mitigate methane emissions from waste decomposition.

Government Promoting Nano-Fertilizer

Context: 

The Government of India is promoting nano DAP as a cost-effective, indigenous alternative to the imported granular form of di-ammonium phosphate (DAP), especially for Punjab’s Rabi season crops.

What is Nano DAP?

It is cheaper and easier to transport, with a 500 ml bottle costing Rs 600 covering one acre, compared to granular DAP’s Rs 1,350 per 50 kg bag. However, Punjab Agricultural University (PAU) scientists have raised concerns, reporting lower wheat yields when using nano DAP. IFFCO, which developed nano DAP (in liquid form), recommends using it alongside granular DAP for optimal results.

What are Nano-fertilizers?

Nano-fertilizers are advanced fertilizers engineered using nanotechnology to improve nutrient delivery to plants. They contain nutrients in nano-sized particles, which allows for better absorption, efficient use, and reduced environmental impact compared to conventional fertilizers.

 Examples: Some examples of nano-fertilizers include nanoparticles of nitrogen, phosphorus, and potassium, as well as combinations of these nutrients with other elements such as iron or zinc.

Benefits of Nano-Fertilizers:

Current limitations and challenges associated with the implementation of nano fertilizers:

Not a complete replacement: Nano urea only replaces top dressing, not basal application, limiting efficiency benefits.

True yield concerns: The predicted yield increase is 3-16%, but lower actual gains could reduce income benefits

China Shock 2.0

Context: 

The United States has imposed steep tariffs on Chinese imports, including a 100% duty on electric vehicles, as part of an effort to counter the influx of Chinese goods, dubbed “China Shock 2.0.” India and other countries are also taking steps to curb Chinese imports to protect domestic industries.

China Shock 2.0:

Definition: Refers to China’s rapid export growth in high-tech sectors such as solar equipment, electric vehicles, and semiconductors amid domestic demand slumps.

Trigger: China’s economic slowdown due to a property crisis and weak consumer demand.

Global Response: Countries, including India, fear job losses in manufacturing and increased economic dependence on China.

Impact on India:

Growing Imports: Despite restrictions, India’s imports from China surged from $70 billion in FY19 to $101 billion in FY24, impacting sectors like steel, solar equipment, and electronics.

Solar Sector Dominance: India remains heavily reliant on China for 80% of its solar cells and modules, impacting its renewable energy goals.

Steel Industry Pressure: Rising imports of Chinese steel are eroding profits for Indian steelmakers, calling for government intervention.

Electronics: Though mobile phone manufacturing has increased, India’s dependency on China for electronics remains largely unchanged.

Measures to Counter China Shock 2.0:

Anti-Dumping Duties: India has launched over 30 anti-dumping investigations against China in 2024 to protect domestic industries.

Renewable Energy Push: India is investing $4.5 billion in clean energy manufacturing to reduce dependency on Chinese solar imports.

Strengthening Local Supply Chains: Focus on boosting domestic production in key sectors like steel, electronics, and renewable energy.

Conclusion:

To counter China Shock 2.0 and secure economic independence, India must advance its Atmanirbhar Bharat (self-reliant India) initiative by building resilient domestic industries and reducing dependency on Chinese imports across critical sectors.

PLFS Report, 2023-24

Context: 

The National Statistical Office (NSO) recently released the Periodic Labour Force Survey (PLFS) report for 2023-24. It highlights key employment trends in India, including stagnating unemployment rates, increasing labor force participation, and the challenges of creating formal jobs despite significant economic growth.

Key Data Points:

Unemployment rate: 3.2% in 2023-24, unchanged from 2022-23, the first time no year-on-year decline has been observed since the survey began in 2017-18.

Labour force participation Rate (LFPR): Increased to 60.1% in 2023-24 (from 57.9% in 2022-23). Rural LFPR rose to 63.7%, and urban LFPR increased to 52%.

Worker population ratio (WPR): WPR stood at 58.2%, with 76.3% for males and 40.3% for females.

Unemployment by gender: Female unemployment increased to 3.2% (from 2.9%), while male unemployment slightly declined to 3.2% (from 3.3%).

Urban-rural divergence: Rural unemployment increased slightly to 2.5% from 2.4%, while urban unemployment improved, falling to 5.1% from 5.4%.

Yen Carry Trade

In News

Low rates incentivized global investors to borrow yen cheaply and invest in other countries for better returns.

About Yen Carry Trade

Investors borrow money in a country with low interest rates and invest it in countries with higher interest rates.

Example: Borrowing yen (from Japan) with low rates and investing in countries like Brazil, Mexico, or India where rates are higher.

Bank of Japan’s Policy:  Between 2011 and 2016, Japan’s interest rates were at zero, and since 2016, they have been even lower (-0.10%) to stimulate economic activity in Japan.

From mid-March to July, the Bank of Japan raised rates from -0.10% to 0.25%.

The increase in Japanese interest rates led to a stronger yen.

Impact: Investors who had borrowed yen and invested in other currencies started selling their international assets.

The yen strengthened against other currencies like the US dollar, Brazilian real, Indian rupee, and Mexican peso.

Debate over GST on Health Insurance

Context

Opposition parties in India are demanding the withdrawal of Goods and Services Tax (GST) on life insurance and health insurance premiums.

Background

GST replaced all indirect taxes like service tax and cess from 2017.

Since GST encapsulates service tax, which applies to the insurance industry, its introduction has resulted in an increase in premium amounts.

GST on health and life insurance policies is fixed at 18%.

Prior to GST, life insurance premiums were subject to 15% service taxes, comprising Basic Service Tax, Swachh Bharat cess, and Krishi Kalyan cess.

The increase from 15% to 18% impacted the end consumer (policyholders) by raising their premiums amounts.

Argument in favor of imposing the tax

GST is applicable to all insurance policies since insurance is a service, and policyholders pay tax on their insurance premium.

Insurance policies allow certain deductions while computing income tax. The  tax-saving deductions, particularly on life insurance premiums, are Sections 80C and 80D of the Income Tax Act, 1961.

Under Section 80C, a customer can avail deductions of up to Rs 1.5 lakh on the overall insurance premium, including the GST applicable on them.

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Antitrust Complaint Against Google

Context

An Indian start-up lobby group has filed a complaint with the Competition Commission of India (CCI) against Google’s alleged anti-competitive practices in the online advertising market.

About

The Alliance of Digital India Foundation (ADIF), said that Google’s dominance over major online platforms and its reliance on advertising for the majority of its revenue hinders competition and negatively impacts Indian businesses.

The development comes as India is currently discussing an exhaustive digital competition law, which could see increased preemptive compliance on the part of large tech companies.

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Banking Laws (Amendment) Bill, 2024

Context

Recently, the Banking Laws (Amendment) Bill, 2024 was introduced in Lok Sabha seeking to increase the option for nominees per bank account to four, from existing one, among others.

Rationale of Introducing Bill

The introduction of Banking Laws (Amendment) Bill, 2024 follows the announcement during the 2023-24 Budget speech, emphasising the need for reforms in the banking sector to strengthen governance and safeguard investor interests.

The proposed amendments align with the government’s larger vision of facilitating banking sector reforms, including the privatisation of public sector banks.

The Banking Laws (Amendment) Bill, 2024, seeks to amend several laws, including the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, the State Bank of India Act, 1955, and the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980.

Its primary goal is to enhance governance, strengthen investor protection, and improve overall banking practices.

Proposed Amendments

Nominees per Bank Account: Currently, each bank account can have only one nominee. However, the proposed amendment aims to increase this limit to four nominees per account.

It offers greater flexibility and choice to account holders.

Redefining ‘Substantial Interest’: The bill seeks to redefine the concept of ‘substantial interest’ for bank directorships. The existing threshold of Rs 5 lakh will be raised significantly to Rs 2 crore.

It reflects a long-overdue adjustment to a limit that has been in place for nearly six decades.

Flexibility in Statutory Auditor Pay (Autonomy for Banks): The bill intends to give banks greater flexibility in determining the pay for statutory auditors.

Conclusion

The Banking Laws (Amendment) Bill, 2024 represents a significant step toward modernising India’s banking framework.

By increasing nominee options, redefining substantial interest, and granting more autonomy to banks, the bill aims to create a more robust and investor-friendly banking ecosystem.

Diamond Sectors in India

Context

Diamond industry in India is facing mass scale job losses, pay reduction and uncertainty about work, which employs around seven lakh workers in thousands of factories in cutting and polishing rough diamonds and exporting them in multiple countries.

Geographical Distribution of Diamond Fields

Diamonds are precious gems, formed deep within the Earth’s crust over millions of years, hold both cultural and economic significance.

India’s diamond occurrences date back to prehistoric times, and the country is home to several diamond-bearing regions.

South Indian Tract (Andhra Pradesh): This region comprises parts of Anantapur, Kadapa, Guntur, Krishna, Mahabubnagar, and Kurnool districts. Andhra Pradesh hosts significant diamond reserves and extraction activities.

Central Indian Tract (Madhya Pradesh – Panna Belt): Madhya Pradesh, particularly the Panna belt, is renowned for its diamond deposits.

Panna has a long history of diamond mining and continues to contribute to India’s gem industry.

Gujarat: The diamond sector in Gujarat shines brightly.

Surat, often called the ‘Diamond City’ processes around eight lakh (800,000) rough diamonds, making it a global hub for diamond polishing. Recently, the Surat Diamond Bourse has further boosted the industry.

With an estimated annual turnover of 2 lakh crore (approximately $27 billion), this bourse is set to provide employment to an additional 1.5 lakh people.

India’s Dominance in Cut and Polished Diamonds

Exports: Indian exports of finished diamonds amount to a staggering $23 billion annually.

Employment: The diamond sector directly employs around 1 million people in India.

Additionally, it indirectly supports approximately 5 million jobs across various related industries.

Global Leadership: India processes over 90% of the diamonds used in jewellery worldwide. Indian artisans skillfully transform rough stones into exquisite gems that adorn fingers, necks, and ears across the globe.

Key Concerns

Lowering Exports: India’s cut and polished diamond exports in 2023-24 plunged 27.5% from a year ago to a $15.97 billion due to sluggish demand from the United States, China and the United Arab Emirates

The fall in exports forced the world’s biggest diamond polisher to reduce imports of rough diamonds by 18% from a year ago to $14.27 billion in the financial year 2023-24.

Mass Job Losses and Pay Reductions: Approximately seven lakh workers find employment in Surat’s diamond factories, but uncertainty now looms large.

Global Factors at Play: Since 95% of polished diamonds from Surat are exported, global factors significantly impact the industry.

Geopolitical tensions, such as the Russia-Ukraine conflict and Israel-Palestine issues, have disrupted demand for diamonds worldwide. These conflicts ripple through the supply chain, affecting Surat’s factories.

Inventory Woes and Supply Chain Disruptions: Surat’s factories are left with substantial inventories. It is because Russia, a major supplier of rough diamonds, has faced sanctions and geopolitical challenges.

The delicate balance between supply and demand has been upset.

Recession’s Toll: In 2022, Surat’s diamond industry boasted a turnover of nearly 2,25,000 crore. Alas, that figure has dwindled to around 1,50,000 crore today.

The recession has been relentless, casting a shadow over the city that once sparkled with diamond brilliance.

Other Factors

Market Dynamics: Fluctuations in global demand and rough diamond prices impact revenue.

Technological Shifts: The rise of lab-grown diamonds and changing consumer preferences necessitate adaptation.

Sustainability: Balancing growth with environmental and ethical considerations remains crucial

Bangladesh Unrest Hits Engineering Shipments to India

Context

According to the Engineering Export Promotion Council of India (EEPC), India’s engineering goods exports to Bangladesh have faced a significant challenge due to the recent unrest in the neighboring country.

India’s Engineering Export Performance

Accounting for 3% of the total GDP, the Indian engineering sector forms a crucial backbone of the Indian economy.

The engineering sector is the largest contributor to India’s overall exports with a share of 24% and also contributes approximately 40% of the total manufacturing export.

Engineering exports in fiscal 2023-24 grew by 2.13% and reached at US $109.32 billion, which is contrary to the merchandise export trend which declined by 3.11%.

It performed well given the weak global trade trends, dwindling demand, forex crisis and geopolitical conflicts.

Today, out of total engineering exports, the proportion of consumer durables decreased from 34% in 1956-57 to 9% in 2023-24, while the proportion of capital goods increased considerably from 12% in 1956-57 to 60% in 2023-24.

Export Destinations

India exports engineering products to the following regions: ASEAN, North-East Asia, Africa, EU, North America, CIS, Latin America, South Asia, Africa, Middle East, West Asia, etc.

India’s engineering exports continued their year-on-year growth for the second consecutive month into January 2024 with a 4.20% increase that was attributed to increased shipments of Iron & Steel, aircraft, spacecraft and parts, Copper and copper products, and Electric machinery.

Additionally, heightened demand from South Asia, the European Union, and North America contributed to this growth.

Concerns after recent turmoil in Bangladesh

Export Decline: In the first four months of the year, India’s engineering goods exports to Bangladesh declined by 9%.

It has raised concerns for an industry that constitutes a quarter of India’s merchandise exports.

Supply Chain Disruptions: The ongoing unrest in Bangladesh disrupted supply chains, affecting the smooth flow of goods between the two countries.

As a result, Indian exporters faced difficulties in shipping engineering products to their Bangladeshi counterparts.

Revenue Losses and Uncertainty: The situation has raised the specter of revenue losses for Indian exporters. With engineering goods being a crucial part of India’s export portfolio, any disruption can have far-reaching consequences.

Specific Export Categories: While overall engineering goods exports from India had risen by 4.2% between April and July, there was a sharp 31.6% dip in exports of iron and steel.

Additionally, several of the sector’s top export markets—including Italy, Korea, Nepal, and Bangladesh—showed reduced appetite for Indian goods during this period.

Offsetting Factors: Despite the decline in exports to Bangladesh, there were positive trends elsewhere

Contribution of the Space Sector to India’s GDP

Context

India’s space sector has directly contributed about $24 billion (20,000 crore) to India’s Gross Domestic Product over the last decade.

Space Sector of India

India’s space sector has benefitted from decades of consistent investment, with $13 billion invested in the last decade.

It is the 8th largest space economy (in terms of funding) in the world.

In the recently announced Union Budget for 2024-25, India’s space sector received a significant boost. The Central government allocated 13,042.75 crore to support space-related initiatives.

Contribution of Space Sector to India’s GDP

The Sector has supported 96,000 jobs in the public and private sector.

For every dollar produced by the space sector, there was a multiplier effect of $2.54 to the Indian economy and India’s space force was 2.5 times more productive than the country’s broader industrial workforce.

The Indian space sector was diversifying and now had 700 companies including 200 start-ups and had seen revenues grow to $6.3 billion in 2023, which was about 1.5% of the global space market.

Satellite communications contributed 54% to the space economy, followed by navigation (26%) and launches (11%).

The main industries supported by the space sector were telecom (25%), information technology (10%) and administrative services (7%).

FDI in space sector

Under the amended FDI policy, 100% FDI is allowed in the space sector. The entry route for the various activities are as follows:

Up to 74% under Automatic route: Satellites-Manufacturing & Operation, Satellite Data Products and Ground Segment & User Segment.

Up to 49% under Automatic route: Launch Vehicles and associated systems or subsystems, Creation of Spaceports for launching and receiving Spacecraft.

Up to 100% under Automatic route: Manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment.

Potential of Space Sector

Export Potential and Investment: Currently, India’s export market share in space-related services stands at 2,400 crore (about $0.3 billion). The goal is to boost this to ₹88,000 crore ($11 billion).

Rise of Space Tourism: In 2023, the space tourism market was valued at $848.28 million.

It is expected to grow to $27,861.99 million by 2032.

Challenges in India’s Space Sector

Competition and Global Market Share: To achieve this ambitious goal of 8% of the global market share, Indian space companies must compete effectively on the international stage.

Private Sector Participation: While the private sector has shown interest, there’s a need for more substantial investment and commitment.

Technology Development and Innovation: Developing cutting-edge technologies, such as reusable launch vehicles, miniaturized satellites, and advanced propulsion systems, requires substantial investment and research.

Regulatory Framework and Licensing: Navigating licensing processes, export controls, and compliance can be complex.

Infrastructure and Facilities: Developing and maintaining such infrastructure requires significant capital.

Way Ahead

India aims to commission the Bharatiya Antariksha Station (BAS) by 2035 and land Indian astronauts on the Moon by 2040.

Private entities are now actively involved in crucial aspects of research, manufacturing, and fabrication of rockets and satellites, fostering a vibrant ecosystem of innovation.  It is expected to integrate Indian companies into global value chains.

With this, companies will be able to set up their manufacturing facilities within the country duly encouraging ‘Make In India (MII)’ and ‘Atmanirbhar Bharat’ initiatives of the Government.

Vehicle Scrapping Policy to Phase Out Polluting Vehicles

Context

The Ministry of Road Transport and Highways has launched the Voluntary Vehicle Modernization Program or Vehicle Scrapping Policy to create an ecosystem for phasing out unfit polluting vehicles across the country.

About

The Program and Policy will be implemented through a network of Registered Vehicle Scrapping Facilities (RVSFs) and Automated Testing Stations (ATSs).

Presently, there are sixty-plus RVSFs across 17 States / UTs and seventy-five ATSs across 12 States / UTs operational in the country.

Recognising the importance of Fleet Modernization and Circular Economy, multiple Commercial and Passenger Vehicle Manufacturers have agreed to offer discounts for a limited period against a Certificate of Deposit (Scrappage Certificate).

Commercial Vehicle and Passenger Vehicle manufacturers have shown a willingness to offer discounts for a limited period of two years and one year respectively.

Advantages of Vehicle Scrapping Policy

Rise in demand for new cars: With old vehicles being scrapped, the demand for new vehicles will rise. More than 51 lakh light motor vehicles (private and commercial) are more than 20 years old.

Employment growth: Establishing scrapping centers and the increase in vehicle sales will lead to job creation in various sectors including manufacturing, services, and recycling.

Better air quality: Scrapping unfit vehicles will result in less air pollution and better air quality.

Best price for scrap: Vehicle owners will get the best price for car scrappage for workable parts such as tyres. The recycling industry will also be more active leading to higher revenue.

Better Fuel Efficiency: Newer vehicles are generally more fuel-efficient, leading to savings in fuel consumption and reducing the country’s dependency on fossil fuels.

Challenges

Financial Burden: Owners of older vehicles, particularly those from lower-income groups, find it financially burdensome to replace their vehicles, even with incentives.

Waste Management Challenges: The scrapping of millions of vehicles lead to challenges in managing the waste generated, including hazardous materials like batteries, oil, and electronic components.

Market Disruptions: The sudden influx of scrapped vehicles and the push for new ones could create disruptions in the automotive market, affecting prices and demand unpredictably.

Way Ahead

To fully realize the potential of the scheme there is a need to ensure that scrapping centers are easily accessible to vehicle owners, especially in rural and semi-urban areas.

Also establish a mechanism for regularly reviewing the policy’s impact and make necessary adjustments based on technological advancements and changing environmental needs.

Provide support for small businesses and workers in the unorganized sector who may be affected by the policy. This could include retraining programs, financial assistance, or opportunities to transition into the new automotive ecosystem.

Zombie Startups

In News

Zombie startups have become a common scenario today.

About Zombie startups

Zombie startups are ventures that have failed to scale or achieve sustainable growth.

They  are characterized by stagnant growth and dwindling resources.

They may struggle to attract new investment or generate revenue, relying heavily on existing funds that diminish over time.

They can distort market dynamics by occupying space and resources that could be allocated to more viable ventures, potentially slowing overall ecosystem growth.

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India’s Ethanol Production shift from Sugar to Maize

Context

Cereal Grains have overtaken sugarcane as the primary feedstock for the production of ethanol used in blending with petrol.

About

In the current supply year 2023- 2024, sugar mills and distilleries supplied 401 crore liters of ethanol to oil marketing companies.

Of that, 211 crore liters or 52.7% was ethanol produced using maize and damaged foodgrains (mainly broken/ old rice not fit for human consumption), while sugarcane-based feedstocks (molasses and whole juice/ syrup) accounted for the remaining 190 crore liters.

This is the first time that the contribution of grains to India’s ethanol production has surpassed 50%.

What is Ethanol?

Ethanol is 99.9% pure alcohol that can be blended with petrol.

Alcohol production involves fermentation of sugar using yeast. In cane juice or molasses, sugar is present in the form of sucrose that is broken down into glucose and fructose.

Also grains contain starch, a carbohydrate that has to first be extracted and converted into sucrose and simpler sugars, before their further fermentation, distillation and dehydration to ethanol.

Ethanol blending

The ‘National Policy on Biofuels’ notified by the government in 2018 envisaged an indicative target of 20% ethanol blending in petrol by 2030.

In 2014 only 1.5 per cent ethanol was blended in petrol in India.

Given the encouraging performance and various interventions made by the government since 2014, the 20% target was advanced to 2025-26.

Why  is maize being promoted to produce ethanol ?

Till 2017-18, ethanol was being produced only from molasses, the dense dark brown liquid byproduct containing sucrose that mills cannot economically recover and crystallize into sugar.

However Sugarcane is a water-guzzling crop. A NITI Aayog report says that just one liter of ethanol produced from sugarcane consumes at least 2,860 liters of water.

India will require 1320 million tons of sugarcane, 19 million hectares of additional land and 348 billion cubic meters of extra water to produce enough ethanol to meet the 20% ethanol blending target of 2025.

Further the Food Corporation of India’s (FCI) has restricted the use of rice on concerns over cereal inflation and hence maize has emerged as the top ethanol feedstock.

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Economic Survey 2024- Key Highlights:

Context

The Finance minister tabled the Economy survey in the Parliament, a day ahead of the Budget presentation.

About Economic Survey

It is prepared by the Economic Division of the Department of Economic Affairs in the Ministry of Finance.

It is formulated under the supervision of the chief economic adviser.

The Economic Survey was first introduced in 1950-51 as part of the Budget documents.

It was separated in the 1960s and is now presented a day before the Union Budget.

The Economic Survey comprises two parts.

The document’s first part includes the country’s economic developments and challenges.

It also offers an overall review on the economy. The second part is focused on the past financial year.

Key Highlights of the Economic Survey 2024

Resilient Indian Economy: The economy grew over 7 percent for a third consecutive year.

Gross value added (GVA) at 2011-12 prices grew by 7.2 percent in FY24.

India’s real GDP in FY24 was 20 percent higher than in FY20, a notable achievement among major economies, and suggested strong potential for continued robust growth in FY 2024-25 and beyond.

India’s CAD (current account deficit) for the last financial year stood at 0.7 percent of the GDP during FY24, an improvement from the deficit of 2.0 percent of GDP in FY23.

India’s external debt has been sustainable over the years, with the external debt-to-GDP ratio standing at 18.7 percent at the end of March 2024.

Stable banking sector: Bank credit growth was broad-based and double-digit.

Gross and net non-performing assets (NPAs) reached multi-year lows.

Core inflation falls significantly: Inflation at 5.4 percent – the lowest level since the pandemic, driven by a fall in core inflation – both goods and services.

Core services inflation eased to a nine-year low in FY24; at the same time, core goods inflation also declined to a four-year low.

Food inflation a concern: It stood at 6.6 percent in FY23 and increased to 7.5 percent in FY24.

Due to extreme weather events, depleted reservoirs, and crop damage, India’s agriculture sector faced challenges, giving rise to food inflation.

FDI inflows slow: Net FDI inflows to India declined from $42 billion during FY23 to $26.5 billion in FY24.

However, gross FDI inflows moderated only by 0.6 per cent from $71.4 billion in FY23 to just under $71 billion in FY24.

External Sector: India’s external sector remained strong despite geopolitical headwinds and persistent inflation.

Logistics Performance Index: India improved its rank from 44th in 2018 to 38th in 2023 out of 139 countries.

Export Diversification: India is adding more export destinations, indicating regional diversification.

Services Exports: Grew by 4.9% to USD 341.1 billion in FY24. Growth driven by IT/software services and ‘other’ business services.

Remittances: India is the top remittance recipient globally, reaching USD 120 billion in 2023.

Foreign Portfolio Investment: Positive net inflows in FY24 supported by strong economic growth, stable business environment, and increased investor confidence.

India’s energy needs to grow 2 times by 2047: India’s energy needs are expected to grow 2 to 2.5 times by 2047 to meet a growing economy’s developmental priorities and aspirations.

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Highlights Of the Union Budget 2024-25

Context

The Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman presented the Union Budget 2024-25 in Parliament.

About

Budget Estimates of 2024-25 are

Total receipts other than borrowings: `32.07 lakh crore.

Total expenditure: `48.21 lakh crore.

Net tax receipt: `25.83 lakh crore.

Fiscal deficit: 4.9 percent of GDP.

Government aims to reach a deficit below 4.5 percent next year.

Inflation continues to be low, stable and moving towards the 4% target; Core inflation (non-food, non-fuel) at 3.1%.

The focus of the budget is on Employment, Skilling, MSMEs, and the Middle  Class.

Package of PM’s five schemes for Employment and Skilling

Prime Minister’s Package of 5 Schemes and Initiatives for employment, skilling and other opportunities for 4.1 crore youth over a 5-year period.

Scheme A – First Timers: One-month salary of up to `15,000 to be provided in 3 installments to first-time employees, as registered in the EPFO.

Scheme B – Job Creation in manufacturing: Incentive to be provided at specified scale directly, both employee and employer, with respect to their EPFO contribution in the first 4 years of employment.

Scheme C – Support to employers: Government to reimburse up to `3,000 per month for 2 years towards EPFO contribution of employers, for each additional employee.

New centrally sponsored scheme for Skilling: 20 lakh youth to be skilled over a 5-year period and 1,000 Industrial Training Institutes to be upgraded in hub and spoke arrangements.

New Scheme for Internship in 500 Top Companies  to 1 crore youth in 5 years.

Nine Budget Priorities in pursuit of ‘Viksit Bharat’

Productivity and resilience in Agriculture

Employment & Skilling

Inclusive Human Resource Development and Social Justice

Manufacturing & Services

Urban Development 

Energy Security

Infrastructure

Innovation, Research & Development and

Next Generation Reforms

Priority 1: Productivity and resilience in Agriculture

Allocation of  1.52 lakh crore for agriculture and allied sectors.

New 109 high-yielding and climate-resilient varieties of 32 field and horticulture crops to be released for cultivation by farmers.

10,000 need-based bio-input resource centres to be established for natural farming.

Digital Public Infrastructure (DPI) for Agriculture to be implemented for coverage of farmers and their lands in 3 years.

Priority 2: Employment & Skilling

As part of the Prime Minister’s package, 3 schemes for ‘Employment Linked Incentive’ to be implemented – Scheme A – First Timers; Scheme B – Job Creation in manufacturing;  Scheme C – Support to employers.

To facilitate higher participation of women in the workforce;

Working women hostels and crèches to be established with industrial collaboration

Women-specific skilling programmes to be organized

Market access for women SHG enterprises to be promoted.

Skill Development: New centrally sponsored scheme for Skilling under Prime Minister’s Package for 20 lakh youth over a 5-year period.

Model Skill Loan Scheme to be revised to facilitate loans up to 7.5 lakh.

Financial support for loans upto `10 lakh for higher education in domestic institutions to be provided to youth who have not been eligible for any benefit under government schemes and policies.

Priority 3: Inclusive Human Resource Development and Social Justice

Purvodaya: Industrial node at Gaya to be developed along the Amritsar-Kolkata Industrial Corridor.

Power projects, including a new 2400 MW power plant at Pirpainti, to be taken up at a cost of  `21,400 crore.

Andhra Pradesh Reorganization Act: Special financial support through multilateral development agencies of `15,000 crore in the current financial year.

Industrial nodes at Kopparthy along Visakhapatnam-Chennai Industrial Corridor and at Orvakal along Hyderabad-Bengaluru Industrial Corridor.

Women-led development: Total allocation of more than `3 lakh crore for schemes benefitting women and girls.

Pradhan Mantri Janjatiya Unnat Gram Abhiyan: Socio-economic development of tribal families in tribal-majority villages and aspirational districts, covering 63,000 villages benefitting 5 crore tribal people.

100 branches of India Post Payment Bank to be set up in the NorthEast region.

Priority 4: Manufacturing & Services

Credit Guarantee Scheme for MSMEs in the Manufacturing Sector: A credit guarantee scheme without collateral or third-party guarantee in term loans to MSMEs for purchase of machinery and equipment.

Credit Support to MSMEs during Stress Period: New mechanism to facilitate continuation of bank credit to MSMEs during their stress period.

Mudra Loans: The limit of Mudra loans under ‘Tarun’ category to be enhanced to `20 lakh from `10 lakh for those who have successfully repaid previous loans.

E-Commerce Export Hubs: E-Commerce Export Hubs to be set up under public-private-partnership (PPP) mode for MSMEs and traditional artisans to sell their products in international markets.

Critical Mineral Mission: Critical Mineral Mission to be set up for domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets.

Digital Public Infrastructure (DPI) Applications: Development of DPI applications in the areas of credit, e-commerce, education, health, law and justice, logistics, MSME, services delivery, and urban governance.

Priority 5: Urban Development

Formulation of Transit Oriented Development plans and strategies to implement and finance 14 large cities above 30 lakh population.

Street Markets: New scheme to support the development of 100 weekly ‘haats’ or street food hubs every year for the next 5 years in select cities.

Priority 6: Energy Security

Government to partner with the private sector for R&D of Bharat Small Modular Reactor and newer technologies for nuclear energy, and to set up Bharat Small Reactors.

Advanced Ultra Super Critical Thermal Power Plants: Joint venture proposed between NTPC and BHEL to set up a full scale 800 MW commercial plant using Advanced Ultra SuperCritical (AUSC) technology.

Priority 7: Infrastructure

Infrastructure investment by Central Government: `11,11,111 crore (3.4 % of GDP) to be provided for capital expenditure.

Infrastructure investment by state governments: Provision of `1.5 lakh crore for long-term interest free loans to support states in infrastructure investment.

Tourism: Comprehensive development of Vishnupad Temple Corridor, Mahabodhi Temple Corridor and Rajgir.

Priority 8: Innovation, Research & Development

Anusandhan National Research Fund for basic research and prototype development to be operationalised.

Financing pool of  `1 lakh crore for spurring private sector-driven research and innovation at commercial scale.

Space Economy:  Venture capital fund of  `1,000 crore to be set up for expanding the space economy by 5 times in the next 10 years.

Priority 9: Next Generation Reforms

Rural Land Related Actions: Unique Land Parcel Identification Number (ULPIN) or Bhu-Aadhaar for all lands, Digitization of cadastral maps etc.

NPS Vatsalya: NPS-Vatsalya as a plan for contribution by parents and guardians for minors.

Changes in Personal Income Tax under new tax regime.