In News:

In a landmark decision during its February 2025 meeting, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) reduced the repo rate by 25 basis points, from 6.5% to 6.25%, marking the first rate cut in five years (since May 2020). This move follows the Union Government’s recent cut in personal income tax, aimed at boosting consumption.

What is the Monetary Policy Committee (MPC)?

The MPC is a six-member statutory body responsible for setting India’s monetary policy. Its primary objective is price stability while ensuring economic growth. It meets bi-monthly to assess economic indicators and modify key policy rates like the repo rate, which influences overall borrowing and lending costs in the economy.

Key Highlights from the MPC Decision:

Repo Rate Cut:

• Reduced to 6.25% from 6.5%.
• Objective: Stimulate credit growth, investment, and consumer demand.
• Expected Impact: Lower EMIs for borrowers, reduced interest rates on EBLR and MCLR-linked loans.

GDP Growth Outlook (FY26):

• RBI projects 6.7% GDP growth for FY26.
• This is slightly higher than the FY25 estimate of 6.4%, and in line with the Economic Survey’s projection of 6.3–6.8%.
• Growth recovery is attributed to calibrated fiscal consolidation and stable private consumption.

Inflation Projections (CPI-based):

• FY26 Inflation Estimate: 4.2%
  • Q1: 4.5%
  • Q2: 4.0%
  • Q3: 3.8%
  • Q4: 4.2%
• CPI inflation had already dropped to 5.22% in December 2024, aided by easing food prices.
• RBI emphasized continued transmission of past policy measures and food price moderation as drivers of disinflation.

Broader Monetary Policy Context

• RBI will maintain a “neutral” policy stance to remain flexible amid evolving macroeconomic conditions.
• RBI Governor Sanjay Malhotra stressed that the inflation-targeting framework has helped stabilize prices, especially post-pandemic.
• The policy space was created by the simultaneous drop in inflation and moderate growth, allowing support for the economy without derailing price stability.

Cybersecurity & Digital Measures

• Additional Factor Authentication (AFA) introduced for international digital payments.
• Launch of exclusive domains:
  • "bank.in" for Indian banks
  • "fin.in" for the wider financial sector

These aim to bolster digital transaction security amid rising cyber fraud.

Forex & External Sector Outlook

• RBI reiterated that it does not target exchange rate levels, intervening only to curb excessive volatility.
• Ongoing global challenges include:
  • Strengthening of the US dollar
  • Higher bond yields
  • Geopolitical tensions
  • Threat of trade wars
• These have led to capital outflows, currency depreciation, and increased financial market volatility.

Conclusion

The RBI’s rate cut signals a strategic shift towards supporting economic growth amid global uncertainties. With a moderate inflation outlook and improving macroeconomic indicators, the decision is expected to boost domestic demand and investment, while reinforcing RBI’s commitment to price and financial stability.

In News:

As artificial intelligence (AI) reshapes global economic, strategic, and technological landscapes, the question of whether India should build its own sovereign foundational AI model has gained prominence. Sovereign AI models—developed, trained, and deployed using domestic infrastructure, datasets, and expertise—are now seen as strategic assets, with countries like the US and China already establishing their own. India, however, remains dependent on foreign AI giants such as OpenAI, Google DeepMind, and Meta.

Why India Needs a Sovereign AI Model

1. Data Sovereignty and Security: India generates one of the world’s largest data pools, including sensitive data from healthcare, finance, and governance. Using foreign-built AI models risks privacy breaches and potential misuse. A homegrown model would ensure control over data and ethical AI deployment.

2. Reducing Foreign Dependence: Sovereign AI is crucial for applications in defense, cybersecurity, and governance, where reliance on foreign technology may undermine strategic autonomy. Sanctions or export controls could otherwise disrupt access to essential technologies like GPUs or software updates.

3. Cultural and Linguistic Alignment: Current global AI models are largely English-centric. A sovereign model trained on Indian languages and datasets would bridge the digital divide and make AI more inclusive. Projects like AI4Bharat’s IndicTrans2 and Sarvam AI’s Sarvam-1, a multilingual model built with Nvidia, exemplify this direction.

4. National Security and Innovation: Sovereign AI is essential in military intelligence, predictive security, and surveillance. It also fosters an innovation ecosystem, generating high-skilled jobs and encouraging academic-industry collaboration.

Challenges in Building Foundational AI Models

1. Infrastructure Gaps: India lacks cutting-edge chip manufacturing capabilities. With no agreements with firms like TSMC, India relies on imports of GPUs and processors, unlike countries developing supercomputers (e.g., Denmark’s Gefion, Japan’s AI Grid).

2. High Development Costs: Training a large AI model can cost millions. DeepSeek V3, for instance, cost $5.6 million for a single run, while India’s annual AI R&D budget remains modest compared to Big Tech’s $80 billion.

3. Fragmented Resources: Subsidized GPUs are spread thin across institutions, diluting their impact. Meta’s Llama 4, for example, used large dedicated clusters—unfeasible under current Indian frameworks.

4. Public R&D Inefficiencies: Bureaucratic red tape discourages risk-taking needed in AI research. Unlike flexible spending in firms like OpenAI, Indian R&D lacks autonomy and long-term funding.

Policy Recommendations and Way Forward

• Invest in IndiaAI Mission: Develop a national AI infrastructure with over 10,000 GPUs, secure cloud systems, and supercomputing clusters to train and deploy large-scale models.
• Build DPI for AI Builders: Create datasets, APIs, and platforms to support data annotation, fine-tuning, and delivery in Indian contexts.
• Adopt a Phased Approach: Focus on sovereign models in sensitive sectors (defense, healthcare) while using global open models for non-critical applications.
• Promote Public-Private Collaboration: Forge partnerships with companies like Nvidia or OpenAI for technology transfer and joint ventures.
• Encourage Innovation Under Constraints: India must emulate models like Alibaba or DeepSeek, which succeeded with limited resources and targeted innovations.

Conclusion

Building a sovereign foundational AI model is not merely a technological ambition but a strategic necessity. With coordinated efforts between government, industry, and academia, India can achieve AI self-reliance—ensuring data sovereignty, inclusive growth, and a strong global presence in the AI-driven future.

In News:

In the Union Budget 2025–26, the Finance Minister proposed a significant policy shift by increasing the investment and turnover limits for MSME classification by 2.5 and 2 times respectively. This move is expected to enhance the growth prospects and scalability of India’s micro, small, and medium enterprises (MSMEs).

Economic Significance:

The MSME sector forms the backbone of the Indian economy, contributing 30% to the GDP and nearly 45% to manufacturing output. With over 1 crore registered units employing 7.5 crore people, it is the largest source of non-agricultural employment in the country. It plays a pivotal role in inclusive development, offering livelihood opportunities to the rural, urban poor, and semi-skilled workforce.

The formalization drive has been significant, with over 4 crore MSMEs registered on the Udyam portal by March 2024. Key schemes like PM Vishwakarma Yojana (?13,000 crore) and Mudra Yojana (?5.41 lakh crore disbursed in FY24) have supported artisans and first-time entrepreneurs, particularly women and marginalized communities.

Boost to Trade and Innovation:

MSMEs account for 45.73% of India’s total exports in sectors like textiles, leather, and engineering goods. Their integration into Global Value Chains (GVCs) is being facilitated by reforms in trade logistics, the GeM portal, and PLI schemes. Digital transformation is advancing rapidly, with 72% MSME transactions now digital, supported by platforms like ONDC and the RBI’s Public Tech Platform.

Women and Rural Empowerment:

Women entrepreneurs constitute 20.5% of Udyam registrations, and 68% of Mudra loans benefit them. MSMEs are also catalyzing rural industrialization by promoting agro-processing and curbing rural-urban migration through schemes like the SRI Fund and Animal Husbandry Credit Guarantee Scheme.

Key Challenges:

Despite their potential, MSMEs face critical bottlenecks:

• Credit access remains limited; only 20% of units access formal finance. Payment delays amounting to ?10.7 lakh crore (2022) hinder working capital.
• Regulatory burdens, inadequate infrastructure, and poor digital skills further constrain productivity.
• Low awareness of schemes and limited integration into global ESG standards affect competitiveness.
• The sector remains largely informal, weakening labor rights and policy outreach.

Recent Reforms & Recommendations:

To unlock MSMEs’ potential, a multi-pronged reform strategy is underway:

• Credit Measures: Promotion of cash-flow based lending, expansion of CGTMSE, Vyapar Credit Cards, and enhanced TReDS-GeM integration.
• Ease of Doing Business: Single-window clearances, self-certification, and stronger MSME facilitation councils.
• Digital & Skill Upgradation: Launch of Digital MSME 2.0, apprenticeship hubs, and innovation incubators.
• Market Access: Expansion of cluster-based models, branding support, and ONDC-GeM integration.
• Green MSMEs: ESG-linked credit, circular economy incentives, and green certifications.
• Formalization Push: Linking benefits to Udyam registration, backed by SIDBI-led equity support.

Conclusion:
MSMEs are central to India’s vision of a $5 trillion economy and Viksit Bharat by 2047. With increased investment thresholds, focused policy interventions, and digital empowerment, India can build a resilient, inclusive, and globally competitive MSME ecosystem.

In News:

The Union Budget 2025–26 marks a pivotal step towards strengthening mental health infrastructure in India. An allocation of ?99,858.56 crore to the Ministry of Health and Family Welfare (MoHFW) highlights the government’s recognition of health, including mental health, as a key pillar of national development.

Key Budgetary Allocations for Mental Health (2025–26)

• National Tele Mental Health Programme (NTMHP): Allocated ?79.6 crore to expand access to mental health services across the country.
• National Institute of Mental Health and Neurosciences (NIMHANS): Receives support to enhance research and treatment capacity.
• District Mental Health Programme: Implemented in 767 districts, providing training and outpatient services.
• Ayushman Arogya Mandirs: Over 1.73 lakh SHCs and PHCs are being upgraded to offer mental health services under comprehensive primary care.

Mental Health in India: Status and Burden

• As per WHO, mental health is the ability to realize one’s potential, cope with stress, work productively, and contribute to the community.
• India's Burden:
  • 15% of adult Indians experience mental disorders (National Survey).
  • Mental morbidity is highest in urban metros (13.5%), followed by rural areas (6.9%) and non-metro urban zones (4.3%).
• Global Burden (2019): Around 970 million people globally suffered from mental disorders, notably anxiety and depression.
• Treatment Gap: Estimated at 70% to 92%, particularly acute among blue-collar workers.
• Economic Impact: Mental health disorders result in significant productivity losses, often surpassing the direct cost of care.

Challenges in Mental Health Care in India

1. Budgetary and Policy Limitations

• The National Mental Health Programme (NMHP) faces funding ambiguities, often subsumed under broader health allocations.
• Limited enforcement of Mental Healthcare Act, 2017, despite mental health being a statutory right. Over 11 crore Indians suffer from mental disorders, yet 80% do not seek help.

2. Exclusion in Labour Laws

• The Occupational Safety, Health and Working Conditions Code (OSHWC), 2020, primarily covers physical safety. Mental health is not explicitly recognized.
• Phrases like “as far as reasonably practicable” limit employers’ obligations.
• The Code on Social Security (CSC), 2020, does not list mental strain as an occupational disease, making compensation for stress-induced conditions difficult.

3. Neglect of Blue-Collar Mental Health

• Mental health risks—long hours, poor conditions, job insecurity—affect blue-collar workers disproportionately.
• Workplace mental health programs (e.g., Infosys HALE, TCS EAP) are mainly for white-collar employees.
• Tele-MANAS, a government mental health helpline, requires voluntary calls. Low awareness and stigma among blue-collar workers dilute its effectiveness.

Policy and Structural Reforms Needed

• Legislative Frameworks:
  • Amend OSHWC and CSC to explicitly include mental well-being and stress-related injuries as compensable conditions.
  • Update the Third Schedule of the CSC to include mental health conditions, reducing dependence on case law.
• Awareness and Education:
  • Launch mandatory employer-led awareness campaigns on programs like Tele-MANAS and Manodarpan.
  • Community-based programs for early detection, support, and referral of mental health disorders.
• Inclusive and Tripartite Approach:
  • Integrate employers, blue-collar workers, and mental health professionals into a unified framework under the new Labour Codes.
  • Incorporate mental health indicators into occupational safety audits.
• Institutional Strengthening:
  • Increase capacity-building efforts by training frontline health workers, general physicians, and non-specialist cadres in mental healthcare.
  • Establish Centres of Excellence for mental health training and research.

Global and National Initiatives

• WHO Comprehensive Mental Health Action Plan (2013–2030): Focuses on integrating mental health into primary care and strengthening community-level interventions.
• Manodarpan Initiative: Aims at student mental health support under Atmanirbhar Bharat.
• Kiran Helpline: Government-run suicide prevention helpline for crisis support.
• Tele-MANAS Cells: 53 centers operational in 36 States/UTs, enhancing digital mental health care access.

Conclusion and Way Forward

The 2025–26 Budget reflects a progressive approach to mental health, particularly through investments in tele-counselling, primary care, and institutional support. However, significant gaps remain in policy, especially in addressing the mental health needs of blue-collar workers.

To transform “Satyamev Jayate” to “Shramev Jayate,” India must:

• Institutionalize rights-based mental health protection in labour legislation.
• Close the treatment gap through universal access and community-level awareness.
• Recognize mental health as integral to human capital and national productivity.

Only a comprehensive, inclusive, and rights-oriented approach will ensure mental health equity in India’s development journey.

In News:

A recent scientific study has revealed that the eastern Himalayas in Arunachal Pradesh have lost 110 glaciers between 1988 and 2020, highlighting a critical impact of climate change in the region.

Key Findings of the Study

• Glacier Loss: The number of glaciers declined from 756 to 646 over 32 years.
• Glacial Area Reduction: Total glacial cover reduced from 585.23 sq. km to 309.85 sq. km, indicating a loss of over 47%.
• Retreat Rate: Glaciers retreated at a rate of 16.94 sq. km per year.
• Elevation: Most glaciers were located at 4,500–4,800 metres above mean sea level on north-facing slopes of 15°–35°.
• Remote Sensing & GIS: The study used advanced tools along with the Randolph Glacier Inventory to track and analyze glacier boundaries.
• Glacial Lakes: Retreat has led to the formation of numerous glacial lakes, increasing the risk of Glacial Lake Outburst Floods (GLOFs), as seen during the 2023 Sikkim disaster which killed at least 55 people and damaged a 1,200 MW Teesta hydropower project.

Causes of Glacial Retreat

• Climate Change:
  • The eastern Himalayas are warming faster than the global average.
  • Temperature rise: Between 0.1°C and 0.8°C per decade.
  • Over the last century, the region has experienced an increase of ~1.6°C.
  • By 2100, projections indicate a 5–6°C temperature rise and 20–30% increase in precipitation.
• Black Carbon Deposition: Emissions from human activities (e.g., vehicles, biomass burning) deposit soot on ice, reducing reflectivity (albedo) and increasing heat absorption.
• Erratic Snowfall Patterns: Changes in precipitation reduce snow accumulation, weakening glacier sustenance.
• Geological Factors: Local topography, altitude, and rock composition also influence glacier stability and response to warming.

Implications of Glacial Retreat

• Water Security
  • The Himalayas are known as the ‘Third Pole’, storing the largest volume of ice outside the polar regions.
  • They are vital for sustaining over 1.3 billion people in South Asia by feeding major rivers (Indus, Ganga, Brahmaputra).
  • Glacial retreat threatens long-term freshwater availability, agriculture, and urban water supplies.
• Hydropower and Infrastructure
  • Changing river flow patterns due to glacial melt affect hydropower generation and irrigation systems.
  • Risk of infrastructure damage from GLOFs is rising.
• Biodiversity and Agriculture: Altered ecosystems and climatic stress impact Himalayan biodiversity and disrupt traditional farming practices.

Himalayan Glaciers and River Systems

• Indus Basin: Originates from Lake Mansarovar; flows through Ladakh and Pakistan.
• Ganga Basin: Emerges from Gangotri Glacier in Uttarakhand; forms the Ganga after merging with Alaknanda.
• Brahmaputra Basin: Rises near Kailash range in Tibet; flows through Arunachal Pradesh, Assam, and Bangladesh.

Major Glaciers in India

Glacier                  Region              Importance

Siachen                Ladakh               Longest glacier in India (76 km)

Gangotri             Uttarakhand        Source of the Ganga

Yamunotri          Uttarakhand        Origin of the Yamuna

Zemu                  Sikkim                 Largest glacier in Eastern Himalayas

Rathong             Sikkim                 Feeds Teesta River

Milam                Uttarakhand         Source of Goriganga River

Pindari               Uttarakhand         Glacial trekking route

Glacial Lake Outburst Floods (GLOFs)

• GLOFs are sudden discharges of water from glacial lakes, often caused by moraine dam failures.
• These can trigger catastrophic downstream floods, threatening lives, infrastructure, and ecosystems.

Mitigation and Adaptation Strategies

• Climate Action: Drastic cuts in greenhouse gas emissions at national and global levels.
• Sustainable Water Management: Enhance glacier-fed river basin planning.
• Disaster Risk Reduction: GLOF early-warning systems, resilient infrastructure, and relocation policies.
• Community Participation: Local awareness, traditional knowledge integration, and eco-restoration efforts.
• International Cooperation: Transboundary initiatives under frameworks like the HKH (Hindu Kush Himalaya) Monitoring Network and UNFCCC.

In News:

In January 2025, the Reserve Bank of India (RBI) announced its largest monetary easing since the COVID-19 pandemic, unveiling a multi-pronged plan to inject over ?1.5 lakh crore into the money markets.

This move aims to address liquidity shortfalls caused by RBI’s forex interventions and signal possible easing in the upcoming monetary policy review.

Context: Why Liquidity Infusion Was Needed

• Forex Intervention: RBI sold over $50 billion from its foreign exchange reserves to stabilise the rupee, in response to large-scale equity sell-offs by Foreign Institutional Investors (FIIs).
• Impact: These interventions reduced rupee liquidity, tightened short-term interest rates, and raised borrowing costs.
• Liquidity Deficit: Market estimates pegged the shortfall at ?3 lakh crore.

Key Liquidity Measures Announced by RBI

• Government Bond Buy-Back: ?60,000 Crore
  • Conducted in three tranches on January 30, February 13, and February 20, 2025.
  • Objective: To inject liquidity into the banking system by repurchasing government securities before maturity.
• 56-Day Variable Rate Repo Auction: ?50,000 Crore
  • Scheduled for February 7, 2025.
  • Enables banks to borrow short-term funds by offering government securities as collateral at a market-determined interest rate.
• USD/INR Buy-Sell Swap Auction: $5 Billion
  • A six-month forex swap in which RBI borrows dollars in exchange for rupees and agrees to buy them back later.
  • Helps stabilize the rupee without draining rupee liquidity.

Significance of the Measures

• Monetary Transmission: With adequate liquidity, any potential repo rate cut will be more effectively transmitted through lower lending rates, boosting investment and consumption.
• Financial Stability: By calming money markets and moderating borrowing costs, RBI strengthens confidence amid global uncertainties.
• Rupee Management without Liquidity Squeeze: The forex swap allows rupee liquidity to remain intact while addressing exchange rate volatility.

Governor’s Focus Areas:

In a meeting with private sector bank heads ahead of the February monetary policy review, RBI Governor Sanjay Malhotra highlighted the following priorities:

• Financial Stability & Inclusion
• Enhanced Digital Literacy and Credit Access
• Improved Customer Service & Grievance Redressal
• Cybersecurity & IT Risk Management
• Monitoring of Third-party Service Providers
• Countering Rising Digital Fraud

In News:

Union Minister for Finance and Corporate Affairs Smt Nirmala Sitharaman presented Union Budget 2025-26 in the Parliament.

Key Highlights:

Fiscal Policy and Macroeconomic Indicators

• Total Expenditure: ?50.65 lakh crore
• Total Receipts (excl. borrowings): ?34.96 lakh crore
• Fiscal Deficit: 4.4% of GDP
• Gross Market Borrowing: ?14.82 lakh crore
• Capital Expenditure: ?11.21 lakh crore (3.1% of GDP)

Agriculture and Allied Sectors

• Prime Minister Dhan-Dhaanya Krishi Yojana: 100 low-productivity districts targeted; 1.7 crore farmers to benefit.
• Mission for Aatmanirbharta in Pulses: 6-year mission on Tur, Urad, and Masoor; NAFED/NCCF to procure for 4 years.
• Vegetables & Fruits Program: Comprehensive initiative for production, pricing, processing, and logistics.
• Makhana Board: New board in Bihar for production, value addition, and export.
• National Mission on High Yielding Seeds: To commercialize over 100 high-yielding seed varieties.
• Cotton Mission: 5-year initiative to boost productivity and Extra Long Staple (ELS) varieties.
• Fisheries: New EEZ and High Seas Framework focusing on Islands.
• Credit through KCC: Loan limit increased from ?3 lakh to ?5 lakh.
• Urea Plant in Assam: New plant at Namrup (12.7 lakh MT annual capacity).

MSMEs and Startups

• MSME Classification: Investment and turnover limits doubled (2.5x & 2x).
• Credit Cards for Micro Units: ?5 lakh limit; 10 lakh cards in year one.
• ?10,000 Cr Fund of Funds for Startups
• First-Time Entrepreneurs Scheme: Loans up to ?2 crore for 5 lakh women, SC/ST entrepreneurs.
• Footwear & Leather Sector Scheme: Aims ?4 lakh crore turnover and 22 lakh jobs.
• Toy Manufacturing Support: High-quality, eco-friendly toy ecosystem.
• Food Tech Institute: To be established in Bihar.
• National Manufacturing Mission: Across small, medium, and large units.

Infrastructure and Investment

• PPP Pipeline: 3-year project pipeline to be announced.
• ?1.5 lakh crore 50-year interest-free loans to states for CapEx.
• Urban Challenge Fund: ?1 lakh crore outlay; ?10,000 crore for FY26.
• Asset Monetization Plan 2025–30: Capital recycling worth ?10 lakh crore.
• Jal Jeevan Mission: Extended to 2028 with enhanced outlay.
• UDAN 2.0: Targeting 120 new destinations, 4 crore passengers in 10 years.
• Maritime Development Fund: ?25,000 crore; up to 49% govt contribution.
• Nuclear Energy Mission: ?20,000 crore outlay for Small Modular Reactors (SMRs).
• Greenfield Airports: Announced for Bihar.

Welfare and Social Security

• Saksham Anganwadi & Poshan 2.0: Enhanced nutritional cost norms.
• Medical Education: 10,000 new MBBS seats; 75,000 in 5 years.
• Day Care Cancer Centres: In all district hospitals; 200 in FY26.
• PM SVANidhi Revamp: ?30,000 UPI-linked credit cards.
• Online Platform Workers: E-Shram ID, PMJAY coverage.
• Urban Livelihood Scheme: For sustainable urban worker incomes.

Education and Skilling

• 50,000 Atal Tinkering Labs: Govt schools in 5 years.
• Bharatiya Bhasha Pustak Scheme: Digital books in Indian languages.
• National Skilling Centres of Excellence: With global partners.
• AI in Education: Centre of Excellence with ?500 crore outlay.
• IIT Expansion: Additional capacity for 6,500 students.

Innovation and R&D

• ?20,000 crore Innovation Fund (private-led R&D).
• Deep Tech Fund of Funds: For next-gen startups.
• PM Research Fellowships: 10,000 fellowships with higher support.
• 2nd Gene Bank: 10 lakh germplasm lines for food security.
• National Geospatial Mission
• Gyan Bharatam Mission: Conservation of 1 crore+ manuscripts.

Exports and Trade

• Export Promotion Mission: With ministerial and sectoral targets.
• BharatTradeNet (BTN): Unified platform for trade finance and docs.
• GCC Framework: Promote Global Capability Centres in Tier-2 cities.

Financial Sector Reforms

• FDI in Insurance: Raised from 74% to 100% for domestic investment.
• NaBFID Credit Enhancement Facility: For infra bonds.
• Grameen Credit Score: For SHGs and rural borrowers.
• Investment Friendliness Index: To rank states in 2025.
• Jan Vishwas Bill 2.0: Decriminalization of 100+ provisions.
• Tonnage Tax Extended: To inland vessels.
• Startups: Tax benefit eligibility extended to incorporation by 1 April 2030.

Taxation Reforms

Direct Taxes

• No Personal Tax: Income up to ?12 lakh (?12.75 lakh for salaried) under new regime.
• Revised Tax Slabs (New Regime):
  • 0–4L: Nil | 4–8L: 5% | 8–12L: 10%
  • 12–16L: 15% | 16–20L: 20% | 20–24L: 25% | 24L+: 30%
• Standard Deduction: ?75,000
• Compliance Relief: Trusts registration extended to 10 years.
• TDS/TCS Rationalization: Fewer thresholds, higher limits for senior citizens and rent.
• Tax Certainty: Safe harbour rules, startup extensions, presumptive taxation for electronics.

Indirect Taxes

• Tariff Rationalization: Only 8 remaining tariff rates.
• Customs Relief: ?2,600 crore forgone, key lifeline drugs exempted.
• Support to Domestic Manufacturing:
  • EV/mobile battery manufacturing: 63 capital goods exempted
  • Ships: BCD exemption extended for 10 years
  • Marine, leather, textiles: Several BCD reductions/exemptions
• Voluntary Compliance Scheme: Without penalty for post-clearance corrections.

In News:

Geo-economic fragmentation refers to a policy-driven reversal of global economic integration, increasingly shaped by geopolitical alignments. It signifies a shift from globalization to strategically-driven economic blocs, where nations prioritize political alliances over market efficiency.

Key Characteristics

• Emergence of friend-shoring, re-shoring, and economic nationalism.
• Fragmentation of trade, capital flows, FDI, and migration.
• Retreat from multilateralism, with institutions like the WTO and IMF under stress.
• Strategic use of environmental, labor, and social standards by developed countries to impose uniform regulations, causing tensions.

Globalization to Fragmentation: Statistical Evidence

• Trade-to-GDP Ratio: Increased from 39% (1980) to 60% (2012); now threatened by rising protectionism.
• FDI Inflows: Rose from $54 billion (1980) to $1.5 trillion (2019); now increasingly concentrated among like-minded countries.
• Global Economy: Expanded from $11 trillion (1980) to over $100 trillion (2022).
• Trade Restrictions (WTO Report):
  • 2023–24: 169 new measures covering $887.7 billion in trade.
  • 2022–23: Covered $337.1 billion — shows a dramatic rise in protectionism.
• Over 24,000 new trade and investment restrictions imposed globally between 2020–24.

IMF on Costs of GEF

• Trade fragmentation could cause 0.2% to 7% GDP losses, especially for developing countries.
• Current fragmentation is more costly than Cold War era, as trade now constitutes 45% of global GDP (vs. 16% then).
• Less trade = less knowledge diffusion, innovation, and productivity gains.

Strategic Impacts: Global Supply Chains

China’s Dominance

• 80% of global battery manufacturing.
• 80% of solar panel components.
• 60% of wind turbine capacity.
• 70% of global rare earth mineral processing.
• Dominates EV supply chains, critical mineral refining, and clean energy manufacturing.

FDI Realignment

• FDI is increasingly relocating from China to India, Vietnam, Mexico, etc.
• Friend-shoring reduces capital access for emerging markets.
• Emerging economies face reduced FDI, slower growth, and technological decoupling.

India’s Strategic Response: Deregulation and Internal Growth

Policy Recommendations (Economic Survey 2024–25)

• Amplify deregulation to lower compliance costs and boost entrepreneurship.
• Empower SMEs to withstand global shocks and strengthen domestic manufacturing.
• Encourage inter-state learning for best practices in economic governance.
• Redouble efforts to boost exports and foreign investment amidst global volatility.

Rationale

• With the decline of global cooperation, internal engines of growth become crucial.
• Deregulation can unleash innovation, enhance productivity, and ensure resilient growth.
• India's response must be strategic, systematic, and state-inclusive to capitalize on this global transition.

In News:

• Released on 31st January 2025, a day before the Union Budget.
• Prepared by the Department of Economic Affairs, Ministry of Finance.
• Provides a comprehensive review of India’s macroeconomic trends, sectoral developments, and key policy challenges.
• Real GDP growth estimated at 6.4% in FY25 (close to decadal average); projected between 6.3–6.8% in FY26.
• Reflects India's resilience amidst global slowdown, supply chain disruptions, and geopolitical uncertainties.

Sector-wise Performance

Agriculture:

• Expected growth: 3.8% in FY25.
• Record Kharif foodgrain production: 1647.05 LMT (+5.7% YoY).
• Growth driven by horticulture, livestock, and fisheries.
• Supported by above-normal monsoons and robust reservoir levels.

Industry:

• Estimated growth: 6.2% in FY25.
• Construction, utilities, and mining contribute significantly.
• Challenges: Sluggish export demand, climate disruptions, and festival timing variations.
• Manufacturing PMI remains in the expansionary zone.

Services:

• Robust growth: 7.2% in FY25.
• Services exports up by 12.8% (April–Nov FY25) vs 5.7% in FY24.
• Growth led by finance, real estate, public administration, and professional services.

Inflation and Price Stability

• Retail inflation eased to 4.9% (Apr–Dec 2024) from 5.4% (FY24).
• Food inflation remains high at 8.4%, driven by pulses and vegetables.
• CPI expected to align with RBI's 4% target by FY26.

Investment and Infrastructure

• Capital Expenditure grew 8.2% YoY (Jul–Nov 2024); sustained increase since FY21.
• Infrastructure momentum:
  • 2031 km railways commissioned (Apr–Nov 2024).
  • 17 Vande Bharat trains introduced.
  • Port efficiency improved; container turnaround time reduced from 48.1 to 30.4 hours.
• Renewable energy capacity rose by 15.8% YoY (Dec 2024).

External Sector and Trade

• Overall exports grew by 6% (Apr–Dec 2024); merchandise exports up 1.6%.
• Services exports surged; India now 7th largest globally.
• FDI inflows: $55.6 billion (Apr–Nov FY25), +17.9% YoY.
• Forex reserves at $640.3 billion (Dec 2024), covering 10.9 months of imports and 90% of external debt.
• CAD contained at 1.2% of GDP in Q2 FY25.
• Strong remittance inflows support BOP stability.

Fiscal Health

• Gross Tax Revenue rose 10.7% YoY (Apr–Nov 2024).
• Stable deficit indicators allowed for developmental expenditure.
• State revenue expenditure grew 12%, with subsidies increasing by 25.7%.

Banking, Credit, and Financial Markets

• Gross NPAs dropped to 2.6% (lowest in 12 years).
• CRAR of scheduled banks at 16.7% (Sept 2024), well above regulatory norms.
• Stock market cap to GDP ratio: 136%, higher than China (65%) and Brazil (37%).
• Credit-GDP gap reduced to -0.3% in Q1 FY25 (from -10.3% in Q1 FY23).

Employment and Labour Market

• Unemployment rate declined to 3.2% (2023-24) from 6.0% (2017-18).
• Labour Force Participation Rate (LFPR) and Worker-Population Ratio (WPR) improved.
• Emphasis on AI skill development to future-proof labour markets.

Health, Education & Social Sector

• Government health expenditure rose from 29% to 48% of total health spending (FY15–FY22).
• Out-of-pocket expenditure dropped from 62.6% to 39.4% in the same period.
• Education reforms aligned with NEP 2020 via programs like Samagra Shiksha, DIKSHA, PM SHRI, etc.
• Social services spending grew at 15% CAGR (FY21–FY25).
• Decline in Gini coefficient indicates improving consumption equality.

Policy Recommendations and Reform Agenda

• Deregulation as central theme to boost productivity and EoDB.
• Advocates Ease of Doing Business 2.0, led by states, targeting:
  • Simplification of compliance norms.
  • Risk-based regulation.
  • Reduction in tariffs and licensing hurdles.
• ?50,000 crore Self-Reliant India Fund launched for MSME equity support.
• Need for long-term infrastructure investment to achieve Viksit Bharat@2047.

Global Backdrop

• Global GDP grew by 3.3% in 2023, with an average 3.2% growth projected over next five years (IMF).
• Weak global manufacturing; services sector remains stronger.
• Risks: Geopolitical tensions, trade policy fragmentation, energy transition dependence on China.

Way Forward

• Balanced outlook for FY26 with upside from:
  • Strong rural demand.
  • Agricultural recovery.
  • Easing food inflation.
• Challenges include:
  • Geopolitical tensions.
  • Global trade and commodity price volatility.
  • Delay in private investment materialisation.

Context:

Sudan’s Darfur region is once again in global focus following a deadly drone attack on the last functional hospital in El-Fasher, killing at least 67 people and injuring dozens. The International Criminal Court (ICC) has called for urgent UN Security Council intervention as the humanitarian situation deteriorates.

Geographical and Historical Background

• Location: Western Sudan, bordering Chad, Libya, Central African Republic, and South Sudan.
• Area: Approximately 493,000 sq. km, nearly the size of France.
• Topography: Predominantly arid and semi-arid terrain, with desert in the north and savanna in the south. Key physical features include:
  • Jebel Marra Mountains: Volcanic highlands and key water source.
  • Wadi Howar: Seasonal river vital for agriculture.
  • Baggara Belt: Grazing zone, often contested.
• Historical Significance: Once an independent Islamic sultanate ruled by the Fur tribe, Darfur was annexed by Anglo-Egyptian Sudan in 1916. The name "Darfur" means "land of the Fur" in Arabic.

Ethnic Composition and Demographics

• Home to over 80 ethnic groups, including the Fur, Zaghawa, Beja, Nubians, and Arabs.
• Long-standing ethnic tensions exist between Arab nomadic groups and non-Arab farming communities, which have been a root cause of conflict.

Conflict Timeline and Key Actors

• Conflict Origins: Armed conflict began in 2003, led by rebel groups such as the Sudan Liberation Movement (SLM) and Justice and Equality Movement (JEM), demanding political autonomy and better representation.
• Government Response: The Sudanese government armed Janjaweed militias—now rebranded as the Rapid Support Forces (RSF)—who were accused of widespread atrocities, including genocide, mass killings, and rape.
• Recent Escalation:
  • In 2023, violence surged amid civil war between Sudan's national army and RSF.
  • RSF has seized much of Darfur and has besieged El-Fasher, capital of North Darfur, since May 2023.
  • A January 2025 drone attack destroyed the Saudi Hospital in El-Fasher, killing 67 people. The hospital was one of the last with surgical capacity in the region.

Humanitarian Impact

• Health Crisis:
  • 80% of healthcare facilities in Sudan are non-functional.
  • Attacks on medical infrastructure have been rampant; El-Fasher’s Saudi Hospital was hit multiple times by suspected RSF drones.
• Displacement and Starvation:
  • Over 12 million people displaced.
  • Tens of thousands killed.
  • Famine has already gripped camps like Zamzam, Abu Shouk, and Al-Salam, and is expected to spread to additional regions, including El-Fasher, by May 2025 (UN Assessment).

Global and Regional Implications

• The Darfur conflict has destabilized the region, affecting neighboring countries like Chad and the Central African Republic.
• ICC has issued warrants for several individuals including former President Omar al-Bashir, citing war crimes and crimes against humanity.
• The conflict highlights the intersection of climate stress, ethnic rivalries, political marginalization, and international accountability failures.

In News:

The Annual Status of Education Report (ASER) 2024, released by the NGO Pratham, provides an insightful assessment of schooling and foundational learning levels across rural India.

Conducted in 17,997 villages across 605 districts, the survey reached over 6.49 lakh children aged 3–16 and tested more than 5 lakh for reading and arithmetic.

About ASER:

• Type: Household-based, citizen-led survey
• Initiated: 2005 (Annual till 2014; biennial since 2016)
• Scope:
  • Tracks school enrollment (ages 3–16)
  • Assesses basic reading and arithmetic skills (ages 5–16)
  • Includes children in and out of school, across government, private, and informal institutions
  • 2024: Introduced digital literacy assessment for ages 14–16

Key Findings of ASER 2024:

1. Enrollment Trends

• Pre-primary (Ages 3–5):
  • Overall enrollment improved significantly.
  • 3-year-old enrollment rose from 68.1% in 2018 to 77.4% in 2024.
  • Anganwadis remain primary providers for 3–4-year-olds, while private preschools dominate among 5-year-olds.
• Elementary (Ages 6–14):
  • Overall enrollment slightly declined from 98.4% (2022) to 98.1% (2024).
  • Government school enrollment fell from 72.9% (2022) to 66.8% (2024).
  • Private school enrollment, steadily rising since 2006, is regaining ground post-pandemic.
• Adolescents (Ages 15–16):
  • Dropout rates fell from 13.1% in 2018 to 7.9% in 2024.
  • However, female dropout (8.1%) remains higher than male.

2. Learning Outcomes

• Reading Skills:
  • Std III: 23.4% in government schools could read Std II-level text (up from 16.3% in 2022).
  • Std V: 44.8% could read Class II text, nearly matching 2018 levels (44.2%).
  • Private schools yet to recover fully to pre-pandemic levels (59.3% in 2024 vs. 65.1% in 2018).
• Arithmetic Skills:
  • Std III: 33.7% could perform basic subtraction (up from 25.9% in 2022, exceeding 28.2% in 2018).
  • Std VIII: 45.8% could solve basic problems, showing consistent improvement.

Trend: Arithmetic recovery has outpaced reading, with government schools showing faster gains than private ones.

3. Digital Literacy (Ages 14–16)

• Access: Nearly 90% have access to smartphones.
• Ownership:
  • 36.2% of boys own smartphones vs. 26.9% of girls.
• Usage:
  • 82.2% use smartphones; only 57% for education, but 76% for social media.
• Safety Awareness:
  • 62% know how to block/report users, and 55.2% can make profiles private.

4. School Infrastructure & Observations

• Attendance:
  • Student attendance improved from 72.4% (2018) to 75.9% (2024).
  • Teacher attendance rose from 85.1% to 87.5% in the same period.
• Facilities:
  • Usable girls' toilets increased from 66.4% to 72%.
  • Drinking water availability rose from 74.8% to 77.7%.
  • Playground access remains stable (~66%).
• Learning Resources:
  • Use of non-textbook reading materials (e.g., stories, folk tales) rose from 36.9% to 51.3%.
• Foundational Literacy and Numeracy (FLN):
  • 80%+ of schools implemented FLN activities.
  • 75% had at least one FLN-trained teacher.

Significance of Elementary Education:

• Foundational for Learning: Builds core skills vital for academic progression.
• Social Development: Encourages interaction, empathy, teamwork, and communication.
• Emotional and Cognitive Growth: Stimulates curiosity, motivation, and self-confidence.
• Economic Multiplier: Strong early education contributes to long-term national productivity and innovation.

Persistent Challenges:

• Infrastructure Deficits:
  • Over 1.5 lakh schools lack functional electricity.
  • 67,000 schools lack toilets; only 33.2% have usable disabled-friendly toilets.
• Technology Divide: Only 43.5% of government schools have computers vs. 70.9% in private schools.
• Human Resource Gaps: Around 1 lakh schools function with only one teacher.
• Social Barriers:
  • Caste, class, rural-urban, and gender divides restrict equal educational access.
  • Language barriers affect non-Hindi/English speakers due to lack of regional textbooks.

Key Government Initiatives:

• National Education Policy (NEP) 2020
• PM SHRI Schools
• Sarva Shiksha Abhiyan
• Mid-Day Meal Scheme
• Beti Bachao Beti Padhao
• National Programme on Technology Enhanced Learning (NPTEL)
• PRAGYATA (Guidelines for digital education

Way Forward:

• Early Interventions: Focus on retention among disadvantaged groups.
• Inclusive Learning Models: Introduce flexible/part-time programs for working children.
• Supplementary Literacy: Target out-of-school and dropout children with bridge courses.
• Local Governance: Establish District School Boards for planning and accountability.
• Infrastructure Expansion: Ensure school access within 1 km in underserved regions.
• Parental Awareness: Launch community campaigns on education's long-term benefits.

What is the Union Budget?

The Union Budget, referred to as the Annual Financial Statement under Article 112 of the Constitution, outlines the government's estimated receipts and expenditure for a financial year. It serves as a crucial instrument for economic policy and governance.

The Budget Division of the Department of Economic Affairs under the Ministry of Finance is responsible for preparing the Union Budget.

Key Components of the Budget

1. Expenditure

Expenditure is classified on the basis of:

• Asset Creation and Liability Reduction:
  • Capital Expenditure: Increases assets or reduces liabilities (e.g., infrastructure, hospitals).
  • Revenue Expenditure: Does not create assets (e.g., salaries, subsidies, interest payments).
• Sectoral Impact:
  • General Services: Administrative functions, defence, interest payments.
  • Economic Services: Agriculture, transport, rural development, etc.
  • Social Services: Education, health, welfare.
  • Grants-in-Aid and Contributions.

Development Expenditure = Economic Services + Social Services, and it too can be capital or revenue in nature.

2. Receipts

Government receipts are classified into:

• Revenue Receipts: Do not create liabilities (e.g., tax and non-tax revenues).
• Non-Debt Capital Receipts: Do not involve liabilities (e.g., loan recovery, disinvestment).
• Debt-Creating Capital Receipts: Involve future liabilities (e.g., borrowings).

3. Deficit Indicators

• Fiscal Deficit = Total Expenditure - (Revenue Receipts + Non-Debt Capital Receipts)
• Primary Deficit = Fiscal Deficit - Interest Payments
• Revenue Deficit = Revenue Expenditure - Revenue Receipts

Fiscal deficit reflects the net borrowing requirement of the government.

Implications of the Budget on the Economy

1. Aggregate Demand

• Government Expenditure boosts aggregate demand.
• Tax and Non-Tax Revenue reduces disposable income, thereby contracting demand.

Policy Interpretations:

• Expansionary Fiscal Policy: Rise in expenditure-GDP ratio, increase in fiscal deficit.
• Contractionary Fiscal Policy: Increase in revenue-GDP ratio, reduction in fiscal deficit.

2. Income Distribution

• Revenue expenditure like food subsidies or MGNREGA supports lower-income groups.
• Corporate tax concessions benefit businesses. Both may increase deficits but differ in their distributional impact.

Fiscal Rules and Their Role

Fiscal rules define policy targets to maintain macroeconomic stability. They guide the government’s borrowing and spending behaviour.

Current Framework in India

India’s fiscal framework is guided by the N.K. Singh Committee Report, which recommended:

1. Stock Target: Maintain a specific Debt-to-GDP ratio.
2. Flow Target: Limit Fiscal Deficit-to-GDP ratio.
3. Composition Target: Maintain Revenue Deficit-to-GDP ratio.

Challenges in Implementation

• India’s tax rates are largely fixed and not adjusted frequently.
• To meet fiscal targets, the government primarily adjusts expenditure.
• This rigidity may constrain the ability to undertake expansionary fiscal policy, especially during economic downturns or rising unemployment.

Need for Re-examination

Given persistent issues like low growth and unemployment, current fiscal rules may hinder responsive policy action. A flexible and context-specific fiscal framework is essential for ensuring both macroeconomic stability and inclusive development.

Conclusion

The Union Budget is not merely a financial statement but a tool of economic management. A nuanced understanding of its formulation, components, and policy implications is vital for evaluating government priorities and their impact on the economy and society.

In News:

India's recent coal mining tragedy in Dima Hasao, Assam, underscores the nation's ongoing struggle with illegal and hazardous rat-hole mining, despite the National Green Tribunal's 2014 ban. This persistent exploitation, driven by industrial demand for coal, highlights the gap between environmental regulations and their enforcement, revealing a broader issue of balancing economic growth with environmental protection. As India strives to meet ambitious climate goals and sustain economic development, strengthening environmental regulations becomes critical.

Current Environmental Regulations in India

India has established a strong legal framework to protect its environment, grounded in the Indian Constitution. Articles 48A and 51A(g) direct the state and citizens to safeguard the environment, while Article 21 ensures the right to a clean and healthy environment, as interpreted by the Supreme Court. Key pollution control laws include:

• Water (Prevention and Control of Pollution) Act, 1974: Regulates water pollution and establishes pollution control boards at the national and state levels.
• Air (Prevention and Control of Pollution) Act, 1981: Controls air pollution from industrial emissions and vehicles.
• Environment (Protection) Act, 1986: Provides overarching powers for environmental protection.
• Plastic Waste Management Rules, 2016: Regulates plastic waste disposal and bans single-use plastics.

Other significant laws focus on forest and wildlife protection, including the Indian Forest Act, 1927, and the Wildlife (Protection) Act, 1972, along with the National Green Tribunal (NGT) Act, 2010, which ensures quick resolution of environmental disputes.

Key Issues with Enforcement

• Despite these stringent regulations, enforcement remains weak due to institutional limitations. Many industrial units fail to meet environmental standards, with regulatory bodies underfunded and understaffed. For example, pollution control boards in states like Uttar Pradesh and Bihar are plagued by staffing shortages, hampering their ability to monitor pollution effectively.
• Inadequate public participation and insufficient technology adoption further exacerbate these challenges.
• The Environmental Impact Assessment (EIA) process, often bypassed or diluted, leads to development projects being approved without full consideration of their environmental impacts, particularly in ecologically sensitive areas.

Weak Enforcement and Conflict between Development and Conservation

The tension between development and conservation is evident in policies that relax environmental regulations for economic growth. The Forest (Conservation) Amendment Act, 2023, prioritizes infrastructure projects over forest preservation, undermining ecological conservation. Moreover, the rapid urbanization of cities like Gurugram and Faridabad has led to large-scale deforestation and a reduction in natural conservation zones, worsening air and water quality.

Strengthening Environmental Regulations

To address these challenges, India needs to strengthen its environmental regulatory mechanisms:

• Enhance Enforcement: Adequate funding, skilled personnel, and advanced technology, such as AI-based pollution monitoring and drone surveillance, are essential to improve compliance.
• EIA Reforms: The EIA process should be made more transparent and participatory, ensuring that marginalized communities are included in decision-making.
• Promote Clean Energy: Expanding subsidies for renewable energy and encouraging industries to adopt green technologies will help reduce reliance on fossil fuels.
• Circular Economy: Encouraging industries to adopt recycling and upcycling practices can minimize waste and reduce resource extraction.
• Strengthen Local Involvement: Empowering local communities through decentralization under the Forest Rights Act will ensure more inclusive environmental governance.

Conclusion

India’s environmental challenges require a balanced approach, integrating sustainable development with robust environmental protections. Strengthening regulatory enforcement, reforming the EIA process, and fostering community-led conservation are essential to aligning economic growth with environmental sustainability. By addressing these gaps, India can better navigate its path toward achieving both its development goals and climate commitments.

In News:

The President of Indonesia, visited India as the Chief Guest for the 76th Republic Day in January 2025. This marked the 75th anniversary of diplomatic ties, reaffirming the commitment to deepen cooperation in economic, strategic, cultural, and defense domains.

Historical Foundations

• Ancient Civilizational Links: Trade and cultural exchanges date back to the 2nd century BCE, reflected in the influence of Hinduism and Buddhism on Indonesian society (e.g., Ramayana, Mahabharata, Borobudur, Prambanan).
• Modern Diplomatic Ties:
  • Formalized in 1950, with a Treaty of Friendship in 1951.
  • Collaborated in the 1955 Bandung Conference and co-founded the Non-Aligned Movement (1961).
  • Indonesia’s first President Sukarno was the Guest of Honour at India’s first Republic Day in 1950.
• Cold War and Beyond:
  • Relations cooled in the 1960s but revived in the 1980s.
  • The 1991 'Look East' Policy and the 2014 'Act East' Policy revitalized ties.
  • Strategic Partnership in 2005; upgraded to a Comprehensive Strategic Partnership in 2018.

Key Pillars of Cooperation

• Economic and Trade Relations
  • Trade Volume: Reached USD 38.8 billion (2022–23), targeted to increase to USD 50 billion by 2025.
  • Key Imports: India imports coal, palm oil, and nickel.
  • Investment: Indian investments in Indonesia total USD 1.56 billion in infrastructure, textiles, and energy.
• New Developments:
  • MoU on Local Currency Settlement Systems to reduce dependency on USD.
  • Focus on resolving trade barriers via forums like WGTI and BMTF.
  • Cooperation in critical minerals like nickel and bauxite.
  • BPCL to invest USD 121 million in the Nunukan gas block.
• Military Exercises: Garuda Shakti (Army), Samudra Shakti (Navy), and participation in Milan, Komodo, Super Garuda Shield, etc.
• Key Agreements:
  • 2018 Defense Cooperation Agreement.
  • White Shipping Information Exchange (WSIE).
  • Proposal for Bilateral Maritime Dialogue and Cyber Security Dialogue.
  • Joint vision on maritime cooperation under SAGAR (Security and Growth for All in the Region).
  • BrahMos Deal: Talks underway for Indonesia’s acquisition of BrahMos missiles (~USD 450 million).
• Cultural Diplomacy: Shared heritage of Hindu-Buddhist traditions; India assisting in restoring Prambanan temple.
• Tourism & Connectivity: Direct flights since 2023; India is the second-largest source of tourists to Bali.
• New Initiatives:
  • Cultural Exchange Programme (2025–2028).
  • India reaffirmed the Kashi Cultural Pathway for heritage restoration and repatriation of artifacts.
• Science, Technology, and Space
  • ISRO supports Indonesia’s satellite ambitions; agreement on Biak Tracking Station.
  • Renewed MoU on STEM cooperation.
  • Areas of collaboration: Quantum tech, high-performance computing, and digital public infrastructure.
• Energy and Health Security
  • Collaboration on biofuels under the Global Biofuels Alliance.
  • Joint initiatives on mid-day meals and public distribution systems.
  • MoUs on digital health, capacity building, and traditional medicine.

Multilateral and Regional Cooperation

• ASEAN & Indo-Pacific: Commitment to ASEAN centrality and cooperation through IPOI, India-Indonesia-Australia Trilateral, and ASEAN-India outlook.
• Global Platforms: Collaboration in BRICS, G20, IORA, and advocacy for the Global South.
• Climate & Disaster Resilience:
  • Joint efforts under CDRI.
  • Indonesia invited to the International Solar Alliance and Big Cat Alliance.

Key Challenges

• Trade Imbalance: Heavy reliance on limited imports (coal, palm oil); imbalance persists as Indonesia’s trade with China is far greater (~USD 139 billion).
• Bureaucratic & Regulatory Barriers: Slow progress on infrastructure and investment due to permit and regulatory issues.
• Geopolitical Pressures: Indo-Pacific instability and China's expanding influence pose strategic challenges.
• Logistical Constraints: Inadequate connectivity infrastructure hinders deeper integration.

Way Forward

• Trade Diversification: Include sectors like tech, agriculture, and green energy.
• Defense Deepening: Expand joint exercises, maritime patrols, and intelligence-sharing.
• Enhance Connectivity: Boost air, sea, and digital linkages for trade and tourism.
• Green Collaboration: Advance renewable energy and sustainable mining ventures.
• Cultural & Educational Engagement: Promote student exchanges, scholarships (e.g., ITEC), and diaspora involvement.

Conclusion

India and Indonesia share deep-rooted civilizational links and are strategically aligned in the Indo-Pacific. Their evolving Comprehensive Strategic Partnership encompasses trade, defense, technology, and cultural diplomacy. Strengthening this partnership will not only boost bilateral growth but also ensure a stable, multipolar, and cooperative regional order.

In News:

A recent State Bank of India (SBI) report highlights the evolving trends in investment activity and the increasing importance of External Commercial Borrowings (ECBs) in financing India's economic growth. It also reflects rising private sector participation and a robust capital formation trend.

Investment Trends in India:

• Total Investment Announcements reached ?32.01 lakh crore during April–December 2024 (9MFY25), up 39% from the same period in FY24.
• The private sector accounted for 70% of investments in 9MFY25, up from 56% in FY24, indicating rising business confidence.
• Gross block of Indian corporates rose to ?106.5 lakh crore (March 2024), from ?73.94 lakh crore in March 2020—an addition of over ?8 lakh crore annually.
• Capital Work in Progress stood at ?13.63 lakh crore, reflecting ongoing infrastructure and industrial projects.
• Household Net Financial Savings (HNFS) improved to 5.3% of GDP in FY24 from 5.0% in FY23.
• Investment-to-GDP ratio improved, with:
  • Government investment at 4.1% of GDP (FY23) — highest since FY12.
  • Private corporate investment rising to 11.9% in FY23, projected to reach 12.5% in FY24.

What are External Commercial Borrowings (ECBs)?

ECBs refer to loans raised by Indian entities from foreign lenders, including commercial banks, export credit agencies, and institutional investors. These borrowings are regulated by the Reserve Bank of India (RBI) and used for purposes like capital expansion, modernization, and infrastructure development.

Current Status of ECBs (as of Sept–Nov 2024):

• Outstanding ECBs stood at $190.4 billion (Sept 2024).
  • Private sector share: 63% (~$97.6 billion).
  • Public sector share: 37% (~$55.5 billion).
• Of the total, non-Rupee and non-FDI ECBs accounted for $154.9 billion.
• ECBs registered (April–Nov 2024): $33.8 billion, mainly for capital goods import, local capex, and new projects.
• Cost of ECBs declined to:
  • 6.6% average during April–November 2024.
  • 5.8% in November 2024, down by 71 basis points from the previous month.
• Hedging practices: Private companies hedge about 74% of their ECB exposure, essential for managing currency risk.

Why Are ECBs Important for India?

• Bridging Capital Gaps: Domestic markets may not meet the capital needs of large projects.
• Lower Interest Rates: ECBs often offer cheaper financing than domestic loans.
• Infrastructure Financing: Key source of funds for sectors needing long-term investment.
• Foreign Exchange Access: Supports imports, modernization, and technology adoption.
• Private Sector Expansion: Enables firms to grow, diversify, and remain globally competitive.

Challenges and Risks:

• Currency Risk: Rupee depreciation can raise repayment costs.
• Interest Rate Risk: Linked to global rates (e.g., LIBOR/SOFR), which can rise unpredictably.
• Hedging Costs: Though necessary, hedging adds to borrowing costs.
• Global Dependency: Exposure to international financial volatility.
• Regulatory Constraints: RBI norms on end-use, maturity, and cost ceilings can reduce flexibility.
• Over-Borrowing Risk: Mismanagement can lead to unsustainable debt levels and strain forex reserves.

Clarification on ECB Liability Data:

• Some media reports mistakenly cited India’s ECB stock as $273 billion.
• The actual ECBs, as per RBI (Sept 2024), stand at $190.4 billion.
• The inflated figure includes $72 billion in FPI (Debt), which should not be classified as ECBs.

Way Forward:

• Regulatory Refinement: Simplify ECB rules for strategic sectors and long-term projects.
• Encourage Hedging: Make risk management more affordable and accessible.
• Prudent Borrowing: Promote ECBs for infrastructure, exports, and modernization rather than working capital.
• Monitoring and Oversight: Ensure transparency and prevent over-leverage.
• Strengthen Domestic Financing: To reduce overdependence on foreign borrowing.

In News:

The Union Cabinet reviewed the progress under NHM (2021–24), underscoring significant gains in public health infrastructure, disease control, and healthcare accessibility, particularly during and after the COVID-19 pandemic.

About NHM:

• Launched: 2013, integrating NRHM (2005) and NUHM (2012).
• Objective: Universal access to equitable, affordable, and quality healthcare services.
• Focus: Vulnerable populations, rural and urban poor.
• Implementation: Ministry of Health & Family Welfare supports states and UTs.

Key Achievements (2021–2024):

1. Human Resource Expansion

• 12.13 lakh healthcare workers added, including doctors, nurses, CHOs, and AYUSH practitioners.
• Ni-kshay Mitras: 1.56 lakh volunteers supported 9.4 lakh TB patients.
• Progressive annual engagement:
  • FY 2021–22: 2.69 lakh
  • FY 2022–23: 4.21 lakh
  • FY 2023–24: 5.23 lakh

Maternal and Child Health

• Maternal Mortality Ratio (MMR): Dropped by 83% since 1990 (from 130 to 97 per lakh live births).
• Under-5 Mortality Rate (U5MR): Reduced from 45 (2014) to 32 (2020).
• Infant Mortality Rate (IMR): Declined from 39 (2014) to 28 (2020).
• Total Fertility Rate (TFR): Reduced from 2.3 (2015) to 2.0 (2020).

Disease Control and Elimination

• Tuberculosis (TB):
  • Incidence: From 237 (2015) to 195 (2023) per 1,00,000.
  • Mortality: Decreased by 21.4% (from 28 to 22).
• Kala-azar: Target achieved in all endemic blocks (<1 case/10,000 population by 2023).
• Sickle Cell Anemia: 2.61 crore people screened under the National Elimination Mission.
• Malaria:
  • Cases fell in 2021 but rose in 2022 and 2023.
  • Deaths declined continuously.

Immunization Campaigns

• COVID-19: Over 220 crore doses administered (2021–2024).
• Measles-Rubella: 97.98% coverage, vaccinating 34.77 crore children under IMI 5.0.
• Digital Health: U-WIN platform launched in 2023 for real-time vaccination tracking in 65 districts.

Healthcare Infrastructure

• 7,998 health facilities certified under National Quality Assurance Standards (NQAS).
• Ayushman Arogya Mandirs: 1.72 lakh operational, with 1.34 lakh offering 12 essential services.
• 24×7 services: At 12,348 PHCs and 3,133 FRUs.
• Mobile Medical Units (MMUs): Expanded to 1,424 units, MMU Portal operational.

Specialized Health Initiatives

• Pradhan Mantri TB Mukt Bharat Abhiyan: Volunteer-driven TB patient support.
• Pradhan Mantri National Dialysis Programme:
  • Delivered 62.35 lakh hemodialysis sessions to 4.53 lakh patients in FY 2023–24.
• Sickle Cell Mission: Major tribal health initiative targeting elimination by 2047.

National Programs Under NHM

• RMNCH+A: Reproductive, Maternal, Newborn, Child, and Adolescent Health.
• Communicable Disease Control: TB, malaria, leprosy, HIV/AIDS.
• Non-Communicable Diseases (NCDs): Cancer, diabetes, hypertension.
• Other Initiatives: Rashtriya Bal Swasthya Karyakram (RBSK), PM National Dialysis Programme, Ayushman Bharat (AB-PMJAY).

Alignment with SDG Goals

• NHM achievements indicate India is on track to meet SDG-3 targets (Good Health and Well-being), especially in maternal and child mortality reduction.

In News:

The Indian judiciary is grappling with an unprecedented backlog of cases, while India’s digital economy is witnessing exponential growth, promising to be a key driver of future economic expansion. Simultaneously, India's strides in the space sector and emerging technologies signal its increasing role as a global innovator.

The Crisis of Judicial Pendency in India

• Background: The Supreme Court recently permitted High Courts to appoint ad-hoc retired judges under Article 224A to address the mounting pendency of cases. This move revives a constitutional provision that had remained dormant, with only three recorded instances of its use.
• Scale of Backlog:
  • As of January 2025, over 62 lakh cases are pending in High Courts.
  • Nearly 4 crore cases are pending in subordinate courts.
  • 30% of High Court judicial positions remain vacant.
• Reasons for Pendency

• Insufficient Judicial Strength: Low judge-to-population ratio.
• Infrastructure Deficit: Poor court facilities, especially in rural areas.
• Administrative Delays: Outdated systems and slow bureaucratic processing.
• Rising Litigation: Increase in public awareness and socio-economic issues.
• Adjournments & Procedural Delays: Inefficient court practices.
• Vacancies in Appointments: Delay in filling judicial posts due to the standoff between executive and judiciary.

Constitutional Provision: Article 224A

• Enables High Courts to appoint retired judges temporarily with the President’s consent.
• Judges appointed under this article have full powers and jurisdiction of a regular High Court judge.
• Supreme Court in Lok Prahari v. Union of India (2021) provided guidelines for such appointments, including limiting it to instances where judicial vacancies are not more than 20%.

Judicial Appointments Debate: Collegium vs. NJAC

• Collegium System
  • CJI + Four senior-most judges decide appointments.
  • Criticized for lack of transparency, nepotism, and non-accountability.
• National Judicial Appointments Commission (NJAC)
  • Proposed inclusion of judiciary, executive, and civil society (2 eminent persons).
  • Struck down by SC in 2015 to preserve judicial independence.
• Current Debate: Rising demands for a reformed NJAC to bring in accountability while retaining independence.

Global Models of Judicial Appointments

Country                  System                           Key Feature

UK                     Judicial Appointments Commission                 Transparent, includes laypersons

South Africa     Judicial Service Commission                            Diverse representation: judiciary, politicians, academics

France                High Council of Judiciary                                Balanced approach with civil society input

Impacts of Judicial Delay

• Delayed Justice: Undermines public trust.
• Overcrowded Prisons: Over 70% of inmates are undertrials; prisons operate at 114% capacity.
• Economic Costs: Delays in dispute resolution hamper business environment and economic efficiency.
• Judicial Burnout: Overburdened judges impact quality of judgments.

Addressing Judicial Pendency

• Short-Term Measures
  • Appointment of Ad-Hoc Judges under Article 224A.
  • Fast Track Courts for specific offenses (e.g., crimes against women, corruption).
• Long-Term Reforms
  • Reforming Judicial Appointments: Transparent and accountable system through restructured NJAC.
  • Enhancing Collegium Transparency: Clear criteria and public disclosure.
  • Promoting ADR Mechanisms: Arbitration, mediation, and conciliation to reduce court burden.
  • Judicial Infrastructure Development: More courtrooms, modern facilities, and digitalization.

Way Forward

Judicial Reform

• Strengthen judicial accountability while maintaining independence.
• Incorporate global best practices in appointment systems.
• Promote Alternative Dispute Resolution (ADR) and digitization of court processes

Introduction

India's transition towards clean energy has accelerated, with 2024 witnessing record-breaking renewable energy (RE) installations and policy innovation. With a vision to achieve 500 GW of non-fossil fuel capacity by 2030 and net-zero emissions by 2070, India is shaping itself as a global leader in sustainable development.

What is Renewable Energy?

Renewable energy is derived from naturally replenishing sources like solar, wind, hydropower, and biomass. It plays a vital role in:

• Reducing dependence on fossil fuels.
• Lowering greenhouse gas emissions.
• Ensuring long-term energy security.

India’s RE Targets and Progress

Parameter                                 Target/Status

2030 Target                              500 GW of non-fossil fuel capacity

Net Zero by                               2070

Current Status (Jan 2025)      217.62 GW of non-fossil fuel-based capacity

Short-term Goal                      50% energy capacity from renewable sources

2024: Year of Renewable Milestones

Solar Energy

• 24.5 GW added in 2024 — a 2.8x increase over 2023.
• 18.5 GW utility-scale solar: Rajasthan, Gujarat, Tamil Nadu contributed 71%.
• Rooftop Solar:
  • 4.59 GW added (↑53%)
  • 7 lakh installations under PM Surya Ghar: Muft Bijli Yojana.
• Off-grid Solar:
  • 1.48 GW added (↑182%), promoting rural energy access.

Wind Energy

• 3.4 GW added: Gujarat (1,250 MW), Karnataka (1,135 MW), Tamil Nadu (980 MW) = 98% of new capacity.

Hydropower & Others

• Existing hydropower plants modernized to improve efficiency.

Government Initiatives Driving Growth

Scheme/Initiative                                                Purpose

PM Surya Ghar: Muft Bijli Yojana                  Rooftop solar subsidies for households

Green Energy Corridor (GEC)                        Transmission infra for RE-rich states

Hydrogen Energy Mission                                Promote green hydrogen production

National Smart Grid Mission (NSGM)            Integration of variable RE sources into the grid

FAME Scheme                                                   Promote EV adoption, indirectly supporting RE usage

International Solar Alliance (ISA)                   Strengthen global cooperation in solar energy

Challenges in RE Expansion

• Land Acquisition: Resistance from locals, especially in solar park areas.
• Grid Stability: Intermittency of solar/wind leads to voltage and frequency issues.
• Storage Gaps: Lack of large-scale battery storage limits surplus utilization.
• E-Waste Concerns: Rising disposal of solar panels and batteries.
• Mineral Dependency: Import reliance on lithium, cobalt, etc.
• Regulatory Bottlenecks: Delay in approvals and lack of inter-state coordination.

Way Forward: Strategic Interventions

Technological Innovation

• Floating Solar Projects: Utilize reservoirs to save land and reduce evaporation.
• Decentralized Systems: Peer-to-peer trading via blockchain for energy democratization.
• Green Hydrogen: Use surplus RE for hydrogen fuel, develop hydrogen corridors.

Infrastructure & Manufacturing

• Renewable Energy SEZs: Promote local manufacturing and innovation.
• Smart Grid Development: Improve grid flexibility and real-time balancing.

Environmental Management

• Circular Economy for RE Waste: Design policies for solar panel and battery recycling.
• Urban Integration: Incentivize rooftop installations in urban centers.

Conclusion

India’s renewable energy revolution is at a crucial juncture. With 2024 setting a strong precedent through record installations and policy progress, the path to 2030 and beyond will require addressing infrastructural, financial, and regulatory challenges. A multi-pronged, inclusive, and technology-driven approach will help India lead the global clean energy transition.

Urban India at a Crossroads

India's urban population is projected to reach 40% by 2030, up from 30% in 2011. While this urban surge brings opportunities for economic and social progress, it also amplifies challenges such as:

• Infrastructure strain
• Environmental degradation
• Social inequality
• Climate impacts—including increased frequency of floods, heatwaves, and climate-driven migration

Traditionally, governments have relied on a combination of policy reforms, infrastructure investment, and technological advancements. However, a crucial component is often overlooked: behavioral change.

The Case for Behavioral Change in Urban Governance

Urban planning and service delivery frequently overlook how citizen and provider behavior shapes outcomes. Sustained, meaningful change requires more than just awareness campaigns—it demands behaviorally-informed governance. Here's why:

• Enhancing Service Delivery: Cities like Indore showcase how behavior change can revolutionize urban systems. Once struggling with waste management, Indore became India’s cleanest city through:
  • Door-to-door campaigns
  • Strict enforcement of segregation rules
  • Viral initiatives like the ‘Kachra Gadi’ song to shift mindsets
• Driving Sustainability: In cities like Delhi, the odd-even vehicle rule led to a 30% reduction in traffic congestion by using simple default behavioral triggers. When people opt for public transport or energy conservation, it reduces emissions and eases city operations.
• Improving Public Safety: Behavioral strategies also improve law enforcement and community trust. For instance, Kerala’s ‘Janamaithri Suraksha’ program emphasizes empathetic policing, resulting in stronger police-citizen relations.
• Boosting Institutional Efficiency: Embedding behavioral insights can improve the efficiency of government schemes. The NITI Aayog’s Behavioral Insights Unit and initiatives in Uttar Pradesh and Bihar demonstrate success in using nudges to improve outcomes in areas like maternal health and welfare delivery.

Why Cities need Chief Behavioral Officers (CBOs)

To embed these insights systematically, Indian cities must institutionalize behavioral science through dedicated roles like Chief Behavioral Officers (CBOs) within Urban Local Bodies.

CBO Functions:

• Integrate behavioral strategies into urban planning
• Design evidence-backed nudges and campaigns
• Collaborate with stakeholders, municipal officers, and researchers
• Guide data-driven policy experimentation

Support Structure:

• A small team of behavioral fellows
• Annual Behavioral Plans aligned with city goals
• Investment in citizen engagement platforms
• Use of big data and surveys to uncover behavioral bottlenecks

Examples from global cities like New Orleans (via What Works Cities) show that CBOs can drive change quickly and cost-effectively.

Challenges to Behaviorally-Informed Urbanism

Despite its promise, this approach faces several roadblocks:

• Cultural inertia and resistance to change (e.g., reluctance in waste segregation)
• Lack of training in behavioral science among officials
• Resource constraints in smaller municipalities
• Fragmented coordination between departments (e.g., transport, sanitation)

Way Forward

To overcome these challenges, cities must:

• Institutionalize behavioral roles in governance structures
• Partner with behavioral scientists and think tanks
• Leverage technology (e.g., mobile apps for citizen feedback)
• Scale successful pilots (e.g., Indore’s waste model) across regions

This structured approach not only improves efficiency and citizen satisfaction, but also reduces the costs of service delivery, allowing long-term savings.

Context:

• The India-Middle East-Europe Economic Corridor (IMEC), announced at the G20 Summit 2023 in New Delhi, is a transformative multi-modal connectivity initiative aiming to link India, the Middle East, and Europe through railways, ports, roads, energy pipelines, and digital infrastructure.
• Seen as a strategic counter to China’s Belt and Road Initiative (BRI), IMEC marks a significant step in reshaping global trade routes and enhancing economic cooperation across continents.

Structure and Components of IMEC

• Corridors:
  • Eastern Corridor: Connects India to the Arabian Peninsula
  • Northern Corridor: Links the Gulf to Europe
• Key Infrastructure:
  • Rail and road networks
  • Shipping routes from Indian ports (e.g., Mumbai, Mundra, Kandla, JNPT) to UAE and onwards via rail to Saudi Arabia, Jordan, and Israel (Haifa Port)
  • Maritime link from Haifa to Piraeus Port in Greece, and further into Europe
  • Electricity grids, green hydrogen pipelines, and high-speed data cables
• Participating Nations: India, US, Saudi Arabia, UAE, France, Germany, Italy, European Union
• Support Mechanism: US-led Partnership for Global Infrastructure and Investment (PGII)

Significance of IMEC

For India

• Enhanced Global Connectivity:
  • Provides faster, cost-effective access to European markets
  • Reduces dependence on the Suez Canal, a known chokepoint
• Economic Gains:
  • Boosts the Make in India initiative through expanded market access
  • Enhances maritime security and tourism opportunities in the Mediterranean
• Strategic Leverage:
  • Strengthens ties with Middle East, US, and Europe
  • Reinforces India’s image as a global strategic partner
• Energy Security and Green Growth:
  • Facilitates the Green Grid Concept via power lines and hydrogen pipelines
  • Aligns with India’s clean energy and decarbonisation goals
• Digital and Cyber Infrastructure:
  • Supports data flow and communication resilience across the corridor

For the United States

• Strategic Counter to BRI:
  • Offers democratic nations an alternative to China’s BRI
• Reinforces Transatlantic Unity:
  • Addresses trust deficits post Ukraine war
  • Reaffirms US commitment to European allies
• Energy and Supply Chain Security:
  • Reduces reliance on adversarial energy routes
  • Diversifies regional supply chains
• Geopolitical Stability:
  • Encourages peaceful engagement among West Asian rivals
  • Deters alignment with China-led blocks
• Job Creation and Economic Growth:
  • Infrastructure investments boost local economies and employment

Strategic and Geopolitical Implications

• Acts as a balancing mechanism in global geopolitics against the influence of China’s BRI
• Built on diplomatic breakthroughs such as the Abraham Accords
• Promotes economic cooperation between traditional rivals (e.g., Israel, Saudi Arabia, UAE)
• Supports a rules-based international order centered on transparency, sustainability, and democratic values

Challenges to Implementation

• Geopolitical Instability: Conflicts such as Israel-Hamas, Iran-Saudi tensions, or political instability in West Asia can delay progress
• Infrastructure Bottlenecks:
  • High capital requirement and complexity of cross-border integration
  • Varying timelines and priorities among participating nations
• Competing Regional Interests:
  • Exclusion of key players like Turkey, Iran, and China may trigger pushback
  • Turkey’s rivalry with Greece and Israel may create diplomatic hurdles

Security Concerns: Risk of terrorism, piracy, and cyber threats in unstable regions

In News:

After 15 months of war triggered by Hamas' October 2023 attack on Israel, a ceasefire agreement has been brokered by Qatar, Egypt, and the US, marking a fragile but significant pause in one of the most destructive phases of the Israel-Palestine conflict.

Key Features of the Ceasefire Agreement

The agreement is based on a three-phase framework proposed by US President Joe Biden in June 2024 and endorsed by the UN Security Council:

Phase I (42 days)

• Complete ceasefire and withdrawal of Israeli forces from all populated areas in Gaza.
• Release of 33 Israeli hostages (women, elderly, injured) by Hamas.
• Release of 900–1,650 Palestinian prisoners, including minors and those detained since October 7, 2023.
• Daily entry of 600 humanitarian aid trucks into Gaza.
• Partial Israeli withdrawal from key corridors like Netzarim (splitting Gaza) and parts of the Philadelphi Corridor (Gaza-Egypt border).

Phase II

• Release of remaining hostages, primarily male soldiers.
• Complete Israeli military withdrawal from Gaza.
• Details to be negotiated during Phase I; no written guarantees for its execution.

Phase III

• Return of the remains of deceased hostages.
• Initiation of a multi-year reconstruction plan for Gaza under international supervision.

Challenges to Implementation

Fragile Political Consensus in Israel

• Far-right ministers (e.g., Itamar Ben-Gvir) oppose the deal, threatening to quit the government.
• Prime Minister Netanyahu faces pressure from both hawks demanding a full military victory and moderates seeking peace.

Hamas' Demands

• Seeks permanent ceasefire and complete Israeli withdrawal, making it unwilling to release all hostages without guarantees.
• Israel, in contrast, insists on neutralizing Hamas militarily.

Unclear Future Governance of Gaza

• Israel rejects both Hamas and the Palestinian Authority (PA) as future administrators.
• Global consensus supports Palestinian-led governance, but viable alternatives remain elusive.