In News:

England over the past two-and-a-half years, reflecting a strategic shift in its approach to safeguarding gold reserves. This move marks a significant increase in the RBI's domestic gold holdings.

Rise in the RBI's Domestic Gold Holdings

• Current Status (September 2024):The RBI's domestic gold reserves have grown to 510.46 metric tonnes, up from 295.82 metric tonnes in March 2022.
• Reduction in Gold Held Abroad:The gold held under the custodianship of the Bank of England has decreased to 324 metric tonnes from 453.52 metric tonnes in March 2022.
• Gold as a Share of Foreign Exchange Reserves:The proportion of gold in India's total foreign exchange reserves increased from 8.15% in March 2024 to 9.32% in September 2024.

Gold Kept in the Bank of England

• Overview of the Bank of England's Gold Vault:The Bank of England is home to one of the largest gold vaults in the world, second only to the New York Federal Reserve, housing around 400,000 bars of gold.
• India’s Gold Held Abroad:The RBI continues to retain 324 metric tonnes of its gold with the Bank of England and the Bank for International Settlements (BIS).
• Additional Gold Management:Around 20 tonnes of gold are managed through gold deposit schemes.
• Strategic Role of London’s Gold Market:Storing gold in London provides immediate access to the global London bullion market, enhancing liquidity for India’s gold assets.

Historical Context of India’s Gold Holdings

• 1991 Balance of Payments Crisis:During a financial crisis in 1991, India had to send 47 tonnes of gold to the Bank of England to secure loans for repaying international creditors.

RBI’s Strategy to Bring Gold Back to India

• Global Trend of Central Banks Buying Gold:Since the imposition of U.S. sanctions on Russia in 2022, central banks globally have been increasing their gold reserves as a hedge against inflation and to reduce reliance on the U.S. dollar. India has outpaced other G20 nations in this trend, surpassing Russia and China in gold purchases.
• De-dollarisation:This shift is part of a broader strategy of de-dollarisation, aiming to diversify away from the U.S. dollar amidst rising gold prices and growing geopolitical tensions.

Significance of Repatriating Gold to India

• Sign of Economic Strength
  • Recovery from the 1991 Crisis:The decision to repatriate gold reflects a significant improvement in India's economic position, a stark contrast to the 1991 economic crisis when India had to pledge gold for financial survival.
• Optimizing Financial Resources
  • Reducing Storage Costs:Storing gold domestically allows the RBI to save on storage fees paid to foreign custodians, such as the Bank of England.
• Strategic Significance
  • Enhanced Resilience Amid Global Instability:By repatriating its gold, India enhances its strategic autonomy and strengthens its economic position in a world of rising uncertainties and currency volatility.

RBI's Capacity to Safeguard Gold Domestically

• Increasing Domestic Storage Capacity:The RBI has been increasing its domestic capacity for gold storage to accommodate rising reserves and reduce dependence on foreign gold safekeeping facilities.
• Current Foreign Exchange Reserves:As of October 2024, India’s total foreign exchange reserves stand at $684.8 billion, sufficient to cover over 11.2 months of imports.

Diversification of Foreign Exchange Reserves

• Mitigating Currency Risks:By increasing gold reserves, India diversifies its foreign exchange holdings, reducing reliance on any single currency and shielding itself from global currency fluctuations and economic volatility.
• Gold as a Stable Asset:Gold serves as a stable asset, providing a safeguard against global economic shocks, and balances India’s reserves portfolio.

Gold as a Hedge against Inflation

• Preserving Wealth amid Inflation:Gold is traditionally viewed as a hedge against inflation, maintaining or appreciating in value when other currencies weaken. By increasing its gold reserves, India positions itself to better withstand the adverse effects of inflation and ensure long-term financial stability.

Conclusion

The repatriation of gold by the RBI reflects a strategic move to bolster India's economic strength and diversify its financial assets. The decision to bring gold back to India not only signifies an improvement in India's economic fundamentals but also aligns with global trends of central banks increasing their gold reserves to ensure long-term stability and reduce reliance on the U.S. dollar.

Overview

The Economic Advisory Council to the Prime Minister (EAC-PM)'s report titled "Relative Economic Performance of Indian States: 1960-61 to 2023-24" highlights an alarming trend of widening economic disparities across India's states, which is increasingly threatening the principles of federalism and national unity. The findings reveal significant regional imbalances in terms of contributions to the national income, per capita income, and overall economic development. This analysis delves into the key insights from the report and explores the broader implications for India's federal structure, governance, and policy approaches.

Key Insights from the Report

• Regional Economic Disparities:
  • Western and Southern States' Dominance: States such as Maharashtra, Gujarat, Tamil Nadu, and Karnataka have consistently outperformed others. These states have benefited from higher private investments, better infrastructure, and a more business-friendly environment. They also enjoy proximity to international markets, especially coastal regions like Gujarat and Tamil Nadu, which have access to ports and export markets.
  • Underperformance of Northern and Eastern States: On the other hand, northern states (with exceptions like Delhi and Haryana) and eastern states like Bihar, Odisha, and West Bengal lag behind in economic performance. These regions face challenges such as poor infrastructure, low levels of investment, and weak governance structures, which hinder their growth potential.
• Impact of Liberalization (1991):
  • The 1991 economic reforms marked a shift toward market-oriented growth, benefiting states that were already more industrialized or had better urban infrastructure. Southern states, in particular, adapted well to the liberalized environment, attracting higher levels of private investment and expanding their economies.
  • The liberalization process disproportionately favored urban centers like Delhi, Mumbai, Chennai, and Bengaluru, where investments were channelized into growing service sectors, technology, and industries, creating a feedback loop of wealth accumulation in these hubs. Meanwhile, the hinterland remained underdeveloped due to insufficient public investment and the lack of private sector interest in these regions.
• Investment Disparities:
  • Private Investment: Wealthier states attract a disproportionate share of private investment, which is driven by profitability and market opportunities. These states have better infrastructure, which reduces transaction costs and increases returns on investment. In contrast, underdeveloped states struggle to attract investment due to poor governance, inadequate infrastructure, and perceived higher risks.
  • Public Investment: While the public sector still plays a role in investment, the New Economic Policies (NEP) since 1991 have shifted the focus towards private sector-driven growth. This has further widened the investment gap, as the poorer states receive less public investment relative to their needs.
• Role of Infrastructure and Governance:
  • The availability and quality of infrastructure are significant determinants of economic performance. States with better roads, energy supply, ports, and communication networks tend to attract more investments. Additionally, good governance, characterized by reduced corruption, better policy implementation, and transparency, also plays a critical role in fostering economic development.
  • In contrast, states with weaker governance structures and poor infrastructure struggle to create an enabling environment for businesses, further compounding regional disparities.
• Impact on Federalism:
  • The growing economic divide is leading to tensions between the Centre and state governments, particularly in wealthier states that contribute significantly to national income but feel short-changed in resource allocation. These states argue that they are not receiving a fair share of national resources in return for their contributions, leading to growing dissatisfaction with the federal system.
  • The tension is exacerbated by political factors, such as accusations from opposition-led states that the Centre uses public investment to favor states aligned with the ruling party. The growing perception of politicization of resource allocation has the potential to undermine the spirit of cooperative federalism.

Structural Causes of Regional Inequality

• Economic and Investment Magnetism:
  • Wealthier states attract more private investments, as they offer better returns due to established markets, skilled labor, and urbanization. Cities like Mumbai, Delhi, and Bengaluru serve as economic magnets, drawing talent, technology, and capital, which further consolidates their economic dominance.
  • In contrast, states without such economic hubs or access to global markets struggle to attract investment. The absence of urban agglomerations and the concentration of wealth and resources in a few states perpetuate regional disparities.
• Policy and Investment Bias:
  • Post-liberalization policies have disproportionately benefited the organized sector, often at the expense of the unorganized sector, which is more prevalent in poorer states. The emphasis on industrial growth and infrastructure development has largely bypassed the rural and informal sectors, which are critical in underdeveloped states.
  • The organized sector has also benefited from government support, such as tax concessions and subsidized infrastructure, which have enabled these industries to thrive in already developed regions. This has widened the gap between the haves and the have-nots.
• Cronyism and the Black Economy:
  • Crony capitalism and the prevalence of the black economy in poorer states further exacerbate regional imbalances. In some cases, political patronage and corruption divert resources and investments from areas that need them most. This weakens the investment climate, especially in states with higher levels of informal and illegal economic activity.

Implications for Federalism

The growing economic disparity poses a serious threat to India's federal structure. The increasing dissatisfaction of wealthier states with the current fiscal arrangements and the growing demand for fairer resource allocation challenge the spirit of cooperative federalism. A well-functioning federal system relies on equitable distribution of resources and opportunities for all regions to develop.

Policy Recommendations

To address these disparities and strengthen India's federal framework, several policy measures need to be implemented:

• Enhancing Governance and Infrastructure in Lagging States:
  • Improved governance and reducing corruption are essential in attracting both private and public investments. Additionally, there must be a focus on developing critical infrastructure, such as roads, energy, and health facilities, which are essential for economic growth.
  • States need to increase public investment in sectors like education, healthcare, and social security to improve human capital and productivity.
• Focus on the Unorganized Sector:
  • A significant portion of the labor force in poorer states is employed in the unorganized sector. Policies should aim to formalize this sector by providing social security benefits, improving labor rights, and increasing productivity through skill development. This could help raise incomes and stimulate local demand, attracting more private investment.
• Balancing the Organized and Unorganized Sectors:
  • While the organized sector has benefited from liberalization, more attention should be given to the unorganized sector, which forms the backbone of the economy in many poorer states. A balanced approach to economic growth, which includes both organized and unorganized sectors, can help reduce disparities.
• Shifting Focus from Urban Centers to Hinterlands:
  • Private sector investment must be incentivized in underdeveloped regions through tax breaks, subsidies, and targeted infrastructure projects. This will encourage businesses to expand beyond the major urban centers, thus promoting a more balanced distribution of economic activities.

Conclusion

The widening economic divide in India, as revealed by the EAC-PM report, poses a significant challenge to the country's federalism and unity. To ensure inclusive and balanced development, policy reforms must focus on reducing regional disparities by improving governance, infrastructure, and investment in lagging states. A shift towards equitable growth, addressing the needs of both the organized and unorganized sectors, is essential to promoting national cohesion and ensuring sustainable economic progress across all regions.

Introduction

The Pradhan Mantri Mudra Yojana (PMMY) was launched by Prime Minister Narendra Modi on April 8, 2015, with the aim of providing financial support to non-corporate, non-farm small and micro enterprises in India. Through this initiative, loans are provided to individuals and small businesses who are unable to access formal institutional finance.

In the Union Budget 2024-25, Finance Minister Nirmala Sitharaman announced an increase in the loan limit under PMMY from ?10 lakh to ?20 lakh, with the introduction of a new loan category, Tarun Plus, aimed at fostering growth in the entrepreneurial sector.

Key Features of the Pradhan Mantri Mudra Yojana

Loan Limit Increase

• Loan Limit Raised: The loan limit has been increased from ?10 lakh to ?20 lakh for eligible entrepreneurs.
• New Loan Category: The newly introduced Tarun Plus category caters to entrepreneurs who have previously availed and successfully repaid loans under the Tarun category.
• Credit Guarantee: The Credit Guarantee Fund for Micro Units (CGFMU) will cover these enhanced loans, further ensuring the security of micro-enterprises.

Categories of MUDRA Loans

PMMY provides collateral-free loans through financial institutions like Scheduled Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Non-Banking Financial Companies (NBFCs), and Micro Finance Institutions (MFIs). These loans are provided for income-generating activities in sectors like manufacturing, trading, services, and allied agriculture activities.

Objectives of PMMY

1. Financial Inclusion: PMMY targets marginalized and socio-economically neglected sections of society, promoting financial inclusivity.
2. Support to Small Businesses: By providing affordable loans, the scheme encourages small-scale entrepreneurs, particularly women and minority groups, to establish and expand their businesses.
3. Fostering Entrepreneurship: PMMY aims to unlock the potential of India’s entrepreneurial spirit, especially in rural and underserved areas.

MUDRA: The Institutional Backbone

Role of Micro Units Development & Refinance Agency Ltd. (MUDRA)

MUDRA is the primary institution set up by the Government of India to manage and implement the Mudra Yojana. It acts as a refinancing agency that provides financial support to small and micro-enterprises by working through financial intermediaries, such as banks and micro-finance institutions.

Funding Sources

• Scheduled Commercial Banks
• Regional Rural Banks (RRBs)
• Small Finance Banks (SFBs)
• Non-Banking Financial Companies (NBFCs)
• Micro Finance Institutions (MFIs)

Application Process

Applicants can avail loans through any of the aforementioned financial institutions or apply online via the Udyami Mitra Portal.

Benefits of Pradhan Mantri Mudra Yojana

• Collateral-free Loans: No security is required to obtain loans, which reduces the financial burden on borrowers.
• Easily Accessible: PMMY loans are available across India, making them accessible to entrepreneurs in both rural and urban areas.
• Quick and Flexible Loans: Loans can be disbursed quickly with flexible repayment terms (up to 7 years).
• Empowering Women Entrepreneurs: The scheme offers special incentives for women entrepreneurs, helping them to establish and grow their businesses.
• Support to Rural Areas: Special emphasis on empowering rural enterprises and reducing regional disparities.
• MUDRA Card: The MUDRA Card is a RuPay debit card that allows borrowers to access funds through an overdraft facility, enhancing liquidity for businesses.
• No Default Penalty: In case of loan defaults due to unforeseen circumstances, the government will step in to reduce the burden on entrepreneurs.

Categories of Loans Under PMMY

1. Shishu Category: Loans up to ?50,000

• Targeted at micro-enterprises at the initial stage of their business journey.

2. Kishore Category: Loans between ?50,000 and ?5 lakh

• Targeted at enterprises looking to expand their operations and upgrade their infrastructure.

3. Tarun Category: Loans between ?5 lakh and ?10 lakh

• For established businesses that are in need of funds to scale up.

4. Tarun Plus: Loans between ?10 lakh and ?20 lakh

• A new category designed for entrepreneurs who have repaid loans under the Tarun category and wish to further expand their business.

Achievements of PMMY (2023-24)

• Total Loans Sanctioned: ?5.4 trillion across 66.8 million loans in FY 2023-24.
• Loans Disbursed: Significant amounts were disbursed under each category:
  • Shishu: ?1,08,472.51 crore
  • Kishore: ?1,00,370.49 crore
  • Tarun: ?13,454.27 crore
• Women Borrowers: A large share of loans have gone to women entrepreneurs, ensuring gender inclusivity.
• Minority Borrowers: The scheme also emphasizes financial empowerment of minority communities.
• NPA Reduction: The Non-Performing Assets (NPA) in Mudra loans have reduced to 3.4% in FY 2024, compared to higher levels in earlier years.

Digital Tools and Support Systems

MUDRA MITRA App

The MUDRA MITRA mobile app helps users access information about the PMMY scheme, loan application procedures, and other resources. The app is available for download on Google Play Store and Apple App Store.

Online Loan Application

Entrepreneurs can apply for loans online via portals such as PSBloansin59minutes and Udyamimitra, providing greater convenience and accessibility.

Steps to Improve Implementation

• Handholding Support: Assistance in submitting loan applications is available for applicants.
• Intensive Awareness Campaigns: The government conducts publicity campaigns to raise awareness about PMMY.
• Simplified Loan Process: The loan application forms have been simplified to encourage wider participation.
• Performance Monitoring: Regular monitoring of PMMY implementation to ensure its success.
• Interest Subvention: A 2% interest subvention is offered for prompt repayment of Shishu loans.

Conclusion

The Pradhan Mantri Mudra Yojana has been a transformative scheme in fostering entrepreneurship and ensuring financial inclusion for small and micro-businesses across India. With the recent increase in loan limits and the addition of the Tarun Plus category, the scheme continues to empower emerging entrepreneurs and provides a crucial lifeline for business growth and sustainability. By supporting women, minorities, and new entrepreneurs, PMMY has contributed significantly to economic upliftment and inclusive growth in the country.

In News:

On October 17, eight coaches of the Agartala-Lokmanya Tilak Express derailed in Assam with no casualties. On October 11, a passenger train rear-ended a stationary goods train near Chennai, also with no casualties. Indian trains have been involved in multiple accidents of late. The Balasore accident on June 2, 2023, had the greatest death toll, more than 275, yet pressure on the Railways to improve safety competes with pressures straining its subsistence.

Railway Accident Trends

• Decline in Accidents Over Time:
  • From 1,390 accidents per year in the 1960s, railway accidents have reduced to about 80 accidents per year in the last decade.
• Recent Consequential Accidents:
  • 34 accidents in 2021-2022
  • 48 accidents in 2022-2023
  • 40 accidents in 2023-2024
• Primary Causes of Accidents:
  • 55.8% due to staff errors (railway personnel).
  • 28.4% due to non-staff errors.
  • 6.2% due to equipment failure.
• Role of Signalling Failures:
  • Major accidents, such as Balasore and Kavaraipettai, were attributed to signalling system failures.

Key Safety Technologies and Measures

• Kavach System:
  • Kavach is an automatic train protection system designed to prevent collisions by monitoring train positions and activating alarms or braking.
  • As of February 2024, Kavach was implemented on only 2% (1,465 route km) of the railway network, limiting its effectiveness.
• Signalling System Overhaul:
  • Outdated and faulty signalling systems contribute significantly to accidents. Both Balasore and Kavaraipettai incidents were linked to failures in signalling infrastructure.

Financial Strain on Indian Railways

• Operating Ratio (OR):
  • The Operating Ratio (OR) in 2024-2025 is estimated to be ?98.2, indicating that the Railways spends ?98.2 for every ?100 earned.
  • A higher OR reduces available funds for safety improvements and infrastructure upgrades.
• Budgetary Constraints:
  • The 2023-24 budget showed a 7.2% reduction in capital outlay for track renewal and a 96% decrease in the Depreciation Reserve Fund, which is used to replace aging assets.
• Revenue Imbalance:
  • Freight services account for 65% of Railways’ revenue but face capacity constraints, with 30% of the network operating at over 100% capacity.
  • Passenger services, however, continue to incur significant losses, with ?68,269 crore loss in 2021-22.

Challenges in Rail Infrastructure

• Slow Infrastructure Development:
  • The government's Dedicated Freight Corridors (DFCs), intended to alleviate congestion, are severely delayed:
  • The Eastern DFC is the only fully operational corridor.
  • Other corridors, including the Western DFC and additional planned routes, remain incomplete.
• Track and Equipment Maintenance:
  • Ongoing delays in upgrading and maintaining essential infrastructure (tracks, wagons, signalling) contribute to the rising number of accidents.

Loco Pilot Working Conditions

• Extended Working Hours:
  • Loco pilots often work 12-hour shifts due to manpower shortages, leading to fatigue and increased risk of human error.
  • Stress and exhaustion are significant contributors to accidents caused by human error, including Signal Passed at Danger (SPAD).

Recommendations for Improving Railway Safety

• Loco Pilot Vacancies:Immediate recruitment to fill the 18,799 vacant loco pilot positions to prevent overworking and reduce fatigue-related errors.
• Expand Kavach Deployment:Accelerate the nationwide installation of the Kavach system, particularly on high-risk and high-traffic routes, to enhance safety.
• Complete Dedicated Freight Corridors (DFCs):Expedite the completion of DFCs to ease congestion and increase freight movement efficiency.
• Independent Railway Safety Authority:Establish an independent Railway Safety Authority with statutory powers, as recommended by the Kakodkar Committee (2012), to enforce safety standards and monitor implementation.
• Improve Signal Infrastructure:Invest in advanced and reliable signalling systems to prevent errors stemming from outdated or malfunctioning infrastructure.
• Regulate Working Hours:Enforce strict work hour limits to reduce fatigue among railway staff and ensure proper rest between shifts.
• Strengthen Trackside Infrastructure:Install fencing along tracks in high-risk areas to prevent cattle run-overs, a common cause of derailments in rural and semi-urban areas.

Conclusion

• Indian Railways faces a complex set of challenges, balancing safety requirements with financial constraints. Despite technological advancements like Kavach, its limited deployment and outdated infrastructure continue to present significant risks.
• A holistic approach to reform is needed, including addressing manpower shortages, upgrading safety technologies, and investing in infrastructure development. This will be essential for reducing accidents, improving safety, and ensuring the long-term sustainability of India’s vast railway network.

Why in the news?

India is ranked 105th among 127 countries in the Global Hunger Index (GHI) 2024, indicating a ‘serious’ level of hunger, along with Afghanistan and Pakistan, which also face hunger challenges.

According to the Global Hunger Index released on 10th October 2024, the hunger levels in 42 countries are at alarming levels, making the goal of Zero Hunger by 2030 unattainable. At this pace of progress, the world will not even attain a low hunger level until 2160. The world’s GHI score is 18.3, which is considered moderate in the severity of hunger scale.

Key Takeaways:

1. The GHI is published by Concern Worldwide and Welthungerhilfe annually to measure and track hunger at global, regional, and national levels. The purpose of the report is to create awareness and understanding of the struggle against hunger and call attention to those areas of the world where hunger levels are highest and there is a need for additional efforts.

2. GHI is calculated based on a formula that combines four indicators that together capture the multidimensional nature of hunger:

• Undernourishment: the share of the population whose caloric intake is insufficient;
• Child stunting: the share of children under the age of five who have low height for their age, reflecting chronic undernutrition;
• Child wasting: the share of children under the age of five who have low weight for their height, reflecting acute undernutrition; and
• Child mortality: the share of children who die before their fifth birthday, reflecting in part the fatal mix of inadequate nutrition and unhealthy environments.

3. The 2024 GHI reflects that multiple factors are posing challenges in attaining Zero Hunger. The challenges include large-scale armed conflicts, climate change indicators that are worsening faster than expected, high food prices, market disruptions, economic downturns, and debt crises in many low- and middle-income countries.

4. The report highlights the link between Gender inequality, climate change, and hunger. Gender is intertwined with climate and food security challenges in ways that respective policies and interventions often ignore. Women and girls are typically hardest hit by food insecurity and malnutrition. They also suffer disproportionately from the effects of weather extremes and climate emergencies.

5. Six countries – Somalia, Yemen, Chad, Madagascar, Burundi, and South Sudan- have levels of hunger considered alarming. This is the result of widespread human misery, undernourishment, and malnutrition.

What is Hunger?

The Food and Agriculture Organization of the United Nations (FAO) defines hunger as food deprivation, or undernourishment, as the habitual consumption of too few calories to provide the minimum dietary energy an individual requires to live a healthy and productive life, given that person’s sex, age, stature, and physical activity level.

6. India ranked 105th out of 125 countries in the Global Hunger Index 2024, with a score of 27.3, indicating a serious level of hunger.  Child wasting is particularly high in India. Child undernutrition in India goes hand in hand with the poor nutritional status of mothers, suggesting an intergenerational pattern of undernutrition and underscoring the need for attention to maternal health nutrition and infant feeding.

7. India’s GHI score of 27.3 is a cause for concern, especially when compared to its South Asian neighbours like Bangladesh, Nepal, and Sri Lanka, which fall into the “moderate” category

8. The performance of India on various parameters of GHI:

• 13.7 per cent of India’s population suffers from undernourishment,
• 35.5 per cent of children under the age of five are stunted
• 18.7 per cent experience child wasting and
• 2.9 per cent of children do not reach their fifth birthday.

9. The policy recommendations made in the document include strengthening accountability to international law and the enforceability of the right to adequate food, promoting gender-transformative approaches to food systems and climate policies and programs, and making investments that integrate and promote gender, climate, and food justice.

National Family Health Survey

1. The National Family Health Survey (NFHS) in India provides estimates of underweight, (low weight for age), stunting (low height for age), and wasting (low weight for height). These conditions affect preschool children (those less than 6 years of age) disproportionately and compromise a child’s physical and mental development while also increasing the vulnerability to infections.

2. According to the NFHS 5, the percentage of stunted, wasted, and underweight children is 36 per cent, 19 per cent and 32 per cent respectively.

(Thought Process: These data can be incorporated in your Mains Answer Writing to enrich your content.)

3. NFHS 5 highlighted that among mothers with a child between ages 6-23 months, 18 per cent reported that their child did not eat any food whatsoever — referred to as “zero-food” — in the 24 hours preceding the survey. The zero-food prevalence was 30 per cent for infants aged 6-11 months, remains worryingly high at 13 per cent among the 12-17 months old, and persists even among 18-23 months-old children at 8 per cent.

Hidden Hunger

In India, we suffer largely from “hidden hunger” which does not always manifest itself in an emaciated appearance. It is a hunger caused by the constant or recurrent lack of food of sufficient quality and quantity. It is the deprivation of vitamins and minerals, essential micronutrients that are necessary for proper growth, physical fitness, and mental development.

4. Going without food for an entire day at this critical period of a child’s development raises serious concerns related to severe food insecurity. According to the World Health Organisation, at six months of age, 33 per cent of the daily calorie intake is expected to come from food. This proportion increases to 61 per cent at 12 months of age. The recommended calorie percentages mentioned here are the minimum amount that should come from food.

5. India has a challenging task in attaining the Sustainable Development Goal (SDG) 2 of “zero hunger”. Mission Poshan 2.0, the overarching flagship programme dedicated to maternal and child nutrition, has evolved in the right direction by targeting SDG 2 “zero hunger” and focusing on food-based initiatives, including its flagship supplementary nutrition programme service as mandated by the 2013 National Food Security Act.

In News

The NITI Aayog has recently increased the asset monetisation target for the fiscal year 2024-25 (FY25) by ?23,000 crore, bringing the total to ?1.9 trillion. This adjustment aligns with the broader target of ?6 trillion set under the National Monetisation Pipeline (NMP) for the period from FY 2022 to FY 2025.

Understanding Asset Monetisation

Definition

Asset monetisation refers to the process of converting public assets into revenue-generating assets without selling them outright. This includes using assets to generate profit or cash, thereby unlocking their economic value.

Importance

• Revenue Generation: Monetisation creates new revenue streams for governments by leveraging underutilised public assets.
• Focus on Public Assets: The emphasis is on monetising existing infrastructure such as roads, airports, railways, and pipelines, primarily targeting brownfield assets—those that can be improved or repurposed.

Monetisation vs. Privatisation

While privatisation involves complete ownership transfer to the private sector, asset monetisation allows public authorities to retain ownership while benefiting from private sector efficiencies through structured partnerships.

The National Monetisation Pipeline (NMP)

Overview

The NMP is an initiative aimed at promoting sustainable infrastructure financing through the monetisation of operational public assets. It envisions a monetisation potential of ?6 lakh crore, focusing on leasing core assets from the Central government and public sector entities.

Preparation and Coverage

• Collaborative Approach: Developed by NITI Aayog in consultation with infrastructure ministries such as Roads, Railways, and Power.
• Sector Coverage: Encompasses various sectors including roads (27% of the total value), railways (25%), power (15%), and telecom (6%).

Framework for Monetisation

1. Retention of Rights: The government retains ownership, with assets reverting to public authorities post-transaction.
2. Stable Revenue Streams: Focus on de-risked brownfield assets that provide consistent revenue.
3. Defined Partnerships: Establishment of contractual frameworks with strict performance indicators.

Alignment with National Infrastructure Pipeline (NIP)

The NMP is integrated with the NIP, which seeks to attract investments in both greenfield and brownfield projects across all sectors.

Current Status of the NMP

Revenue Generation

As of FY24, the NMP has generated ?3.9 trillion, slightly below the original target of ?4.3 trillion for the initial three years.

Successful Monetisation Examples

• The Ministry of Coal exceeded its target, raising ?1.54 trillion against a goal of ?80,000 crore.
• Mining assets have also been monetised significantly, surpassing their revised targets.

Sectors Lagging

• Railways: Only ?20,417 crore monetised, achieving just 30% of the target.
• Civil Aviation: A mere 14% of its targeted monetisation has been achieved.

Challenges Facing the NMP

• Low Monetisation Potential: The NMP's ?6 lakh crore target represents only a small fraction (5-6%) of the total capital expenditure under the NIP.
• Disinvestment Issues: Many sectors chosen for monetisation have consistently fallen short of their disinvestment targets, raising doubts about achieving future goals.
• Long-Term Rights Concerns: Granting private entities long-term operational rights may be perceived as a form of privatisation, potentially leading to public distrust.
• Budget Clarity: There is a lack of transparency regarding how monetisation proceeds will be allocated within the government budget.
• Potential for Monopolies: Consolidation of asset ownership could lead to monopolistic practices, especially in critical infrastructure sectors.
• Taxpayer Concerns: Taxpayers are wary of the potential for double charges on public assets they initially funded.

Way Forward

• Accelerating Monetisation: The government should expedite contract-based monetisation through Public-Private Partnerships (PPP), particularly in sectors like railways and airports.
• Land Monetisation Initiatives: Engaging real estate companies to develop multi-storey buildings can generate additional revenue while enhancing housing options.
• Establishing Budget Guidelines: Clear budgeting guidelines should be developed to clarify the allocation of funds generated from monetisation, ensuring they are used for infrastructure development rather than operational expenses.

Introduction

The World Development Report 2024 addresses the phenomenon of the middle-income trap, where countries struggle to maintain growth as they transition from low to middle-income status. This report advocates for a "3i" approach—Investment, global Technology infusion, and domestic Innovation—to overcome this challenge. India faces specific hurdles, including stagnant exports, rising protectionism, and premature deindustrialization.

Understanding the Middle-Income Trap

Definition and Characteristics

• A middle-income trap occurs when a country, after achieving middle-income status, fails to progress to high-income status.
• This phenomenon typically arises when a country's per capita income reaches about 11% of US levels, leading to:
  • High wage levels that diminish competitiveness against low-wage economies.
  • Insufficient technological advancement to compete with high-income nations.

Economic Implications

• Traditional growth drivers become ineffective.
• Rising wages in labor-intensive sectors decrease competitiveness, while innovation and productivity remain stagnant.

Historical Context: India’s Income Evolution

1. Post-Independence Era (1950s-1970s)

• Per Capita Income: ?265 in 1950-51.
• Growth Rate: 3.5%, dominated by agriculture.
• Economic Structure: Heavy state intervention and public sector focus.

2. Liberalization Phase (1980s-1990s)

• Per Capita Income Growth: Accelerated to 5.6%.
• Major Shift: 1991 liberalization led to a rise in the services sector and an expanding middle class.

3. High Growth Phase (2000-2010)

• GDP Growth: 8-9% annually.
• Per Capita Income: Increased from ?16,173 in 2000-01 to ?24,295 in 2007-08.
• Sectoral Dominance: Surge in software and services exports.

4. Mixed Growth Phase (2010-2020)

• Growth Volatility: Average of 6-7%.
• Wealth Inequality: Top 1% owned 40.5% of national wealth by 2021.

5. Post-Covid Recovery (2020-Present)

• GDP: Reached $3.75 trillion.
• Current Issues: Unemployment at 8.1%, while digital payment systems expanded.

Challenges in Overcoming the Middle-Income Trap

1. Premature Deindustrialization

• The manufacturing sector's GDP share has stagnated at 15-17%, far below the target of 25%.
• Limits potential productivity gains and innovation.

2. Limitations of Services-Led Growth

• Over-reliance on the services sector hampers mass employment and inclusive growth.

3. Declining Total Factor Productivity (TFP)

• TFP growth has been declining, indicating a shift toward input-driven growth rather than efficiency-driven growth.

4. Informal Sector Dominance

• The informal economy comprises about 90% of the workforce, leading to low productivity and limited access to technology.

5. Risk of a Demographic Burden

• Youth unemployment is rising, with only 2.3% of the workforce receiving formal skill training.

6. Global Economic Headwinds

• Slowing global growth affects India’s export-led strategies, with a recent contraction in merchandise exports.

7. Infrastructure and Logistics Bottlenecks

• India ranks 38th in the World Bank’s Logistics Performance Index, highlighting significant infrastructure gaps.

Strategic Measures for India

1. Enhance Manufacturing Competitiveness

• Targeted Industrial Policies: Refine the Production-Linked Incentive scheme and extend it to emerging sectors like green hydrogen.

2. Accelerate Digital Infrastructure and Skills Development

• Leverage India's digital platforms to create a skills ecosystem and modernize vocational training.

3. Boost R&D Expenditure

• Increase public R&D spending to 2% of GDP by 2030, focusing on key sectors like renewable energy.

4. Foster an Innovation-Driven Manufacturing Policy

• Shift focus to high-value specialized manufacturing rather than competing in mass production.

5. Integrate Skills and Education

• Align educational curricula with industry needs and establish centers of excellence in tier-2 and tier-3 cities.

6. Lead in Green Technology

• Scale initiatives like the International Solar Alliance and create a national carbon market.

7. Reform Market Regulations

• Liberalize product and factor markets to enhance competition and efficiency.

Conclusion

India's path out of the middle-income trap necessitates a concerted effort to boost manufacturing, foster innovation, and address productivity challenges. By leveraging digital infrastructure and enhancing skills, alongside adopting green technologies, India can create a sustainable framework for growth. Effective execution of targeted policies will be crucial for transitioning to a high-income economy.

Overview

The Ministry of Electronics and IT (MeitY) has relaxed certain provisions related to the procurement of computing capacity for artificial intelligence (AI) solutions. This decision is part of the Rs 10,370 crore IndiaAI Mission, aimed at enhancing the country’s AI capabilities.

Key Relaxations

Annual Turnover Requirements

• Primary Bidders: Turnover requirement reduced from ?100 crore to ?50 crore.
• Non-Primary Consortium Members: Requirement halved from ?50 crore to ?25 crore.

Computing Capacity Adjustments

• The performance threshold for successful bidders has been revised:
  • FP16 Performance: Reduced from 300 TFLOPS to 150 TFLOPS.
  • AI Compute Memory: Reduced from 40 GB to 24 GB.

Importance of the Changes

These adjustments respond to concerns raised by smaller companies about exclusionary requirements that favored larger firms. The aim is to create an inclusive environment that allows start-ups to participate in the AI landscape.

AI Mission Goals

• Establish a computing capacity of over 10,000 GPUs.
• Develop foundational models with capacities exceeding 100 billion parameters.
• Focus on priority sectors such as healthcare, agriculture, and governance.

New Technical Criteria

• Companies must demonstrate experience in offering AI services over the past three financial years.
• Minimum billing of ?10 lakh required for eligibility.

Local Sourcing Requirements

• Components for cloud services must be procured from Class I or Class II local suppliers as per the ‘Make in India’ initiative:
  • Class I Supplier: Domestic value addition of at least 50%.
  • Class II Supplier: Local content between 20-50%.

Data Sovereignty and Service Delivery

• All AI services must be delivered from data centres located in India.
• Data uploaded to cloud platforms must remain within India's sovereign territory.

Implementation Strategy

• The Rs 10,370 crore plan will be implemented through a public-private partnership model.
• 50% viability gap funding has been allocated for computing infrastructure development.

Conclusion

The relaxations in AI compute procurement norms aim to support the growth of start-ups in India, fostering an environment conducive to innovation in artificial intelligence. With these changes, smaller companies are better positioned to contribute to the country's ambitious AI goals.

In News:

The Fairwork India Ratings 2024 report, which analyses the work conditions of platform workers on digital labour platforms in India, draws a picture of aggregators who are non-committal to ensuring that workers earn the local living wage and unwilling to recognise collectivisation of workers.

Key Findings:

• Overall Performance: No platform scored above six out of ten, and none achieved top points across the five assessed principles: Fair Pay, Fair Conditions, Fair Contracts, Fair Management, and Fair Representation.
• Study Background: This report is the sixth annual analysis conducted by the Fairwork India Team, in collaboration with the Centre for IT and Public Policy (CITAPP), IIIT-Bangalore, and Oxford University.

Analysis of Welfare Legislation

• The report discusses the evolving nature of platform work and its implications for proposed legislation affecting gig workers in Karnataka and Jharkhand.
• Political interest in gig workers' welfare has increased, but the effectiveness of these initiatives remains uncertain.
• Professors Balaji Parthasarathy and Janaki Srinivasan highlight the importance of ongoing research and advocacy for improving gig worker conditions.

Methodology

• Principles of Assessment: Platforms were evaluated based on five principles, each consisting of two points—one that could only be awarded if the first point was fulfilled.
• Data Collection: Worker interviews were conducted across multiple cities, including Bengaluru, Chennai, Delhi, Kochi, and Thiruvananthapuram.
• Platforms Analyzed: The study included 11 platforms from various sectors, such as logistics, food delivery, and personal care.

Detailed Findings by Principle

Fair Pay

• First Point: Bigbasket and Urban Company were recognized for implementing a minimum wage policy ensuring workers earn at least the local minimum wage.
• Second Point: No platform met the criteria for committing to a local living wage after work-related costs.

Fair Conditions

• First Point: Platforms such as Amazon Flex, BigBasket, and Swiggy provided adequate safety equipment and training.
• Second Point: BigBasket, Swiggy, Urban Company, Zepto, and Zomato offered additional protections, including accident insurance and compensation for medical-related work absences.

Fair Contracts

• First Point: BigBasket, BluSmart, and others ensured contract accessibility and data protection protocols.

Fair Management

• First Point: Amazon Flex, BigBasket, and several others provided due process in disciplinary decisions.
• Second Point: BluSmart, Swiggy, Urban Company, and Zomato were noted for regular external audits and anti-discrimination policies.

Fair Representation

• Despite increased collectivization efforts among platform workers, no platform showed a willingness to recognize collective bodies, underscoring a critical gap in worker representation.

Conclusion

The Fairwork India Ratings 2024 report highlights significant challenges in ensuring fair work conditions for platform workers in India, stressing the need for continuous advocacy and reform in the gig economy.

In News:

The Government is set to launch NULM 2.0, the latest iteration of the National Urban Livelihood Mission (NULM), aimed at enhancing the livelihoods of urban poor and vulnerable populations. This version will specifically target six key groups: construction workers, gig workers, waste management workers, care workers, domestic workers, and transportation workers.

Overview of DAY-NULM

The Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM) was initiated in 2014 by the Ministry of Housing and Urban Affairs to replace the Swarna Jayanti Shahari Rozgar Yojana. It aims to uplift urban poor through organized self-help groups (SHGs), skill development, and access to credit.

Key Features:

• Funding Structure: DAY-NULM operates as a Centrally Sponsored Scheme, with a funding ratio of 75:25 between the central and state governments, adjusted to 90:10 for North Eastern and Special Category states.
• Mobilization of Women: The mission has successfully formed over 831,000 SHGs, mobilizing more than 8.4 million urban poor women by 2023.
• Objectives: It focuses on sustainable livelihoods through skill development, financial access, and entrepreneurship, particularly for women.

Components and Achievements

DAY-NULM includes various initiatives such as:

• Skill training programs.
• Support for self-employment.
• Rehabilitation for street vendors.

Performance Highlights:

• Over 89.33 lakh women have joined SHGs, with 6.12 lakh receiving initial funds.
• Approximately 15 lakh individuals have undergone skill training, leading to employment for 8.20 lakh.
• Surveys have identified 53.76 lakh street vendors, resulting in significant documentation and support.

Introduction of NULM 2.0

NULM 2.0 is a revamped initiative designed to further support urban livelihoods through financial aid and infrastructure enhancements.

Key Features:

• Microcredit Access: Eligible individuals can obtain microcredit of up to ?4 lakh, while groups can access up to ?20 lakh, with a subsidized interest rate of 5%.
• Support for Enterprises: The funding aims to assist beneficiaries in starting small businesses, creating social infrastructure, and providing grants for innovative projects, such as sanitation machinery.

Pilot Initiative

To effectively implement NULM 2.0, the government will conduct a pilot program in 25 cities. This will focus on:

• Identifying urban poor populations.
• Ensuring targeted assistance to improve beneficiaries’ earnings and living conditions.

Conclusion

The rollout of NULM 2.0 represents a significant step in addressing the needs of the urban poor, with a comprehensive framework designed to provide financial support and improve livelihoods. By focusing on critical worker groups and leveraging microcredit, the initiative aims to foster sustainable development and enhance the quality of life for urban vulnerable communities.

Introduction

In recent months, the Income Tax (I-T) Department has intensified scrutiny of several non-governmental organizations (NGOs) in India, linking them to allegations of misconduct, particularly in relation to foreign funding and activities that allegedly stall economic development. The investigation, which began with searches on September 7, 2022, targets prominent NGOs such as Oxfam, the Centre for Policy Research (CPR), and others.

Background of the Investigation

Triggering Events

The I-T probe was initiated following extensive searches at the premises of five major NGOs, including Oxfam, CPR, Environics Trust (ET), the Legal Initiative for Forest and Environment (LIFE), and Care India Solution for Sustainable Development (CISSD).

Key Allegations

The investigation highlights several critical allegations:

• Foreign Funding: Over 75% of funding for four of the NGOs during a five-year period was sourced from abroad, which is claimed to shape their activities in India.
• Interconnections: There are allegations of overlapping personnel and funding connections between these NGOs.
• Legal Challenges: Following the cancellation of their Foreign Contribution Regulation Act (FCRA) licenses, these organizations have filed legal challenges that are currently under review by the Delhi High Court.

Violations of the FCRA

The I-T department asserts that these NGOs violated multiple provisions of the FCRA, including discrepancies in annual returns and misappropriation of foreign funds. The cancellation of their FCRA licenses has led to heightened scrutiny and legal ramifications.

Specific NGO Allegations

1. Oxfam India
   • Accused of supporting foreign entities in efforts to halt mining projects by the Adani Group, violating its stated charitable objectives.
   • Allegations include attempts to redirect funds through other NGOs post-FCRA cancellation.
2. Centre for Policy Research (CPR)
   • Charged with mishandling foreign donations and involvement in environmental litigation, notably the Hasdeo movement against coal mining in Chhattisgarh.
   • Received substantial funding for its Namati-Environmental Justice Programme, purportedly to facilitate legal actions rather than educational initiatives.
3. Environics Trust (ET)
   • Allegedly funded protests against significant industrial projects, including JSW’s Utkal Steel Plant.
   • Claims of collaboration with international organizations to impede development projects, particularly coal initiatives.
4. Legal Initiative for Forest and Environment (LIFE)
   • Accused of being used as a conduit by the US-based Earth Justice to obstruct coal mining and thermal projects in India.
   • Internal communications allegedly reveal awareness of their controversial activities.

Interconnected Operations

The investigation indicates that these NGOs may be working in concert, as highlighted by the I-T department:

• Funding Networks: For instance, Oxfam is cited as a primary funder of ET, allegedly to mobilize local communities against coal industries.
• Personnel Links: Relationships between key figures in these organizations, such as the former president of CPR, who is also associated with Care India, raise concerns about coordinated efforts.

Responses from NGOs

Denial of Allegations

The allegations have been met with strong denials from the NGOs involved. Ritwick Dutta, founder of LIFE, characterized the claims of interlinking as baseless, asserting that his organization operates independently and has no financial ties to Oxfam or CPR.

Lack of Official Responses

Other NGOs, including Oxfam and CPR, have not officially responded to the I-T department's accusations, leaving some questions unanswered regarding their operational practices.

The Role of Civil Society Organizations (CSOs) in India

Definition and Importance

CSOs encompass a range of nonprofit organizations that operate independently from the government. In India, these include:

• Non-Governmental Organizations (NGOs): Primarily focused on community welfare and development across various sectors.
• Community-Based Organizations (CBOs): Grassroots entities that directly serve local needs and interests.

Impact and Challenges

CSOs play a crucial role in advocating for vulnerable populations and addressing social issues. However, they face significant challenges, including scrutiny over funding sources and operational transparency, especially amid increasing governmental oversight.

Conclusion

The ongoing investigation into these NGOs raises critical questions about the relationship between civil society and government regulation in India. While the I-T department's crackdown aims to ensure compliance with foreign funding regulations, the implications for activism and public participation in developmental issues remain contentious. As the legal proceedings unfold, the future of these organizations and their missions may be at stake.

In News:

The Reserve Bank of India (RBI), as part of its strategy to create digital public infrastructure in the country, has announced that a new technology platform called the Unified Lending Interface (ULI) would be introduced by the Reserve Bank Innovation Hub, Bengaluru which will enable friction-less credit to farmers and MSME borrowers to begin with.

What is ULI?

The ULI platform, aims to revolutionize the credit underwriting process by enabling a streamlined and consent-based transfer of both financial and non-financial data from various sources to lenders.

1. Seamless Data Flow: ULI facilitates an efficient flow of digitized data, including crucial records like land titles, directly to lenders, enhancing the credit appraisal process.
2. Faster Credit Appraisal: The platform is particularly beneficial for smaller and rural borrowers who may lack extensive credit histories, significantly reducing the time required for credit assessments.
3. Standardized APIs: ULI employs common, standardized Application Programming Interfaces (APIs) that allow for a plug-and-play integration, simplifying the technical requirements for lenders and ensuring easy access to diverse data sources.
4. Access to Diverse Data: Lenders can access a wealth of information from various databases, including government records and satellite imagery, which can provide deeper insights into potential borrowers.
5. Opportunities for FinTechs: The platform also opens up opportunities for FinTech companies by connecting them with multiple lenders, thereby enhancing their ability to deliver tailored financial solutions.

ULI aims to create a more inclusive and efficient lending ecosystem, ultimately improving access to credit for a wider range of borrowers.

How will it work?

The ULI platform transforms the loan application process, especially for first-time borrowers and those without traditional credit histories. Here’s how it works:

1. Centralized Data Access: ULI acts as a single point of access for lenders to retrieve crucial economic data about loan applicants. This reduces the need for applicants to gather extensive documentation themselves.
2. Plug-and-Play Integration: Financial institutions can easily connect to the ULI platform through standardized APIs, allowing them to quickly access various data sources relevant to the borrower’s financial history and status.
3. Automated Data Retrieval: Instead of borrowers spending weeks collecting documents, lenders can automatically fetch necessary information from the platform. For instance, data for a dairy farmer may include:
   • Cash Flow Information: Sourced from local milk cooperatives.
   • Land Ownership: Verified through state land records.
   • Financial Insights: Derived from the farmer’s historical farming patterns.
4. Enhanced Visibility: This comprehensive data access turns what were previously blind spots for lenders into clear insights, allowing them to assess applicants more accurately.
5. Rapid Decision-Making: With immediate access to essential data, lenders can quickly determine the borrower’s income and creditworthiness. This streamlines decision-making, enabling loans to be sanctioned and disbursed within minutes.
6. Supporting Tenant Farmers: Tenant farmers, who typically struggle to obtain loans due to lack of land titles, can also benefit. ULI can facilitate loans by allowing banks to verify identity and eligibility based on the intended use of funds for agricultural inputs rather than land ownership.

In summary, ULI simplifies the loan process, making it faster and more inclusive for diverse borrowers by leveraging digital data access and automation.

How did it start?

The ULI platform, officially launched by the RBI on August 10, 2023, emerged from the need for a streamlined approach to credit appraisal in an increasingly digital landscape. Here’s how it all began:

1. Identification of Need: The RBI recognized that with rapid digitalization, there was a pressing need for a centralized platform to provide access to the data necessary for credit assessments. This was essential for facilitating frictionless digital credit delivery.
2. Pilot Project: To test the concept, the RBI initiated a pilot project focused on the digitalization of Kisan Credit Card (KCC) loans under ?1.6 lakh in September 2022. This pilot was launched in select districts across Madhya Pradesh, Tamil Nadu, Karnataka, Uttar Pradesh, and Maharashtra.
3. Encouraging Results: The initial outcomes of the KCC pilot were promising, showcasing the potential for seamless loan disbursement. The pilot demonstrated that loans could be disbursed at the doorstep, either through assisted or self-service modes, all without the need for extensive paperwork.
4. Development of ULI: Building on the success of the KCC pilot, the RBI moved forward with the establishment of the ULI platform to broaden the scope of digital credit accessibility for a wider range of borrowers.

In News:

The Periodic Labour Force Survey (PLFS) conducted by the National Statistical Office (NSO) from July 2023 to June 2024 provides crucial insights into the employment landscape in India.

Key Findings from the PLFS Report 2023-24

• Labour Force Participation Rate (LFPR):
  • The LFPR for individuals aged 15 years and above rose to 60.1%, an increase from 57.9% the previous year.
  • For males, LFPR is at 78.8%, while for females, it increased to 41.7%, up from 37.0%.
• Worker Population Ratio (WPR):
  • The WPR for the same age group stands at 58.2%. This is composed of 76.3% for males and 40.3% for females.
  • Female WPR improved from 35.9% to 40.3% during the reporting period.
• Unemployment Rate (UR):
  • The overall unemployment rate is 3.2%. It slightly declined for males from 3.3% to 3.2%, while it increased for females from 2.9% to 3.2%.

Overview of the PLFS

The PLFS, initiated in April 2017, aims to provide timely and accurate labor market data. It focuses on two main objectives:

• Short-term Employment Indicators: Measure key employment metrics every three months in urban areas using the Current Weekly Status (CWS) approach.
• Annual Estimates: Gather employment and unemployment data for both urban and rural areas, assessing them in terms of Usual Status and CWS.

Methodology and Sample Design

• The survey employs a rotational panel sampling design in urban areas, where households are visited multiple times to ensure comprehensive data collection.
• During the 2023-24 period, a total of 12,800 Field Sampling Units (FSUs) were designated, with 12,743 successfully surveyed.

Conceptual Framework

Key indicators measured include:

• Labour Force Participation Rate (LFPR): Percentage of the population working or actively seeking work.
• Worker Population Ratio (WPR): Percentage of employed individuals in the total population.
• Unemployment Rate (UR): Proportion of unemployed individuals among the labor force.

Challenges in Job Creation

India continues to face significant challenges in generating formal jobs. Key factors contributing to this issue include:

• Informalization of Employment: Growth in sectors like agriculture and construction is leading to increased informal employment, lacking social security and job protections.
• Technological Advancements: Automation and AI threaten job opportunities, even for skilled workers, as evidenced by layoffs in the IT sector.
• Skill Mismatch: Despite a push for skill development, the share of skilled jobs has declined, highlighting a growing disconnect between training programs and labor market needs.
• Policy Impacts: Past policies, such as demonetization and poorly implemented GST, have negatively impacted small and medium enterprises (SMEs), which are vital for job creation.

Way Forward:

To address these challenges, several strategies are proposed:

• Sectoral Diversification: Fostering investments in manufacturing, renewable energy, and technology can generate productive jobs.
• Support for MSMEs: Targeted financial aid and regulatory relief for micro, small, and medium enterprises are crucial for boosting their employment potential.
• Skill Development: Aligning training initiatives with current industry demands, particularly in emerging sectors, is essential.
• Focus on New-Age Services: Encouraging growth in sectors like e-commerce and online education could create diverse job opportunities.

Conclusion

The PLFS 2023-24 reveals an encouraging increase in labor force participation, particularly among women, while also highlighting persistent challenges in unemployment and gender disparities. The findings underscore the need for continued efforts to enhance job creation and improve employment conditions in both formal and informal sectors.

Overview of the Trade Deficit

India experienced a notable increase in its trade deficit during July and August 2024, primarily due to declining exports and rising imports. This trend is indicative of both domestic challenges and global economic conditions.

Understanding Trade Deficit

A trade deficit occurs when a country's imports surpass its exports, leading to a negative trade balance. While not inherently detrimental, sustained trade deficits can result in issues such as currency depreciation, rising national debt, and pressure on local industries.

Factors Influencing India's Trade Deficit

Several key elements have contributed to the widening of India’s trade deficit in recent months:

1. Decline in Exports
   • Oil Exports: A sharp decline was observed in petroleum exports, which dropped by 22.2% in July and 37.6% in August, influenced by both weakened global demand and falling oil prices.
   • Gems & Jewellery: This sector saw a reduction exceeding 20% in exports during both months, adversely affecting overall trade performance.
   • Pharmaceuticals and Electronics: These sectors also faced slower growth due to ongoing weak global demand.
2. China's Economic Slowdown
   • Exports to China, particularly in materials such as stone and iron ore, diminished as China grappled with internal economic challenges and reduced infrastructure spending, negatively impacting India's export revenue.
3. Surge in Gold Imports
   • August saw a record $10.1 billion in gold imports, more than doubling previous figures. This increase was driven by lowered import duties and heightened domestic demand for the festive season, significantly contributing to the trade deficit.
4. Decline in Oil Imports
   • On a more positive note, India’s oil import bill decreased by nearly a third due to falling global oil prices, marking the lowest petroleum trade deficit in three years. However, this reduction did not sufficiently counterbalance deficits in other areas.

Implications of the Trade Deficit

1. Currency Depreciation: A growing trade deficit may exert downward pressure on the Indian rupee, making imports costlier and potentially worsening the deficit further, given India's heavy reliance on imported commodities.
2. Impact on Economic Growth: Prolonged trade deficits can hinder economic growth by reflecting diminished export competitiveness and excessive reliance on imports.
3. Foreign Exchange Reserves: While India’s foreign exchange reserves are currently robust, a sustained deficit could deplete these reserves, complicating efforts to stabilize the rupee in the future.

Long-term Challenges and Outlook

India's trade deficit is shaped by a mixture of global and domestic influences:

• Weak Global Demand: Economic sluggishness in developed markets, such as the U.S. and EU, reduces demand for Indian exports, particularly in pharmaceuticals and textiles.
• China’s Economic Issues: As China seeks to offload surplus goods, India may face increased competition from cheaper imports, which could challenge domestic industries.
• Trade Barriers and Regulations: New international trade policies, particularly in the EU regarding environmental standards, impose additional compliance burdens on Indian exporters.

Conclusion and Strategic Recommendations

While India's escalating trade deficit poses challenges, it is not an insurmountable issue. Policymakers need to adopt strategic measures to tackle underlying structural problems:

1. Boosting Exports: Enhancing the competitiveness of export sectors through technological investment and market expansion is vital. Strengthening trade agreements can also improve market access.
2. Reducing Non-essential Imports: Minimizing reliance on luxury imports, particularly gold, while promoting domestic manufacturing can help in balancing the trade deficit.
3. Developing Domestic Industries: Fostering growth in sectors such as electronics and renewable energy will not only reduce import dependence but also enhance export capacity.
4. Managing Currency and Debt: Careful management of the rupee's valuation and maintaining adequate foreign exchange reserves are crucial in mitigating trade deficit impacts.

Achieving the ambitious goal of $1 trillion in exports for both goods and services by 2030 is attainable but requires overcoming current global economic hurdles, adapting to new trade regulations, and building a self-sufficient economy. By strategically addressing these challenges, India can work toward reducing its trade deficit while maintaining economic growth.

Context

At the International Research Conference, the Deputy Governor of the Reserve Bank of India (RBI) addressed the crucial topic of financing sustainable agriculture, emphasizing the need for effective solutions.

What is Sustainable Agriculture?

Sustainable agriculture involves farming practices that meet current food demands while conserving resources for future generations. This approach aims to:

• Protect the environment
• Reduce reliance on chemical inputs
• Efficiently use water and land

The goal is to balance productivity, environmental health, and socio-economic equity.

Benefits of Sustainable Agriculture

• Environmental Conservation: Promotes biodiversity, reduces soil degradation, and conserves water.
• Economic Stability: Lowers dependence on costly chemical inputs, improving farmers’ profitability.
• Improved Food Security: Enhances soil health and crop diversity, ensuring resilience against climate change.
• Social Equity: Farmer Producer Organizations (FPOs) empower small and marginal farmers by providing access to technology, markets, and financial resources, enhancing their bargaining power.

Challenges Facing Sustainable Agriculture

• Low Productivity: Small, fragmented landholdings hinder investment in sustainable practices and mechanization.
• Dependence on Rainfall: Approximately 60% of Indian agriculture is rain-fed, making farmers vulnerable to climate variability.
• Price Volatility: Fluctuating prices force farmers to sell at low prices during peak harvests, while limited processing capacity leads to post-harvest losses.
• Access to Finance: Small farmers struggle to obtain credit, as the formal banking system often favors larger agribusinesses.

Initiatives for Sustainable Agriculture

• Farmer Producer Organizations (FPOs): Over 24,000 FPOs formed by March 2023 enhance farmers’ access to resources and markets.
• Warehouse Receipt Financing: This model allows farmers to store produce and sell when prices are favorable, stabilizing commodity prices.
• Priority Sector Lending (PSL): RBI regulations enable loans up to ?2 crore for agricultural activities, with higher limits for FPOs involved in assured marketing.
• Climate-Smart Agriculture (CSA): India is adopting practices such as drought-resistant crops and advanced water management.
• Technology Integration and Mechanization: Initiatives like the “Per Drop More Crop” scheme promote efficient water use, while Custom Hiring Centres (CHCs) enhance mechanization, reducing labor costs.

Infrastructure is a cornerstone of economic development, and in a rapidly growing economy like India’s, its robustness is vital. Recent incidents, particularly the collapse of several under-construction bridges in Bihar, have cast a spotlight on significant issues within the Indian infrastructure sector, particularly in terms of quality control and project management. With the country's aim to become a developed nation by 2047, addressing these challenges is crucial for sustaining economic growth and ensuring safety.

Current Challenges

1. Cost Overruns and Delays: One of the most pressing issues is the frequent occurrence of cost overruns and delays. According to a report by the Ministry of Statistics and Programme Implementation, 431 infrastructure projects with investments exceeding ?150 crore each have faced cost overruns totaling ?4.82 lakh crore as of December 2023. Additionally, a significant percentage of projects are delayed, with 36% running behind schedule by 25 to 60 months and 15% delayed for over 60 months.
2. Bureaucratic Hurdles: Infrastructure projects often face delays due to the complex maze of clearances required. The implementation status of many projects indicates a lack of comprehensive planning and coordination, especially in urban infrastructure projects managed by local bodies that may lack sufficient capacity and expertise.
3. Project Management Deficiencies: Traditional project management practices in India are often outdated. There is a need for an overhaul to incorporate modern tools and techniques for real-time data management and analysis. Insufficient attention during the planning stages of projects exacerbates these issues, leading to increased costs and project failures.

Path Forward

1. Integrating Modern Practices: Adopting modern project management practices is essential. This includes real-time data management, use of advanced analytics, and adopting global best standards. For example, in the United Kingdom, the Infrastructure and Projects Authority focuses on refining project processes, while countries like China and Saudi Arabia have established agencies dedicated to end-to-end project delivery.

2. PM Gati Shakti National Master Plan: India has initiated the PM Gati Shakti National Master Plan, aimed at integrating various government departments and stakeholders into a unified platform. This GIS-based ERP portal is designed to monitor real-time progress and enhance coordination among departments. While this initiative is promising, the effectiveness will depend on the quality of implementation and oversight.

3. Holistic Program Management Approach: The “Program Management Approach” used in industrial corridor development projects, like the Shendra-Bidkin in Aurangabad, exemplifies effective management of multiple projects simultaneously. This disciplined approach, involving systematic coordination of resources and information, can be applied more broadly across infrastructure projects.

4. Professional Training and Certification: To build a capable workforce, there is a need to establish agencies for professional training in project management. Similar to the Institute of Chartered Accountants of India, such agencies can focus on developing professional ethics and responsibilities in project execution and oversight.

Conclusion

With substantial taxpayer money allocated for infrastructure development, it is imperative to prevent the pitfalls of cost overruns and project failures. A robust program management system, incorporating modern practices and professional training, will enhance the efficiency and effectiveness of infrastructure projects. This approach will not only support India’s high-growth trajectory but also contribute to creating a safer, more affluent future for its citizens.

The Centre unveiled its BioE3 (Biotechnology for Economy, Environment and Employment) policy last week.

On the face of it, the policy appears to be a routine attempt to create incentives and opportunities to energise growth in the biotech sector. But it is, in fact, about transforming existing industrial and manufacturing processes across various sectors to make them more sustainable and environment-friendly, and less wasteful.

The policy seeks to achieve this by harnessing the power of biotechnology, and developing new manufacturing methods that replicate, or mimic, processes found in natural biological systems.

Potential Benefits of Biotechnology:

• Medical Science:
  • Cures for genetic disorders.
  • Development of targeted therapies and treatments.
• Agriculture:
  • Creation of new plant varieties with desirable traits.
  • Increased crop yields and resistance to pests and diseases.
• Environmental Sustainability:
  • Bioplastics: Eco-friendly alternatives to traditional plastics (e.g., polylactic acid from corn starch).
  • Carbon Capture: Micro-organisms capture and convert CO2 into biofuels, reducing the need for CO2 storage.
• Synthetic Biology:
  • Design of novel organisms for specific functions.
  • Laboratory-grown organs for transplantation, reducing reliance on organ donors.
• Industrial Processes:
  • Replacement of chemical processes with biological ones, reducing pollution.
  • Production of sustainable materials and fuels.

BioE3 Policy Benefits for India:

• Economic Impact:
  • Expected $2-4 trillion from biomanufacturing over the next decade.
  • Prepares India for future economic opportunities in biotechnology.
• Research and Development:
  • Promotes competencies, research, and talent development.
  • Supports technology development and maturation.
• Biomanufacturing Hubs:
  • Establishes facilities for producing bio-products: chemicals, enzymes, functional foods, and more.
  • Focus areas: bio-based chemicals, smart proteins, precision therapeutics, climate-resilient agriculture, carbon capture, and marine/space research.
• Future Technologies:
  • Supports development of life support systems for space and innovative marine-based products.
  • Encourages collaboration among multiple government departments for effective implementation.

Why is it in the News?

It is important to recognize India’s progress in alleviating poverty based on norms established in the 1970s. However, there is a need to update the poverty threshold to reflect contemporary notions of a ‘decent standard of living’.

Context:

• The recent release of the Household Consumer Expenditure Survey (HCES) data by the National Sample Survey Office (NSSO) has sparked renewed debates on poverty estimation in India.
• According to estimates derived from the methodologies proposed by the Tendulkar and Rangarajan Committees, poverty levels have reportedly decreased significantly since 2011-12, with figures standing at approximately 6.3% and 10% respectively for the year 2022-23.

Evolution of Consumption-Based Poverty Measurement in India:

• India's consumption-based poverty measurement has evolved since its inception in the 1960s.
• The approach was first introduced by the 1962 Working Group and further refined by the 1979 Task Force.

The 1979 Task Force:

• The task force defined the poverty line as the per-capita consumption expenditure level that could satisfy the average daily calorie requirement of 2,400 kcal in rural areas and 2,100 kcal in urban areas.
  • This included associated non-food expenditures, and the monetary value of this norm became the foundation for subsequent poverty line revisions.

Tendulkar and Rangarajan Committees:

• These committees revisited the calorie norms and expenditure levels established by the 1979 Task Force.
  • However, they did not adequately address non-food components.
  • The committees argued that if expenditures on specific necessities meet nutritional requirements, they should also cover other essential non-food needs.

Implications of the estimates:

• The estimates indicate a notable decrease in poverty since 2011-12.
• However, some commentators advocate for a reassessment of the poverty line in light of changes in survey methodology.
• They contend that recent alterations in survey methodology in the Household Consumer Expenditure Survey (HCES) make previous methodologies unsuitable for analyzing HCES data.
• Surjit S. Bhalla, an economist and former member of the Economic Advisory Council, has provided comprehensive counterarguments to such assertions.
• Nevertheless, none of these discussions have addressed the suitability of current methodologies for monitoring poverty using consumption data.

Historical Background of Poverty Measurement:

• Early approaches: Consumption-based poverty measurement was initiated with a Working Group established by the Planning Commission in 1962 and further refined by a task force in 1979.
  • This task force meticulously outlined its rationale for establishing a poverty line specific to India.
• Definition of poverty line: It was delineated as the per-capita consumption expenditure required to fulfil average daily calorie needs (2,400 Kcal in rural areas, 2,100 Kcal in urban areas) along with associated non-food expenses.
  • This average calorie standard was derived from an analysis of the demographic and activity-based composition of the population during that period.
• The monetary value assigned to this standard became the foundation for subsequent revisions of poverty lines.
  • However, the fundamental methodology underpinning this calculation was not critically reassessed.

Reevaluating Poverty Measurement Norms in India:

• The Tendulkar and Rangarajan Committees acknowledged the evolving demographic and activity composition in India, leading them to propose adjustments to calorie norms and expenditure levels for poverty measurement.
  • However, these committees did not adequately reconsider the non-food components of the poverty line.
• At the core of their argument was the assertion that if spending within an expenditure class is sufficient to meet nutritional requirements, it should also be adequate to cover associated non-food needs.
  • This assumption is questionable in the context of modern India, as the country has undergone significant changes since the 1970s when the Task Force on Poverty was established.

Demographic and Educational Indicators in India Since the 1970s:

Several significant demographic and educational shifts have taken place in India since the 1970s:

• Life Expectancy: Life expectancy at birth has improved from 49.7 years in 1970 to 69.4 years in 2018, reflecting advancements in healthcare and overall quality of life.
• Ageing Population: The proportion of individuals aged 60 and above has grown from 6.1% in the 1970s to 10.1% by 2021.
  • This shift highlights the need for policies and programs that address the unique needs of an ageing population.
• Primary Education: The Gross Enrolment Ratio (GER) in primary education has experienced substantial growth, increasing from 62% in 1971 to universal enrolment today.
  • This progress demonstrates a stronger emphasis on ensuring access to basic education for all children.
• Higher Education: The Gross Enrolment Ratio for higher education has also seen significant growth, rising from below 6% in the 1970s to approximately 28% in recent years.
  • This development signals a greater focus on providing opportunities for advanced education and skill development.

Implications of Demographic and Educational Changes in India:

• The demographic and educational shifts observed in India since the 1970s have significant implications for out-of-pocket expenditures on health and education, as revealed by National Sample Survey (NSS) data. Key implications include:

Education Expenditures:

• The increase in primary and higher education enrolment has led to stiffer competition for aspirational jobs.
• This competition has driven higher spending on private tuition, leading to 'education poverty' among families with young children.
• Addressing this issue requires a change in the approach to education, as outlined in the National Education Policy (2020).

Health Expenditures:

• The rise in life expectancy and an ageing population have led to increased health expenditure needs, especially among the elderly.
• Changes in household composition and a growing elderly population living independently have further highlighted the need for better healthcare provisions.
• Political parties, like the ruling party with its Ayushman Bharat promise, recognize the importance of addressing these healthcare needs, indicating a potential shift in policy focus.

Elderly Population and Household Composition:

• The increase in life expectancy and decline in mortality rates have created a more age-diverse population with a larger elderly population.
• This ageing population necessitates greater attention to healthcare and financial support for the elderly, an issue that may not be adequately captured by current poverty measurement norms.

Redefining Poverty Norms for a Changing India:

• Current consumption-based poverty measures capture average population attributes but face limitations when accounting for increased population heterogeneity.
• As the population structure evolves, using averages to describe poverty becomes problematic.
  • For example: Elderly households may meet nutrition expenditure requirements but struggle with healthcare costs.
• Households with young children might cover food needs yet face challenges in meeting aspirational education expenses, like private tuition.
• These examples highlight how households could surpass extreme poverty thresholds yet lack resources for a decent living standard.
  • Consequently, updating poverty norms is essential to accurately capture the realities of diverse household needs.
• To achieve the Sustainable Development Goal of eradicating poverty in all forms, India must redefine its poverty norms, moving away from outdated standards based on 1970s data.
• By establishing fresh norms for the Amrit Kaal, India can better address the unique challenges faced by its population and make significant strides towards alleviating poverty.

Conclusion

India has made remarkable progress in alleviating poverty based on existing norms. However, to ensure a decent living standard for all citizens, it is crucial to update poverty measures to reflect current demographic and economic changes. By acknowledging the evolving needs of its population, India can continue making significant strides in poverty reduction and work towards a more inclusive and prosperous future.

Why is it in the News?

The current government policy, skewed towards consumers, unfavourably impacts farmers, necessitating a shift to enhance farmers' incomes.

Current State of India‘s Agricultural Exports:

• The current status of India's agri exports highlights a notable shortfall in achieving government targets.
• Despite aiming for $60 billion in 2022, actual exports in 2023-24 amounted to $48.9 billion, showing an 8% decrease from the previous year's $53.2 billion.
• Between 2004-05 and 2013-14, agricultural exports witnessed remarkable growth, expanding nearly fivefold from $8.7 billion to $43.3 billion.
• However, this growth trajectory slowed significantly in the period from 2014-15 to 2023-24, with an annual growth rate of merely 1.9%.
• Key exports include rice ($10.4 billion), marine products ($7.3 billion), spices ($4.25 billion), bovine meat ($3.7 billion), and sugar ($2.8 billion).

What is Agricultural Export Policy?

• The Agricultural Export Policy, commonly known as an agri-export policy, encompasses a range of governmental regulations, strategies, and incentives aimed at facilitating and encouraging the export of agricultural commodities from a specific nation.
• It encompasses diverse measures such as export subsidies, tariff adjustments, quality benchmarks, market access arrangements, financial support, and promotional efforts to assist agricultural producers and exporters in accessing global markets, enhancing their competitiveness, and broadening their export horizons.
• The Government of India introduced a comprehensive Agriculture Export Policy in December 2018, with the following objectives:
  • To diversify our export basket, and destinations and boost high-value and value-added agricultural exports, including focus on perishables.
  • To promote novel, indigenous, organic, ethnic, traditional and non-traditional Agri products exports.
  • To provide an institutional mechanism for pursuing market access, tackling barriers and dealing with sanitary and phytosanitary issues.
  • To strive to double India’s share in world agri exports by integrating with global value chains.
  • Enable farmers to get the benefit of export opportunities in overseas markets.

What is the Need for an Agri-Export Policy?

• Economic Contribution: India's agricultural exports, totalling around USD 53 billion in the fiscal year 2022-2023, constitute a significant portion of overall exports, yet the country's global share in agricultural exports remains low at 2.2% as of 2016.
• Food Security Enhancement: Despite catering to a substantial portion of the world's population with limited resources, a well-designed export policy can generate additional revenue to invest in bolstering food security and augmenting farmers' incomes.
• Inflation Control: Agricultural exports have the potential to stabilize domestic prices, benefiting consumers and producers, particularly during periods of abundant harvests.
• Job Creation: With approximately 45% of the workforce engaged in agriculture, promoting agricultural exports can foster employment opportunities, particularly in rural areas where agriculture is predominant.
• Balance of Payments Support: Agricultural exports significantly contribute to India's foreign exchange reserves, helping to offset trade deficits and maintain currency stability.
• Crop Diversity Utilization: India's diverse agricultural production offers substantial export potential, which can be tapped into through a well-structured export policy.
• Trade Relations Strengthening: Agricultural exports are pivotal in fostering and reinforcing trade ties with countries like the United States, Saudi Arabia, and the United Arab Emirates.
• Addressing Structural Challenges: The policy framework can effectively tackle obstacles such as low farm productivity, inadequate infrastructure, global price fluctuations, and limited market access.

What are the Challenges in India's Agri-Export Policy?

Several challenges hamper the effectiveness of India's agricultural export policy, requiring strategic interventions to unleash the sector's full potential:

• Restrictive Export Policies: Favoring domestic consumers over farmers often impedes the achievement of export targets.
  • Restrictions on commodities like Basmati rice, such as the Minimum Export Price (MEP) of USD 1,200, can limit export volumes.
• Subsidy-Centric Schemes: Increased subsidies during election periods, including food and fertilizer subsidies, strain fiscal discipline.
  • Populist measures like loan waivers and free power for farmers impact the financial health of the agricultural sector.
• Insufficient R&D Investment: Low investment in agricultural R&D, approximately 0.5% of agricultural GDP, hinders growth prospects.
  • Doubling or tripling R&D investments is essential for India to excel in agricultural production and exports.
• Quality and Standards: Maintaining consistent quality and meeting international standards is challenging.
  • Variability in quality, compliance issues, and difficulties in meeting Sanitary and Phytosanitary (SPS) Measures due to pests and diseases impede exports.
• Infrastructure: Inadequate infrastructure for storage, transportation, and processing results in post-harvest losses, reducing export competitiveness.
• Environmental and Sustainability Concerns: Balancing the growth of agricultural exports with environmental sustainability is crucial.
  • Over-exploitation of resources may have long-term consequences, necessitating careful resource management and sustainable practices.

Government Initiatives Promoting Agri-Export in India:

To unlock the full potential of India's agricultural exports, the government has launched several initiatives to enhance productivity, modernise infrastructure, and promote sustainable practices. Key schemes include:

• E-NAM (National Agriculture Market): A pan-India electronic trading portal, E-NAM enables farmers to sell directly to buyers, reducing intermediaries and ensuring fair prices.
  • E-NAM has integrated 1,000 wholesale markets and 585 mandis across 18 states and 3 Union Territories.
• National Horticulture Mission (NHM): Promoting sustainable horticulture practices, including organic farming and precision farming, NHM supports the establishment of over 100 Farmer Producer Organizations (FPOs) for horticultural products.
  • The mission also backs the production of high-value horticultural products for export.
• Market Access Initiative (MAI): Supporting export promotion activities, such as participation in trade fairs, capacity building, and market research, MAI has facilitated Indian exporters' participation in over 100 international trade fairs annually.
• Operation Greens: With an allocation of INR 500 crores in the Union Budget 2023-2024, Operation Greens stabilizes the supply and prices of essential agricultural commodities like fruits and vegetables.
  • The scheme reduces price volatility, ensures fair prices for farmers, and fosters sustainable agri-exports.
• Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters (SAMPADA): With a budgetary allocation of INR 6,000 crores for the period 2020-2021 to 2024-2025, SAMPADA modernizes infrastructure for agro-processing clusters.
  • This reduces post-harvest losses and increases shelf life, improving the overall export potential.
• APEDA: Promoting the export of scheduled products, APEDA provides guidelines for sustainability and quality.
  • APEDA facilitated exports of agricultural products worth USD 22.17 billion during the financial year 2022-2023.
• Agri Export Zones (AEZs): AEZs provide infrastructure development and technology adoption for sustainable agri-exports.
  • Established for commodities like mangoes, grapes, and spices, AEZs have contributed to increased export volumes.
• Promotion of Organic Farming: Initiatives promoting organic farming for environmental sustainability and the export potential of organic products have resulted in increased organic farming area, reaching 3.90 million hectares in 2022-2023, with exports of organic products totalling USD 1.04 billion.

Way Forward for a Stable Agricultural Export Policy in India:

To establish a stable and prosperous agri-export policy in India, several strategic actions and considerations must be taken into account. These include:

• Prioritizing Farmer Welfare: Ensuring that farmers receive fair prices for their produce is crucial for the success of agricultural exports and the well-being of the farming community.
• Supporting Domestic Consumers: Implementing targeted income policies to support vulnerable populations and maintain food security for domestic consumers.
• Enhancing Productivity: Increasing agricultural productivity through investments in R&D, seeds, irrigation, fertilizers, and improved farming practices to bolster global competitiveness.
• Diversifying Export Basket: Expanding the range of agricultural exports, focusing on value-added products, and targeting a wide array of international markets to minimize reliance on a select few commodities.
• Quality Assurance: Implementing strict quality standards and certification mechanisms to ensure that exported agricultural products meet international norms.
  • Establishing uniform quality and standardization protocols is vital, particularly for horticultural items.
• Infrastructure Development: Investing in modern infrastructure, such as cold storage, processing facilities, transportation, and logistics, to reduce post-harvest losses and enhance export competitiveness.
  • Offering financial incentives, subsidies, and credit facilities can encourage investments in agriculture, infrastructure, and processing facilities.
• Technology Adoption: Promoting the use of advanced agricultural technologies, precision farming, and efficient irrigation techniques to boost productivity.
  • Encouraging the growth of agri-startups and fostering innovative solutions can enhance agricultural production and export efficiency.
• Environmentally Sustainable Practices: Encouraging sustainable farming practices, including organic farming, to ensure environmental sustainability in agriculture.
• Learning from Global Best Practices: Gaining insights from successful agricultural export policies and best practices in other countries can inform India's approach.
  • Strengthening diplomatic efforts to negotiate favourable trade agreements and reduce trade barriers will provide better access to international markets.

Conclusion

To ensure India's continued growth in global agricultural trade, a stable export policy is crucial, embodying dynamism, responsiveness, and adaptability. It must prioritize agricultural sustainability, environmental responsibility, and farmer welfare, securing India's position in international trade. Balancing economic growth with farmer well-being and environmental concerns is key to unleashing India's agricultural potential. Forward-looking policies and innovative solutions will strengthen the agri-export sector, fostering a prosperous and sustainable future for all.

Why is it in the News?

Finance Minister Nirmala Sitharaman on Wednesday said the government's focus on capital expenditure and infrastructure development has directly benefited state-run companies and led to substantial growth in their stock performance.

Context:

• In a democratic system, robust opposition plays a vital role in upholding accountability and fostering balanced governance.
• However, the absence of an effective opposition can impede democratic processes, resulting in unfounded criticisms and ineffective checks and balances.
• Prime Minister Narendra Modi's government has encountered such obstacles, especially concerning its oversight of public sector enterprises (PSEs).
• Thus, it is imperative to evaluate the performance of PSEs during the Modi administration, juxtaposing it with historical contexts, and elucidating the government's strategic initiatives aimed at their revitalization.

Strategic Divestment Initiatives by the Modi Government:

• The divestment strategy adopted by the Modi government involves a well-thought-out approach to balance fiscal objectives and national interests.
• This is exemplified through the decisions made regarding Air India and Bharat Petroleum Corporation Ltd (BPCL).
• Air India Privatisation: Air India's transition from a loss-making entity reliant on government subsidies to a privately-owned enterprise signifies a strategic move to enhance efficiency and competitiveness in the aviation sector.
  • Privatisation aims to inject agility and market responsiveness into Air India's operations, fostering growth and profitability amidst intense industry competition.
  • Post-privatisation, Air India's ambitious expansion plans underscore its renewed focus on capturing market opportunities and improving financial performance.
• Retaining Stake in BPCL: Contrary to Air India, the government's decision to maintain ownership of Bharat Petroleum Corporation Ltd (BPCL) reflects strategic considerations linked to energy security and sectoral importance.
  • BPCL's extensive retail network and expertise in areas like ethanol blending align with the government's objectives in sustainable energy transition.
  • By retaining control over BPCL, the government ensures influence over critical sectors while leveraging the company's capabilities to advance national priorities such as sustainability and energy resilience.
• Strategic Decision-Making: The government's divestment strategy goes beyond immediate financial gains, considering broader strategic implications and long-term national interests.
  • Factors like sectoral significance, market dynamics, and alignment with development goals inform divestment decisions, ensuring they contribute to India's economic growth and strategic objectives.
  • Through a strategic divestment approach, the government aims to strike a balance between fiscal imperatives and broader developmental priorities, driving sustainable and inclusive growth.

An In-depth Review of PSE Performance During the Modi Era:

• Under Prime Minister Narendra Modi's leadership, Public Sector Enterprises (PSEs) have experienced notable growth and transformations across various sectors. This comprehensive analysis showcases the strides made by PSEs under the current administration:
• Financial Sector: The Modi government's intervention and reforms revitalized public sector banks (PSBs), inherited with significant non-performing assets (NPAs).
  • PSBs reported their highest-ever profits and lowest-ever NPAs in the fiscal year 2022-23, indicating a substantial improvement in their financial health and investor trust.
• Oil and Gas Sector: Oil India Ltd, an upstream oil company, achieved its highest-ever crude and natural gas production, contributing to India's energy security.
  • Indian Oil Corporation Limited (IOCL) reported record-high refinery throughput, sales volume, and net profit, highlighting its operational efficiency and market competitiveness.
• Energy Generation: Bharat Petroleum Corporation Limited (BPCL) achieved its highest-ever profit for the first nine months of any fiscal year, demonstrating resilience and adaptability in a dynamic market.
  • Coal India registered its highest-ever production, underscoring the government's emphasis on maximizing domestic coal output to meet growing demand.
• Infrastructure Development and Expansion: National Thermal Power Corporation (NTPC) set a new record for the highest-ever electricity generation in a year, strengthening India's power infrastructure.
  • PSEs like Indian Railways and Ports have undertaken ambitious plans to modernize and expand infrastructure capacity, supporting economic growth and development.

Notable Differences Between the Current Government's Strategy and Results and Those of its Predecessors:

• Comparing the current government's approach to managing Public Sector Enterprises (PSEs) with that of its predecessors reveals significant differences:
• UPA Era Mismanagement: During the UPA regime, PSEs were frequently subjected to political interference and corruption, resulting in inefficiency and stagnation.
  • Sectors like Indian Railways faced systemic challenges, such as bureaucratic hurdles and lack of accountability, leading to suboptimal performance and reduced contributions to the economy.
• Corruption and Cronyism During Past Administrations: The UPA era was tainted by major corruption scandals, damaging the credibility of PSEs and eroding public trust in the government's capacity to manage public resources.
  • Political-corporate alliances further undermined the integrity and efficiency of PSEs, compromising their capacity to serve the public interest.
• Policy Paralysis and Inefficiency: The UPA government's policy paralysis and administrative inefficiencies hindered innovation and growth in the public sector.
  • Delayed projects and bureaucratic obstacles led to missed economic opportunities and job creation constraints.
• Modi Government's Transformative Reforms: The Modi government has pursued a reform agenda to revitalize and enhance the competitiveness of the public sector through strategic vision, decisive action, and an emphasis on transparency and accountability.
  • Prime Minister Modi's leadership has emphasized accountability and performance, with measures to streamline decision-making processes, reduce red tape, and hold PSEs accountable.
  • Proactive governance and strategic initiatives, including divestment, strategic partnerships, and infrastructure investments, have unlocked new growth opportunities, improved operational efficiency, and positioned PSEs for long-term success in a global market.

Conclusion

• The governance of Public Sector Enterprises (PSEs) under Prime Minister Modi's leadership marks a transformative era characterized by forward-thinking reforms, efficient management, and a clear vision for national development.
• In the face of opposition critique, the government's strategic interventions have successfully positioned PSEs as significant contributors to India's growth trajectory, ultimately fostering a brighter and more prosperous future for the nation and its citizens.
• Through a combination of bold decision-making, transparency, and a commitment to accountability, the Modi government has revitalized the public sector and enhanced its competitiveness.
• By addressing the challenges inherited from previous administrations, the current leadership has demonstrated its dedication to promoting sustainable growth and development while effectively managing PSEs for the greater good of the country.

Why is it in the News?

Centre has been meeting its capex targets, but the trajectory of private sector and state governments is less certain.

Context:

• Policymakers in India are grappling with the imperative task of revitalizing the investment cycle. Despite the central government's success in meeting capital expenditure (capex) targets, uncertainty clouds the trajectory of investments from the private sector and state governments.
• Thus, a comprehensive examination of India's current investment landscape is essential, scrutinizing key indicators and trends to identify the hurdles and prospects in reigniting the investment momentum.

Overview of Investment Patterns:

• Fluctuating Investment Rates: The investment rate, representing gross fixed capital formation as a percentage of GDP, has shown variability in recent years.
  • After dropping to 27.2% in 2020-21, there has been a slight improvement, with the rate climbing to 31.3% in 2023-24 from 30.8% in the preceding fiscal year.
  • This increase suggests a possible resurgence in investment sentiment and activity, albeit starting from a relatively low level.
• Composition of Investments: Delving Deeper: Yet, a closer examination of investment composition reveals noteworthy nuances.
  • A significant part of the recent uptick in capital formation stems from dwelling construction, supported by government initiatives to bolster the housing sector.
  • While housing investments spur economic growth and job creation, diversification is essential for sustainable and equitable development.
• Declining Investment in Plant and Machinery: Of particular concern is the diminishing share of investments in plant and machinery, crucial for fostering productivity, innovation, and competitiveness across sectors.
  • The allocation of investment to plant and machinery declined from 36% in 2017-18 to 30.7% in 2022-23, indicating a potential shift in investment priorities or hurdles in attracting investments in manufacturing and industrial domains.

Private Sector Investment:

• Insights from CMIE Data: Examining private sector investment trends often involves analyzing data provided by the Centre for Monitoring the Indian Economy (CMIE), offering valuable insights into the investment intentions and actions of private enterprises.
• Mixed Signals in Investment Intentions: Recent CMIE data reveals a nuanced picture of private sector investment in India.
  • While new investment announcements dipped to Rs 27.1 lakh crore in 2023-24 from the previous year's Rs 39 lakh crore, they still represented the second-highest figures in a decade.
  • However, it's essential to recognize that these announcements signify intentions rather than realized investments, potentially leading to disparities between planned projects and actual investments.
• Prevalence of Private Sector Intentions: The bulk of investment intentions—around 85%—originated from the private sector, underscoring its pivotal role in driving investment dynamics.
  • Furthermore, foreign companies contributed 11% of the total investment intentions, reflecting a certain degree of confidence in India's business landscape among international investors.

Analyzing Investment Trends Across Sectors:

• Power Sector Dynamics: Investment inflows into the power sector have surged, reflecting a strategic focus on bolstering infrastructure, particularly in renewable energy projects like solar and wind power, driven by initiatives such as the Production Linked Investment (PLI) scheme.
  • This expansion not only enhances energy security and environmental sustainability but also stimulates job creation and technological advancements.
• Transportation Sector Insights: Investment intentions in transportation services, notably aviation, have risen sharply due to ambitious expansion plans by major airlines.
  • While these investments promise improved connectivity and economic growth, concerns persist about reliance on imported aircraft, emphasizing the need for initiatives to foster domestic manufacturing and technological capabilities.
• Diverse Industry Investment Trends: Various industries, including chemicals, machinery, metals, and automotive sectors, have attracted substantial investment commitments, reflecting a broad spectrum of opportunities for private sector investment.
  • However, the absence of significant investments in consumer goods industries raises questions about the depth and breadth of sectoral investments.
• Challenges in Consumer Goods: Consumer goods industries face challenges such as excess capacity, subdued demand, and high inflation, which dampen investment enthusiasm despite government incentives like the PLI scheme.
  • Lingering issues in job creation and rural demand further contribute to the subdued investment outlook in this segment.
• Impact of State Government Spending: Reduced capital expenditure by state governments in 2022-23 to meet fiscal targets poses a challenge to the investment cycle, given their significant contribution to overall investments.
  • Budgetary constraints in state governments have a ripple effect on the broader investment landscape in the country.

Way Forward:

• Promoting Sustainable Growth: While the rise in capital formation is encouraging, ensuring its sustainability and fostering long-term growth hinges on achieving a balanced distribution of investments across sectors.
  • Over-reliance on specific industries, like construction, may impede the economy's adaptability and hinder innovation and technological progress.
• Policy Imperatives for Investment Stimulus: Effective policy measures are imperative to stimulate private sector investment and cultivate a favorable investment environment.
  • Streamlining regulatory frameworks, bolstering infrastructure, fostering innovation and entrepreneurship, and addressing sector-specific hurdles can incentivize private enterprises to invest in vital areas crucial for fostering economic growth and advancement."

Conclusion

Revitalizing India's investment cycle demands collaborative action from public and private stakeholders. Despite promising sectors, obstacles like sectoral disparities, muted consumer demand, and fiscal limitations at the state level impede a comprehensive rebound. Tackling these hurdles via tailored policies to spur demand, foster sectoral variety, and bolster the investment environment will be pivotal for nurturing enduring economic progress and advancement.

Why is it in the News?

India is reportedly poised to replace the minimum wage with the living wage system, with the transition anticipated to occur by next year.

Context:

• India is reportedly considering shifting from the minimum wage to the living wage by 2025.
• India has approached the International Labour Organization (ILO) to help it chalk out a framework to assess and operationalize the living wages.
• India has asked the ILO to help it in “capacity building, systemic collection of data and evidence of the positive economic outcomes resulting from the implementation of living wages”.
  • Earlier in March, the United Nations agency forged an agreement on the living wage, which was also endorsed by its governing body.
• India, a founding member of the ILO and a permanent member of its governing body since 1922, passed the Code on Wages in 2019.

What is the Current Wage System in India?

• National Floor Level Minimum Wage (NFLMW): Established under the Code on Wages 2019, the NFLMW is determined by the government, requiring establishments to set minimum wages not below this level.
• Flexibility in Minimum Wage Standards: Section 5 of the Code on Wages 2019 prohibits employers from setting wages below the NFLMW, though states have the discretion to revise minimum wage rates as needed.
• Presently, the National Floor Wage stands at Rs 178 per day.

What’s a Living Wage?

• The International Labour Organization (ILO) defines the living wage as the level of remuneration “necessary to afford a decent standard of living for workers and their families, taking into account the country's circumstances and calculated for the work performed during the normal hours of work”.
• This decent standard of living includes being able to afford food, water, housing, education, healthcare, transportation, clothing, and other basic needs including a provision for contingencies, says the Global Living Wage Coalition.
• The goal of a living wage is to ensure the employees get an income enough for satisfactory living standards as well as reduce poverty.

What is Minimum Wage?

• Minimum wage refers to the legally mandated lowest level of compensation that employers must pay employees for their work over a specified period.
• While minimum wage endeavors to prevent low pay, living wage extends beyond by ensuring income is adequate to meet necessities like food, shelter, clothing, and other essentials, addressing the risk of workers falling below the poverty line despite earning minimum wages.
• In India, minimum wage calculation factors in variables such as the state of employment, the skill level of the worker, the nature of their job, and other pertinent factors.

Living Wage vs Minimum Wage:

• Definition: A living wage is the income required to meet basic needs and maintain a decent standard of living, while minimum wage is the lowest legally mandated compensation for workers.
• Purpose: A living wage seeks to address the risk of workers falling below the poverty line, while minimum wage aims to prevent low pay.
• Mandatory vs Voluntary: Minimum wages are legally required, whereas living wages are voluntary unless the government sets the minimum wage at the living wage level.
• Calculation: Living wages consider basic necessities and a decent standard of living, while minimum wages factor in variables like skill level, state of employment, and job nature.

Pros and Cons of Living Wages:

• Living wage is a divisive issue. Proponents of the living wage say people get paid more, leading to a rise in employee satisfaction.
• A boost in employee morale is likely to result in higher productivity.
• It also saves recruitment and training costs for companies as employee turnover falls.
• On the other hand, critics of the concept say companies may cut back on hiring if forced to pay increased wages, creating more job losses.
• Opponents also argue that imposing a living wage means creating a wage floor, which would hurt the economy by impacting businesses, especially those that cannot pay hiked salaries.

How Does Living Wage Benefit India?

• India has over 500 million (50-crore) workers, of which 90 percent are in the unorganized sector, noted ET.
• The national floor level minimum wage (NFLMW) – an amount below which no state government can fix the minimum wage – was Rs 178 per day or more depending on the location in 2023.
  • This was set at Rs 176 per day in 2017 and has not been changed since then.
• Currently, some states pay workers in the unorganized sector even below the NFLMW.
• The Code on Wages, 2019 was passed by Parliament states that the minimum wage cannot be fixed below the national wage floor.
• However, this code, which is binding on all states, is yet to be implemented.
• If India replaces the minimum wages with living wages, workers are expected to earn more.
• According to the ILO, the living wage has to be calculated following its principles and wage-setting process.

Conclusion

India's pursuit of the Sustainable Development Goals by 2030 hinges on strategic shifts, such as transitioning from minimum to living wages, to uplift millions from poverty while safeguarding their welfare. This is particularly pertinent against the backdrop of escalating income inequality, highlighting the imperative for a revamped wage system. As poverty rates decline yet inequality persists, a more equitable approach to wages becomes paramount, underscoring India's commitment to inclusive growth and social justice.

International Labor Organization (ILO):

• The International Labor Organization (ILO) is a specialized agency of the United Nations, founded in 1919 to promote social and economic justice through the establishment of international labor standards.
• The ILO operates with a unique tripartite structure, allowing governments, employers, and workers to engage in dialogue and decision-making on labor matters.

Key Roles and Functions:

• Setting International Standards: The ILO develops and adopts international labor standards in the form of conventions and recommendations, covering areas such as freedom of association, collective bargaining, child labor, forced labor, and non-discrimination.
• Technical Assistance and Capacity Building: The organization provides support to member states in enhancing their labor administration, labor inspection, employment policies, and social protection systems.
• Monitoring and Supervision: The ILO monitors the application of international labor standards in member states, offering guidance and assistance in their implementation.
• Research and Knowledge Sharing: The organization conducts research, collects data, and disseminates information on labor-related topics, facilitating evidence-based policy-making and dialogue.
• The ILO plays a critical role in promoting decent work, social justice, and labor rights worldwide, fostering cooperation among its 187 member states to address labor-related challenges and achieve sustainable development.
• The ILO headquarters are located in Geneva (Switzerland).

Why is it in the News?

One significant event during the 13th Ministerial Conference (MC13) of the World Trade Organization (WTO) in Abu Dhabi was the inability to ratify the agreement concerning investment facilitation for development (IFD). Despite garnering backing from over 70% of the membership, approximately 120 member countries, the agreement remained unadopted.

Context:

• The recent 13th Ministerial Conference (MC13) of the World Trade Organisation (WTO) in Abu Dhabi unfolded a notable occurrence as the agreement on investment facilitation for development (IFD) failed to gain adoption.
• Despite substantial backing from approximately 120 member countries, the IFD Agreement encountered resistance, particularly from India and South Africa.
• In light of these events, it becomes imperative to delve into India's opposition to the IFD Agreement and its apprehensions regarding its alignment with WTO principles, especially concerning the intertwining of investment with trade and the procedural aspects of negotiation surrounding the agreement.

What is the IFD agreement?

• The Investment Facilitation for Development (IFD) Agreement is a legally binding framework that aims to enhance investment flows and promote transparency in regulatory processes.
  • Finalized in November 2023, the agreement is the result of plurilateral negotiations initiated by 70 countries under the Joint Statement Initiative at the WTO in 2017.
• Despite initial opposition from some countries, including India, the IFD Agreement gained significant support, with 120 nations pushing for its inclusion as a plurilateral agreement within Annex 4 of the WTO Agreement.
  • Although the WTO is primarily a multilateral trade organization, the allowance for plurilateral agreements under Article II.3 of the WTO Agreement sets the stage for binding commitments among participating WTO member countries.

Key objectives of the IFD Agreement include:

• Regulatory Transparency: Increasing openness in investment policies and procedures to instill confidence and predictability in the investment landscape.
• Streamlined Administrative Procedures: Simplifying investment-related processes and reducing red tape to attract and facilitate foreign investment inflows.
• By creating a stable and transparent environment for international investments, the IFD Agreement aims to contribute to economic growth and development, catalyzing cooperation among participating WTO members without imposing obligations on non-signatory countries.

What are India’s Concerns?

• India's resistance to the Investment Facilitation for Development (IFD) Agreement stems from concerns regarding its alignment with the WTO framework and the process undertaken to integrate it into the WTO rulebook.
• Given the WTO's dispute settlement mechanism, which solely permits state-to-state legal claims, incorporating Investor-State Dispute Settlement (ISDS) appears infeasible.
• This challenge contributed to India and South Africa's significant efforts to prevent the IFD Agreement from becoming an official component of WTO regulations.

India's primary apprehensions surrounding the IFD Agreement:

• Integrating Investment into the WTO: India questions the compatibility and relevance of investment policies within the WTO's scope, particularly when considering existing platforms dedicated to investment negotiations.
• Process-related Concerns: India argues that the procedure for incorporating the IFD Agreement into the WTO rulebook must be carefully scrutinized, ensuring adherence to established protocols and consensus-building among all member nations.
• While the actual content of the IFD Agreement does not appear to be India's primary concern, the nation's stance underscores the importance of considering the broader implications of such agreements within the global trade and investment landscape.
  • As the international community navigates the complexities of investment facilitation and regulatory reform, the debate surrounding the IFD Agreement will continue to shape the future of multilateral cooperation and the evolution of the WTO's mandate.

Is Investment a Suitable Component of the WTO Framework?

• India posits that investment's integration into the World Trade Organization (WTO) may not inherently translate to increased cross-border trade, contrasting with scholarly perspectives emphasizing the interconnectedness of trade and investment.
• Citing the Organisation for Economic Co-operation and Development (OECD), it is highlighted that a substantial portion—70%—of international trade occurs within global value chains, underscoring the symbiotic relationship between trade and investment.
• Contemporary free trade agreements like the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership exemplify this integration, featuring comprehensive investment provisions encompassing facilitation and protection measures.
• Intriguingly, India's recent trade pact with the European Free Trade Association, despite including investment provisions focused on facilitation and promotion, underscores a pragmatic approach to incorporating investment elements, albeit with limitations.

Negotiating Process of the IFD Agreement:

• India has emphasized the absence of a negotiating mandate regarding investment discussions.
• India contends that the WTO's General Council's decision in 2004 ruled out talks on the nexus between trade and investment, a facet categorized under the 'Singapore issues' introduced during the 1996 WTO Singapore ministerial conference.
• These discussions were explicitly excluded from the Doha round of negotiations initiated in 2001.
• Additionally, India has pointed to the 2015 WTO Nairobi ministerial decision, which stipulates that launching negotiations on new issues multilaterally necessitates unanimous agreement among all member states.
• India argues that since consensus wasn't reached among all nations to commence negotiations on an IFD Agreement, the ensuing negotiations and the resultant text presented for adoption are deemed illegitimate.

Key Questions Surrounding the IFD Agreement:

• India's assertion of a negative mandate against initiating negotiations on the trade and investment relationship raises two critical queries warranting clarification.
• Firstly, does this negative mandate extend to all facets of investment, including facilitation?
  • Notably, the shelved investment agreement proposed during the 1996 Singapore ministerial primarily addressed market access and investment protection, leaving ambiguity regarding whether the negative mandate encompasses all investment-related aspects within the WTO.
• Secondly, does the negative mandate solely pertain to launching negotiations on new issues in a multilateral context?
  • The inquiry arises as to whether this prohibition extends to negotiations commenced on a plurilateral basis.
  • The negotiations for an IFD agreement were instigated on a plurilateral, not multilateral, basis.
• Although Article X.9 of the WTO Agreement stipulates that adding an agreement to the existing set of Plurilateral Agreements listed in Annex 4 necessitates consensus exclusively, the agreement lacks provisions mandating consensus for initiating negotiations for a Plurilateral Agreement.

Way forward:

• As the primary regulatory body for international trade, the World Trade Organization (WTO) is responsible for updating existing rules and establishing new ones.
  • However, reaching a consensus on decision-making within the WTO remains a significant challenge, often leading to legislative deadlock.
• In this context, Preferential Agreements (PAs), such as the proposed Investment Facilitation for Development (IFD) Agreement, can serve as catalysts for reinvigorating the WTO's legislative function.
  • By fostering cooperation among subsets of WTO members, Preferential Agreements (PAs) can help circumvent the challenges of consensus-building within the broader organization.
• As India continues its ascent to become the world's third-largest economy, it is increasingly critical for the nation to reassess its defensive posture toward PAs.
  • By recognizing the potential benefits of agreements like the IFD, India has the opportunity to demonstrate leadership on the global stage, support the revitalization of the WTO's legislative function, and contribute to a more collaborative and effective approach to international trade regulation.

Conclusion

The failure to ratify the IFD agreement at MC13 underscores the formidable challenges encountered by the WTO in navigating intricate matters such as investment facilitation. It underscores the divergent perspectives among member nations regarding the scope and nature of the WTO's role in governing global economic interactions. Closing these divergences becomes imperative for the WTO to adeptly address the evolving landscape of international trade and investment

Why is it in the News?

Recently, the Ministry of Earth Sciences (MoES) organized a consultative workshop in New Delhi today on the Blue Economy Pathways study report status.

Context:

• The Ministry of Earth Sciences (MoES) has collaborated with the World Bank to conduct a technical study and compile a report titled 'India’s Blue Economy: Pathways for resource-efficient, inclusive, and resilient growth in India.'
• This report aims to explore global best practices in Blue Economy implementation, develop an ocean accounting framework, enhance institutional capacity, and propose innovative finance mechanisms in alignment with India's Blue Economy Policy framework.

What is the Blue Economy?

• The blue economy, or the ocean economy, is a term used to describe the economic activities associated with the oceans and seas.
• The World Bank? defines the blue economy as the “sustainable use of ocean resources to benefit economies, livelihoods, and ocean ecosystem health”.
• The activities? commonly understood to represent the blue economy include maritime shipping, fishing and aquaculture, coastal tourism, renewable energy, water desalination, undersea cabling, seabed extractive industries and deep sea mining, marine genetic resources, and biotechnology.
• The blue economy is estimated to be worth more than US$1.5 trillion? per year globally.
• It provides over 30 million jobs and supplies a vital source of protein to over three billion people.

How do the Oceans Contribute to Sustainable Development?

• There is a Sustainable Development Goal (SDG) dedicated to oceans: number 14, ‘Life Below Water?’ aims to conserve and sustainably use the oceans, seas, and marine resources.
• It sets out seven targets for a sustainable ocean economy by 2030. So far, progress toward reaching these goals has been limited?.
• There have been some small improvements in the sustainability of fisheries and an expansion of Marine Protected Areas (MPAs), but these cover only around 7.5% of the oceans.

How are the Oceans Governed?

• Governance of the ocean and the blue economy is both complex and potentially difficult to implement, which has led to fragmented approaches to the sharing of marine resources between nations and impeded understanding of the environmental impacts of the blue economy.
• Ocean-related regulations apply to Exclusive Economic Zones (EEZs), which include territorial waters, archipelagos, and the area of sea that extends 200 nautical miles out from countries’ coastlines.
• The remaining area is called the High Seas? (or ‘open ocean’) and accounts for 64% of the world’s oceans.

Importance of the Blue Economy:

• Economic Prosperity: The Blue Economy offers substantial avenues for economic advancement across various sectors including fisheries, aquaculture, tourism, maritime transport, renewable energy, and biotechnology.
• Sustainable Resource Management: It advocates for the responsible and sustainable utilization of marine resources such as fish stocks, minerals, and energy sources, ensuring their availability for present and future generations.
• Renewable Energy Development: By fostering the exploration of renewable energy sources like offshore wind, wave, and tidal energy, the Blue Economy reduces reliance on fossil fuels, thereby combating climate change.
• Tourism Boost: Coastal and marine tourism serves as a cornerstone of the Blue Economy, stimulating revenue generation, and job creation, and bolstering local economies in coastal areas.
• Climate Change Mitigation: Healthy oceans play a pivotal role in regulating the planet's climate.
  • Through conservation efforts and sustainable practices, the Blue Economy aids in mitigating climate change impacts by preserving coastal ecosystems and reducing carbon emissions.
• Biodiversity Protection: Through the promotion of sustainable practices and responsible resource management, the Blue Economy contributes to the conservation of marine biodiversity, safeguarding endangered species and habitats.

Challenges Facing the Blue Economy:

• Pollution and Environmental Degradation: India's coastal regions confront significant pollution stemming from industrial discharge, untreated sewage, agricultural runoff, and plastic waste.
  • This pollution adversely impacts marine ecosystems, biodiversity, and the long-term sustainability of marine industries.
• Overexploitation of Marine Resources: Illegal, unreported, and unregulated (IUU) fishing practices exacerbate resource depletion, leading to diminished fish stocks and jeopardizing the livelihoods of coastal communities.
• Climate Change Impacts: The effects of climate change, such as rising sea levels, ocean acidification, and alterations in oceanic conditions, pose threats to fisheries, aquaculture, coastal infrastructure, and marine biodiversity.
• Maritime Security Challenges: India's maritime security faces multifaceted challenges including piracy, illegal trafficking, maritime terrorism, and territorial disputes, necessitating robust security measures.
• Limited Institutional Capacity and Infrastructure: Effective management and sustainable development of the blue economy require robust institutional frameworks, governance mechanisms, and infrastructure.
  • However, India grapples with capacity constraints, inadequate funding, bureaucratic inefficiencies, and regulatory gaps, hindering optimal resource management and development.

India's Blue Economy:

• India's Blue Economy, encompassing its vast coastline and Exclusive Economic Zone (EEZ), holds immense potential for driving sustainable growth and development.
• With a coastline stretching 7,517 km and an EEZ covering over two million square kilometers, India is endowed with abundant living and non-living resources.
• Although currently contributing approximately 4% to the nation's GDP, India's Blue Economy is projected to experience significant expansion with improved mechanisms and infrastructure.
  • Furthermore, the coastal economy plays a crucial role in sustaining the livelihoods of over four million fisherfolk and other coastal communities.

Four key industries are poised to propel India's Blue Economy forward:

• Fishing: Leveraging the rich marine resources to enhance fisheries production and promote sustainable fishing practices.
• Aquaculture: Developing innovative techniques to foster the cultivation of aquatic organisms, contributing to food security and livelihood opportunities.
• Ports: Investing in port infrastructure and capacity building to facilitate maritime trade, cargo handling, and logistics efficiency.
• Shipping: Strengthening the shipping industry to support global commerce, transportation, and connectivity while ensuring environmental sustainability

Government Initiatives Promoting Blue Economy:

• Sagarmala Programme: The Sagarmala Programme, a flagship initiative, focuses on modernizing India's ports, improving port connectivity, and driving port-led development.
  • It prioritizes logistics optimization, coastal shipping promotion, and the establishment of coastal economic zones to stimulate economic expansion and employment generation.
• National Policy Framework: The government has devised a comprehensive National Policy Framework for the Blue Economy, outlining a strategic path for the sustainable development and management of marine resources.
  • It aims to integrate sectors like fisheries, aquaculture, shipping, tourism, and renewable energy to foster holistic growth.
• National Marine Fisheries Action Plan (NMFAP): This plan encompasses strategies to enhance fishery resources assessment, upgrade infrastructure and technology in the fisheries sector, and encourage aquaculture development.
• Integrated Coastal Zone Management (ICZM): The government has initiated the Integrated Coastal Zone Management Program to foster sustainable development and conservation of coastal ecosystems.
• Blue Economy Cell: The Ministry of Earth Sciences has instituted a dedicated Blue Economy Cell to streamline research, policy formulation, and implementation of Blue Economy endeavors.
• Marine Spatial Planning (MSP): India is actively developing Marine Spatial Planning frameworks to ensure the efficient and sustainable utilization of marine space.

Conclusion

India's Blue Economy is on the brink of substantial expansion in the coming years.

With the government's proactive Blue Economy Mission, there's potential for this sector to emerge as a key economic driver, contingent upon effective policy implementation.

Aligned with the government's broader vision outlined in the 'Vision of New India by 2030', the Blue Economy policies are geared towards securing enduring economic benefits, fostering job creation, promoting equity, and safeguarding environmental sustainability.

Why is it in the News?

A recent World Bank Group report highlighted that women globally earn only 77 cents for every dollar earned by men, underscoring the persistent gender pay gap where women, on average, earn less than men.

Context:

• The World Bank Group's recent report sheds light on the persistent issue of the gender pay gap, revealing that women globally earn only 77 cents for every dollar their male counterparts earn.
• This disparity has been a contention, with critics sometimes questioning its existence.
  • However, the International Labour Organisation regards the gender pay gap as a tangible indicator of inequality between men and women.
• While various reports present different figures, it is crucial to acknowledge the underlying factors that contribute to this gap and work towards eradicating them to achieve equitable pay for all individuals, regardless of gender.

How is the Gender Pay Gap Calculated?

• The International Labour Organization (ILO) defines the gender pay gap as the difference between the average wage levels of all working women and men in the labor market, whether they are paid a monthly salary, hourly wage, or daily wage.
  • It is crucial to note that this gap does not exclusively represent the wage disparity between men and women with similar qualifications and job responsibilities.
  • Rather, it encompasses the overall earnings difference between all working women and men.
• While the concept of "equal pay for equal work" advocates for equitable compensation for men and women with the same qualifications and job duties, the gender pay gap reflects broader income disparities.
• There is no single, universally agreed-upon method for calculating the gender pay gap.
  • Different organizations and studies may produce varying figures due to their distinct approaches.
• Understanding the various factors contributing to the gender pay gap and addressing them through appropriate policies and initiatives is vital for achieving gender equality in the workforce and ensuring fair compensation for all workers.

Methodological Differences and the Persistence of the Gender Pay Gap:

• The variation in reported gender pay gaps can be attributed to the distinct methodologies employed by different organizations and studies.
  • For instance, Pew Research used hourly wages to calculate the disparity. At the same time, the US Bureau of Labor Statistics utilized weekly wages, considering only full-time workers, defined as those working at least 35 hours per week.
  • Such differences in approach can lead to varying estimates of the gender pay gap.
• Despite these discrepancies in methodology, it is essential to recognize that the gender pay gap is a persistent issue in most countries and industries.
  • While the extent of the gap may differ across studies, the underlying reality is that income disparities between men and women continue to be a prevalent challenge.

What are the Root Causes of the Gender Pay Disparity?

• The gender pay gap can be attributed to several interconnected factors that perpetuate income inequality between men and women.
• Firstly, women's lower labor force participation rate is influenced by prevailing gender stereotypes and societal expectations about gender roles.
  • The International Labour Organization (ILO) reveals that the global labor force participation rate for women stands at just under 47%, compared to 72% for men.
  • In India, the 2011 Census reported a workforce participation rate of 25.51% for women, against 53.26% for men.
• Secondly, even when women join the workforce, they are often concentrated in lower-paying sectors or job roles.
  • The ILO's Women in Business and Management report found that fewer women occupy management and leadership positions, particularly at higher levels.
  • They are more likely to work in support functions such as human resources and financial administration, leading to a lower average salary compared to male managers.
• A Georgetown University survey in 2013 further highlighted that the top 10 highest-paying professions, primarily in engineering and computer science, were dominated by men, while women were overrepresented in the 10 lowest-paying professions, such as arts and education.
• Additionally, women are more likely to work part-time due to limited full-time employment opportunities and family responsibilities.
  • In 73 countries, based on 2018 data, women outnumbered men as part-time workers.
  • The ILO explains that part-time work often lacks proportional benefits to full-time positions, impacting women's overall remuneration over time.
• Other institutional and socioeconomic factors, such as the traditional view of men as breadwinners, lower investments in women's education, and concerns over safety in commuting and the workplace, also contribute to the gender pay gap.
• Addressing these underlying issues and promoting gender equity in the workforce is essential to bridging the gender pay gap and achieving fair compensation for all individuals.

Understanding the Implications of the Gender Pay Gap:

• Analyzing the gender pay gap through various demographic factors reveals patterns that provide valuable insights into income disparities between men and women.
  • For example, women in their mid-30s and 40s often experience a decline in earnings compared to men in similar positions and professions.
• Critiques of the 77% statistic argue that it overlooks the "motherhood penalty," where unmarried women earn 95 cents or more for every dollar a man makes.
  • This penalty suggests that women face career growth setbacks when they take breaks to raise children, highlighting an area requiring attention to promote equal opportunities.
• The 2023 Sveriges Riksbank Prize in Economic Sciences winner, Claudia Goldin, extensively researched pay equality and argued that traditional gender roles force men to "step up" in their careers while women "step back" for family responsibilities.
  • This dynamic ultimately disadvantages both genders, as men miss out on family time, and women sacrifice their careers.
• Efforts to close the gender pay gap, such as implementing maternity and paternity leave policies and flexible work arrangements, have shown promise in reducing income disparities.
• However, the pace of progress varies, emphasizing the need for continued attention and innovation in promoting equal opportunities for all workers.