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Exam Year: 2025

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    According to the Economic Survey, the previous global paradigm of ‘stable geopolitics’ and ‘free trade and investment movement’, has been fading and the foundations on which many nations built themselves are now being shaken.

    World Moving from Free Trade & Multilateralism to Protectionism & Bilateralism

    Trade Wars – US-China tariff wars

    WTO Deadlock over Doha Development Agenda

    Rise of Bilateral/Regional Deals – Eg- RCEP

    Green Protectionism – EU’s Carbon Border Adjustment Mechanism (CBAM), US CHIPS Act

    Challenges before the Indian economy

    Fragmentation of Global Trade due to rise in tariffs, sanctions etc threaten export-oriented sectors. Eg- IT Industry

    Volatile Capital Flows

    Energy security challenges due to sanctions on Russia (40% share)

    Currency Depreciation

    Technology Barriers – New protectionist tools like data localisation rules of EU.

    Employment Impact – Labour-intensive sectors like textiles, gems, and automobiles face slowdown.

    Way Forward

    Internal Measures

    Ease of Doing Business – The Economic Survey (2024-25) key recommendation is ‘to get the domestic economic engine purring by pulling all the levers of deregulation’.

    Raising the investment rate to around 35% of GDP from the current level of ~ 31%.

    Boost domestic demand through high public capex

    Build resilience in semiconductors, defence, and critical minerals under Atmanirbhar Bharat.

    External Measures (Global Integration)

    Diversify Export Markets – Expand trade with Africa, Latin America, Central Asia, and ASEAN.

    Conclude Balanced FTAs – With EU, Canada, Australia.

    Strengthen IMEC, INSTC, and Chabahar Port for secure and cost-effective routes.

    Global South Leadership in WTO to revive dispute settlement and ensure fair rules.

    A self-sustained growth strategy is imperative for India’s long-term economic sovereignty.

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    CSOs are non-state, non-profit entities that represent citizens’ interests and act as intermediaries between the state and the people. However, their role oscillates between cooperation (as development partners) and confrontation (as watchdogs).

    Civil Society Organizations as Anti-State Actors – Arguments in Favour

    CSOs frequently expose corruption, inefficiency, and rights violations by state institutions. Governments perceive such actions as hostile scrutiny.

    Opposition to Government Policies and Projects – Eg- Narmada Bachao Andolan (NBA) opposed Sardar Sarovar dam project

    National Security Concerns – Eg- 2014 Intelligence Bureau Report claimed foreign-funded NGOs caused a “2-3% GDP slowdown” by delaying energy and mining projects.

    Mobilisation of Protests – CSOs lead agitations and mass movements that directly confront state authority. Eg- Anti-AFSPA protests in Manipur led by Irom Sharmila.

    Foreign Funding Suspicions – Eg- FCRA action against Greenpeace India for alleged anti-development activities.

    Use of PILs and Social Media Activism is perceived as obstruction. Eg- Citizens for Justice and Peace (CJP) filed petitions challenging the CAA and NRC.

    Civil Society Organizations as Non-State but Not Anti-State Actors – Arguments Against

    Complementing the State in Service Delivery – CSOs fill governance gaps in education, health, and rural development. Eg- Azim Premji Foundation Trust runs 3500+ schools

    Policy Advocacy – Eg- MKSS inspired the Right to Information Act (2005)

    CSOs empower citizens by promoting political awareness and participatory governance. Eg- ADR enhances electoral transparency through candidate data publication.

    Humanitarian and Relief Support – Eg- Akshaya Patra Foundation distributed 200 million meals during COVID-19; Goonj provided relief materials during Kerala floods.

    Promoting Inclusive Development – CSOs advance the goals of equity, gender justice, and social inclusion. Eg- Sakhi Resource Centre (Kerala)

    CSOs help India align with SDGs and climate commitments, enhancing India’s global standing. Eg- WWF-India and TERI partner with MoEFCC for biodiversity programs.

    Way Forward

    Vijay Kumar Committee Recommendations: ‘Light regulation’ of NGO

    2nd ARC: enact a law to set up an independent National Accreditation Council

    Create formal government-NGO platforms (as in Kerala’s Kudumbashree).

    Encourage Social Accountability Tools like Jan Sunwai, Community Scorecards, and Participatory Planning.

    Shift from Confrontation to Collaboration – seeing CSOs as governance partners, not adversaries

    NGOs are “integral cogs in the wheel of good governance”. A balanced partnership between genuine NGOs and the government is crucial for India’s progress.

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    India is the world’s 3rd largest energy consumer, importing over 85% of its crude oil and 55% of natural gas. The Middle East accounts for nearly 60% of India’s crude imports.

    Energy Security is dominant kingpin of India’s foreign policy due to

    India’s energy demand is projected to double by 2040 (IEA). Energy diplomacy is central to India’s economic growth and geopolitical outreach.

    Geopolitical Risks – Instability in West Asia (Iran-Israel tensions, Strait of Hormuz) threatens supply chains.

    Price Volatility – Fluctuating global oil prices widen India’s current account deficit.

    US sanctions on Iran, Venezuela, Russia limit India’s diversification options

    China’s aggressive investments in overseas oilfields and LNG projects crowd out India. Eg- in Africa

    Infrastructure Gaps – Limited strategic petroleum reserves, LNG terminals, and pipelines.

    Integrating Energy Security with India’s Foreign Policy

    A. Short-Term Measures (2025-2030)

    Diversification of Suppliers- Expand sourcing from US, Russia, Africa, and Latin America.

    Expand Strategic Petroleum Reserves capacity from 5.3 MMT to 10 MMT.

    Chabahar & INSTC Connectivity- Use Iran-Central Asia corridor to secure overland energy routes and bypass chokepoints.

    Maritime and Energy Diplomacy- Strengthen cooperation with UAE, Saudi Arabia, and Oman for logistics bases and secure sea lines of communication.

    Financial Resilience- Develop Rupee-based oil trade and local currency settlements to cushion against dollar volatility and sanctions.

    B. Long-Term Measures (2030-2050)

    “Nearshoring” energy supplies and greening the Indian grid under Neighbourhood First policy. Eg- hydropower projects in Nepal

    Review of Civil Liability for Nuclear Damage Act and Atomic Energy Act for FDI in civil nuclear power.

    Green Energy Partnerships-

    Collaborate with Gulf nations on green hydrogen, solar parks, and carbon capture (India-UAE Green Energy Corridor).

    Promote India as a global hub for renewable technology and green financing.

    Energy Investments Abroad-

    Scale ONGC Videsh and IOCL investments in upstream oil and gas fields in Iraq, UAE, Mozambique, and Russia.

    Establish a Sovereign Energy Investment Fund for strategic acquisitions.

    Critical Minerals Diplomacy- Partner with CAR and African nations for lithium, nickel, and cobalt supply chains.

    Institutional Integration- Create an Energy Diplomacy Wing within MEA for coherent foreign policy alignment.

    “Energy security is not just about fuel, it is about strategic autonomy, and India’s foreign policy must secure both.” – M.K.Narayanan

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    The Human Development Index (HDI), introduced by UNDP in 1990, measures a country’s progress in terms of health, education, and income. The Inequality-adjusted Human Development Index (IHDI), introduced in 2010, refines HDI by factoring in inequality of distribution of these achievements.

    India’s Human Development Performance

    Human Development Index (HDI)

    Rank improved from out of 193 countries.

    Since 1990, HDI improved by 53%, outpacing global and South Asian averages.

    Inequality-adjusted Human Development Index (IHDI)

    India suffers a 30.7% loss due to inequality.

    Poorest 40% hold only 20.2% of income, while the richest 10% hold 25.5%.

    Why IHDI is a Better Indicator of Inclusive Growth

    Accounts for Inequality – Unlike HDI, IHDI reduces scores based on income, education, and health disparities, showing the real distribution of gains.

    Closer to Ground Reality – Reflects what people actually experience, not just national averages. For India, 30.7% loss of human development due to inequality.

    Reveals Hidden Gaps – Exposes divides across region, caste, class, and gender that HDI alone masks. Eg- gender gap in Labour Force Participation Rate

    Guides Policy Better – Eg- targeted schemes like PM Poshan Abhiyan or Eklavya Model Schools

    Captures Inter-generational Equity – By highlighting disparities, it stresses need for equal opportunities for long-term human development.

    Comparative Value – Countries with similar HDI can differ widely in IHDI, revealing which societies are more inclusive.

    Supports SDGs – Aligns with SDG 10 (Reduce Inequality) and SDG 1 (No Poverty) by showing inequality-adjusted outcomes.

    As Amartya Sen observed, “Development is about expanding freedoms.” HDI shows progress, but IHDI shows whether that progress is fairly shared.

    Government Budgeting

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    The PLI scheme, launched in 2020, covers 14 key sectors and provides direct incentives on incremental sales of goods manufactured in India. It aims to raise manufacturing’s contribution to 25% of GDP.

    Rationale of the PLI Scheme

    Boost domestic manufacturing by overcoming the historic 16-17% manufacturing share in GDP.

    Reduce import dependence, especially in critical sectors like electronics, APIs, and solar modules.

    Integrate India into global value chains (GVCs) by attracting global manufacturers.

    Encourage scale, competitiveness, and technology transfer through incentive-based production expansion.

    Generate employment in labour-intensive and high-potential sectors.

    Promote sunrise industries (EVs, semiconductors, telecom, batteries) to position India in future technologies.

    Enhance Exports – Position India as a competitive player in global value chains.

    Achievements So Far

    achieved by PLI beneficiaries (mid-2025).

    Over 12 lakh direct and indirect jobs created.

    India became the 2nd-largest mobile producer, with 97% domestically made.

    Third-largest pharmaceutical producer globally. 50% of total pharma production is exported.

    Automotive Sector – Boosted EV components, hydrogen technologies, and high-tech auto manufacturing.

    Achieved 60% import substitution in telecom equipment.

    Issues

    Falling Manufacturing Share in GDP (from 15.4% to 14.3%) since PLI launch.

    >10% of allocated funds disbursed.

    Delays in Incentive Disbursement

    94% of incentives to pharmaceuticals and mobile-phone manufacturing

    Limited Achievement of Targets only 37% of scheme’s goal.

    Exclusion of MSMEs due to high eligibility thresholds

    Way Forward

    Faster disbursal of incentives to reduce uncertainty and improve industry cash flows.

    Move from scale-based incentives to design, R&D, and innovation incentives (chips, batteries).

    Enhance MSME participation through cluster-based PLI, separate PLI window for MSMEs

    Rationalise value-addition norms – realistic localisation targets.

    Improve coordination between Centre and States to reduce procedural delays.

    Strengthen monitoring, transparency, and impact evaluation through real-time dashboards

    Couple PLI with ease-of-doing-business reforms and plug-and-play infrastructure

    As PM Modi stated, “Aatmanirbharta is the cornerstone of building a Viksit Bharat.” Strengthening PLI can help realise this objective.

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    Fiscal federalism refers to the financial relations between centre and states, covering the division of taxation powers, expenditure responsibilities, and transfer mechanisms. Article 268 – 293 deal with Fiscal Federalism in India.

    Evolving Pattern of Centre-State Financial Relations in Planned Development

    1950-1990- Centralised Planning Era

    The Planning Commission controlled transfers through discretionary plan grants.

    The Finance Commission played a limited role in fiscal transfers.

    The Centre shaped State priorities through proliferation of CSS.

    1991-2014- Reform & Decentralisation Phase

    Economic liberalisation gave States more fiscal autonomy in revenue and expenditure.

    Introduction of VAT (2005) boosted State revenues through a buoyant tax base.

    CSS were rationalised but tied funds still constrained State flexibility.

    2015 onwards- New Federalism Phase

    The 14th Finance Commission raised devolution to 42%, enhancing fiscal space for States.

    NITI Aayog replaced the Planning Commission and adopted a consultative approach.

    GST (2017) introduced pooled sovereignty and created a shared tax regime.

    The 15th Finance Commission continued 41% devolution but increased performance-linked grants.

    Impact of Recent Reforms on Fiscal Federalism

    Positive Impacts

    Institutionalised Cooperative Federalism – GST Council as joint decision-making forum.

    Economic Efficiency – GST reduced cascading taxes, transport time cut by 33%, tax base expanded from 66 lakh (2017) to 1.5 crore+ (2024), collections near .

    Strengthened Development Role – States’ developmental expenditure rose from 8.8% of GDP (2004-05) to 12.5% (2021-22).

    Negative Impacts

    The Centre retains major taxation powers (income tax, CGST, natural resources), while States restricted to SGST.

    Cesses & surcharges grew, shrinking States’ effective share from 35% (2015-20) to ~31% (2020-24).

    Delayed GST compensation, especially during COVID, undermined States’ trust.

    Borrowing capped at 3% of GSDP, with enhanced limits tied to reform conditions (e.g., power sector).

    The 15th FC’s 45% income distance weight penalised better-performing States (TN, Kerala, Karnataka).

    Grants-in-aid declined from to , reducing States’ fiscal flexibility.

    CSS burden increased as States finance a larger share but have little role in design.

    Way Forward

    Equity in devolution – Use HDI as a parameter in horizontal tax distribution.

    Off-budget borrowings – Scrutinise and report to ensure transparency and accountability.

    Horizontal imbalance – Guarantee minimum share for rich States and set a ceiling for poorer States.

    Increase Devolution to 50% under 16th FC.

    Include Cess/Surcharge in divisible pool

    Restructure CSS – Consolidate into fewer umbrella schemes

    For India’s fiscal federalism to be effective, it must rest on the principles of autonomy, adequacy, and elasticity.

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    Social capital refers to networks, relationships, and norms that enable collective action for mutual benefit. For women, social capital is built through Self-Help Groups (SHGs), PRIs, and grassroots networks.

    Women’s Social Capital Advancing Empowerment

    Strengthening Collective Voice in governance and community decision-making.

    Economic Empowerment – Social capital facilitates microfinance, entrepreneurship, and livelihood diversification. Eg- Kudumbashree (Kerala) and Jeevika (Bihar)

    Promoting Information and Knowledge Sharing – Eg- Mahila Kisan Sashaktikaran Pariyojana (MKSP) enables peer learning in sustainable agriculture and technology use.

    Building Social Solidarity and Mutual Support – Women’s collectives provide psychosocial and emotional support against domestic violence, exclusion, and crises.

    Expanding Political Participation- Women constitute 46% of Panchayati Raj representatives (MoPR, 2024), many emerging from SHG or NGO networks.

    Improving Social Accountability – act as watchdogs, ensuring transparency in welfare programs. Eg- SHG federations in Andhra Pradesh monitor PDS.

    Women’s Social Capital Promoting Gender Equity

    Challenging Patriarchal Norms -Collective action enables women to question gender stereotypes and claim public space.

    Redistributing Power -women influence policy and community priorities.

    Inclusive Development -Strengthens intersectional representation (Dalit, tribal, minority women).

    Bridging Social Divides -Networks connect women across caste, class, and regional boundaries, fostering shared identity and solidarity.

    Challenges

    The enduring Devī-Dāsī dichotomy-idolizing women as sacred yet accepting their subjugation-reveals deep-rooted cultural norms that legitimize gender inequality.

    Tokenism in representation: Eg-“Sarpanch Pati” culture undermines effective female leadership

    “Missing Middle” finance trap – SHGs they outgrow microcredit but cannot access medium-scale loans.

    Regional Imbalance: Concentration of SHGs in southern states (71%); weak in the north and northeast.

    Way Forward

    Gender Sensitisation in Governance: Mandatory training for bureaucrats and police.

    Implementation of Nari Shakti Vandan Adhiniyam (2023): Ensure 33% reservation in legislatures.

    Integrate unpaid domestic work into GDP measurement and social protection systems.

    Adopting ILO’s 5Rs (recognition, reduction, redistribution, reward, representation) can help in realising Nari Shakti and SDG 5.

    Human Resources

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    The “paradox of poverty” refers to the coexistence of abundant resources and persistent poverty. This paradox arises primarily due to inequality in the ownership and control of resources.

    Paradox of poverty

    Growth with Poverty – India is the 5th largest economy, yet 16.4% population lives in multidimensional poverty (NITI Aayog, 2023).

    Urban Prosperity vs Slums – Cities contribute over 60% of GDP, but 65 million people live in urban slums.

    Link Between Resource Inequality and Poverty

    Land Ownership Inequality

    According to NSSO 77th Round (2019), the top 10% of landowners control over 50% of agricultural land, while landless households form nearly 55% of the rural poor.

    Small and marginal farmers face low productivity, credit exclusion, and income insecurity, perpetuating poverty.

    Capital and Wealth Concentration

    The Oxfam Inequality Report (2024) notes that the top 1% of Indians own over 40% of national wealth, while the bottom 50% own only 3%.

    This leads to unequal access to investment, employment, and enterprise opportunities, reinforcing poverty among asset-poor households.

    Unequal Access to Education and Skills – Poor families cannot invest in quality schooling, health, or digital access, resulting in low productivity and employability. This inequality in knowledge resources leads to income disparity.

    Gender and Social Inequality

    Only 13% of agricultural landholders in India are women (Agriculture Census 2021).

    These groups remain disproportionately poor, illustrating how resource inequality and social hierarchy reinforce each other.

    Regional Disparities

    States rich in natural resources (e.g., Jharkhand, Odisha, Chhattisgarh) also show high poverty and low human development — a clear manifestation of the resource paradox.

    Extraction without equitable sharing of benefits creates “resource curse” poverty.

    Other Causes of Poverty

    Colonial Legacy: deindustrialization of the economy and exploitation of agricultural resources. Eg- India’s GDP share fell from 24.4% in 1700 to 4.2% in 1950

    Jobless Growth: Despite 7%+ GDP growth, unemployment among youth remains 17.3% (PLFS 2022-23).

    Governance and Policy Failures due to high centralization, corruption, and overlapping. Eg- 30% of NREGA payments are delayed beyond the 15-day limit.

    Populism rather than capacity building: Eg: Free Power Scheme in Punjab.

    Polycrisis – multiple crises of slow economic growth, increased fragility, climate risks, and heightened uncertainty have come together at the same time. (WB)

    Way Forward

    Social Determinants Approach: Integrate health with nutrition, sanitation (Swachh Bharat), and clean energy (Ujjwala Yojana). Eg- Gati Shakti Mission Model

    Expand MGNREGA and link with climate-resilient livelihoods (water conservation, afforestation).

    Women Empowerment by adopting best practices like Kerala’s Kudumbshree Model

    Adopt data-driven local interventions under Aspirational Districts Programme to target high-burden regions.

    Adopt Brazil’s Bolsa Família conditional cash transfer scheme

    Land and Asset Redistribution: Promote tenancy rights and women’s joint land ownership.

    Inclusive Financial Access: Strengthen PM Jan Dhan-Aadhaar-Mobile (JAM) and MUDRA loans for micro-entrepreneurs.

    As Amartya Sen observed, poverty is not merely lack of income but lack of capabilities. Bridging resource inequality is key to achieving inclusive growth and social justice (Article 39 (b) & (c)).

    International Relations

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    The power to pardon is an essential sovereign function, allowing the Head of State to grant clemency and show mercy, in the interest of justice, humanity, or public welfare.

    Difference

    However, there are a few similarities

    Preemptive Pardons

    Pardons granted before conviction or even before formal charges are filed, protecting from future prosecution.

    Eg- President Gerald Ford’s 1974 pardon of Richard Nixon in the Watergate scandal.

    While the power to pardon is vital as a safety valve of justice, it must be exercised with restraint, transparency, and caution.

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    The World Bank defines e-governance as the use by government agencies of information technologies that can transform relations with citizens, businesses, and other arms of government.

    E-governance Projects

    Government to Citizen (G2C) – UMANG, DigiLocker

    Government to Business (G2B) – MCA21, GSTN, GeM Portal

    Government to Government (G2G) – PRAGATI, e-Office

    Government to Employee (G2E) – SPARROW, iGOT-Karmayogi

    Built-in Bias Towards Technology and Back-End Integration

    Infrastructure-Centric Approach: Focus on servers, networks, and databases rather than citizen interface.

    Neglect of ease of access for end-users. Eg- complexity in GSTN and MCA 21 portals.

    Exclusion Errors: Aadhaar authentication failures lead to denial of benefits. Eg- Jharkhand PDS (2017) saw 10-15% exclusion (NITI Aayog).

    Technology Outpacing Capacity: Rapid adoption of AI, blockchain, and analytics without adequate digital literacy or institutional capacity at the local level.

    Lack of User-Centric Designs

    Language and Accessibility Barriers: Most portals available only in English, excluding non-English users.

    Complex Interfaces and Poorly designed websites discourage participation. Eg- multiple logins and verification steps.

    Digital Divide and Exclusion: Only 43% of rural households have internet (NFHS-5, 2021).

    Most systems lack built-in feedback loops or grievance redressal.

    Absence of Design Thinking: Systems designed from administrative, not citizen, perspective

    One-Size-Fits-All Approach: Uniform design ignores regional, gender, and social diversity, affecting inclusivity.

    However, there are few Achievements

    UMANG App: Unified access to 2,300+ government services in 23 languages

    MyGov Platform: Enables citizen consultation and idea crowdsourcing.

    Jan Soochna Portal (Rajasthan): Promotes proactive disclosure of welfare data.

    eSanjeevani Telemedicine Platform: Over 18 crore consultations, with simple, accessible interface for rural users.

    BHASHINI: Supports 35+ Indian languages, breaking language barriers and enhancing inclusivity.

    PMGDISHA: Over 6.3 crore citizens trained in digital literacy.

    Way Forward

    Adopt Design Thinking: Involve citizens in service design and usability testing.

    Local Language Interfaces: Scale BHASHINI integration across all digital services.

    Social Audits and Human Interface: Combine digital governance with local institutions for last-mile trust.

    Strengthen Digital Infrastructure: Accelerate BharatNet Phase-II to connect all Gram Panchayats

    India must move toward “Technology with Inclusion” – ensuring no beneficiary is left behind.

    Civil Society Organisations

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