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GS Paper: GS3-12.Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth

  • Building on the revival of the manufacturing sector

    Why in the News?

    Manufacturing output grew by 21.5% in 2022-23, but the GVA (Gross value addition) only grew by 7.3%. This is because input costs increased sharply by 24.4%, making production more expensive. As a result, even though industries produced more, their profits and value-added were reduced.

    Note: GVA represents the value added by industries, while manufacturing output refers to total production. GVA reflects the economic contribution, factoring in costs like inputs.

    What is the present scenario of India’s manufacturing sector?

    • Growth Momentum: India’s manufacturing sector is experiencing significant growth, with a reported output increase of 21.5% in 2022-23, as indicated by the Annual Survey of Industries (ASI).
      • This growth is attributed largely to the Production Linked Incentive (PLI) scheme, which has played a crucial role in boosting production across various sectors, including electronics, pharmaceuticals, and automobiles.
    • Sectoral Contributions: Key sectors benefiting from the PLI scheme, such as basic metals and motor vehicles, collectively contributed 58% to total manufacturing output, showcasing robust performance driven by these incentives.
    • Positive Economic Indicators: The gross value added (GVA) from manufacturing grew by 7.3%, highlighting an overall recovery in the sector post-COVID-19 disruptions.

    What are the current challenges facing the manufacturing sector?

    • Input Cost Surge: A significant challenge is the rising input prices, which increased by 24.4% in 2022-23. This surge has created a gap between manufacturing output growth and GVA growth, indicating that while production volumes are increasing, profitability is being squeezed due to higher costs.
    • Regional Imbalance: Manufacturing activity is heavily concentrated in a few states—Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Uttar Pradesh—accounting for over 54% of total manufacturing GVA. This concentration limits equitable development across the country.
    • Skill Development Needs: There is a pressing need for skill enhancement to meet the demands of evolving manufacturing technologies and processes.

    How can digital transformation contribute to the future of manufacturing?

    • Adoption of Advanced Technologies: Digital transformation can enhance manufacturing efficiency through automation, data analytics, and IoT (Internet of Things) integration. This can lead to improved productivity and reduced operational costs.
    • Supply Chain Optimization: Digital tools can streamline supply chain management, making it more resilient to disruptions and better able to respond to global demand fluctuations.
    • Enhanced R&D Capabilities: Investing in digital technologies can foster innovation in product development and advanced manufacturing techniques, positioning India as a leader in high-tech manufacturing sectors.

    What strategies can be implemented to stimulate growth in manufacturing? (Way forward)

    • Expand PLI Scheme Scope: To further stimulate growth, the PLI scheme should be extended to include labour-intensive sectors such as apparel and furniture, as well as emerging industries like aerospace and space technology. This could unlock new growth opportunities and reduce import dependency.
    • Streamline Import Regime: Implementing a simplified three-tier tariff system for imports—0–2.5% for raw materials, 2.5%–5% for intermediates, and 5%–7.5% for finished goods—could help lower input costs and enhance competitiveness.
    • Focus on MSMEs: Tailoring PLI incentives for micro, small, and medium enterprises (MSMEs) by lowering capital investment thresholds could empower these businesses to scale up and innovate.

    Mains PYQ:

    Q  Can the strategy of regional-resource-based manufacturing help in promoting employment in India? (UPSC IAS/2019)

  • Why some PLI schemes are in the slow lane?

    Why in the News?

    Six out of the 14 Production-Linked Incentive (PLI) schemes, including textiles, solar modules, IT hardware, automobiles, advanced chemical cells (ACC), and speciality steel, are progressing at a relatively slower pace.

    What are the primary reasons for the slow implementation of PLI schemes?

    • Stringent Eligibility Norms: Many industries have reported that the eligibility criteria for participation in PLI schemes are too stringent, which limits the number of companies that can benefit from the incentives.
    • Initial Setup Challenges: Establishing a domestic manufacturing base from scratch is a monumental task. Industries such as solar modules and advanced chemistry cells (ACC) require substantial time—ranging from one-and-a-half to three years—to set up manufacturing operations, delaying employment generation.
    • Access to Resources: Companies face difficulties in accessing critical resources, including Chinese machinery and skilled technicians, which can hinder their ability to ramp up production quickly.
    • Market Dependency: Some sectors remain heavily reliant on imports and have not yet transitioned to a self-sufficient manufacturing model, impacting their growth under the PLI framework.
    • Slow Disbursement of Funds: The initial years of the scheme saw minimal disbursement of funds, with only a small percentage of the total incentive outlay being paid out in the first two years.

    Which sectors are experiencing the most significant slowdowns, and why?

    • Textiles: This sector is struggling due to high competition and stringent norms that have slowed down participation and growth.
    • Solar Modules: Despite being a strategic sector for renewable energy, delays in establishing manufacturing capabilities have led to slow progress. 
      • As of June 2024, India’s solar module manufacturing capacity reached 77.2 GW, but the solar cell capacity was only 7.6 GW, leading to supply shortages that delayed projects.
    • Automobiles: While some companies are making progress, the automobile sector overall is hindered by initial setup challenges and fluctuating market conditions. 
      • Factors such as rising raw material costs and shifts in consumer preferences towards electric vehicles are creating a complex environment for traditional automakers.
    • Advanced Chemical Cells (ACC): Similar to solar modules, this sector faces long commissioning periods that delay employment outcomes. Because of the lengthy development timelines for manufacturing facilities and the need for substantial investment in technology are contributing to slower growth in this strategic area.
    • IT Hardware: Although recently upgraded with increased funding, it still lags behind in implementation compared to more successful sectors like mobile manufacturing.

    What measures can be taken to enhance the effectiveness of PLI schemes? (Way forward)

    • Revising Eligibility Criteria: Simplifying the eligibility requirements could encourage more companies, especially smaller firms, to participate in the schemes and benefit from incentives.
    • Increasing Support for Supply Chains: Establishing robust supply chains is crucial. The government could provide additional support to smaller suppliers who are essential for scaling up production across sectors.
    • Streamlining Resource Access: Facilitating easier access to necessary machinery and skilled labor can help companies ramp up production more effectively and reduce dependency on imports.
    • Regular Reviews and Adjustments: Continuous monitoring and adjustments based on sector performance can help identify bottlenecks early and allow for timely interventions.
    • Encouraging Ancillary Industries: Promoting the establishment of ancillary industries around larger beneficiaries could create additional jobs and enhance local manufacturing capabilities.

    Mains PYQ:

    Q  Can the strategy of regional-resource-based manufacturing help in promoting employment in India? (UPSC IAS/2019)

  • [pib] Indian Chemical Council wins 2024 OPCW-The Hague Award

    Why in the News?

    The Indian Chemical Council (ICC) was honored with the prestigious Organisation for the Prohibition of Chemical Weapons (OPCW), The Hague Award during the 29th Session of the Conference of the States Parties.

    Significance of the OPCW-The Hague Award

    • Purpose: The award recognizes contributions to advancing the goals of the Chemical Weapons Convention (CWC), focusing on chemical safety, disarmament, and global security.
      • This year, the award was given to the Indian Chemical Council (ICC), the first chemical industry body to receive it, for its role in promoting chemical safety and CWC compliance.
    • Global Impact: The award emphasizes ICC’s work in collaboration with international bodies and advocacy for sustainable practices in chemical security.
    • Legacy: The OPCW, which won the Nobel Peace Prize in 2013, continues to honor impactful organizations and individuals contributing to the global disarmament agenda.

     

    What is the Chemical Weapons Convention (CWC)?

    Details
    What is it? • CWC bans the development, use, and stockpiling of chemical weapons and mandates their destruction.
    • Genesis: Negotiations began in 1980.
    • Established: Opened for signature on January 13, 1993, and entered into force on April 29, 1997.
    • More comprehensive than the 1925 Geneva Protocol, which only banned the use of chemical weapons.
    Structure and Functions • Conference of States Parties (CSP): The main decision-making body, meeting annually.
    • Executive Council: 41-member body overseeing CWC implementation.
    • Technical Secretariat: Provides support for verification and compliance.
    • Verification: Inspects facilities and ensures compliance with the treaty.
    Membership criteria and members • Open to all nations: Any state can join if it meets requirements.
    • 193 States-Parties: Includes most nations.
    • Non-Signatories: Egypt, North Korea, and South Sudan have neither signed nor ratified the CWC.
    Functioning Arm • Organization for the Prohibition of Chemical Weapons (OPCW) implements the CWC, headquartered in The Hague.
    • Role: Oversees the destruction of chemical weapons and ensures treaty compliance.
    • Inspection: Conducts inspections of chemical facilities worldwide.
    • Awards: The OPCW won the Nobel Peace Prize in 2013 for its efforts in chemical weapons elimination.

     

    PYQ:

    [2016] With reference to ‘Organization for the Prohibition of Chemical Weapons (OPCW)’, consider the following statements:

    1. It is an organization of the European Union in working relation with NATO and WHO.
    2. It monitors the chemical industry to prevent new weapons from emerging.
    3. It provides assistance and protection to States (Parties) against chemical weapons threats. Which of the statements given above is/are correct?

    (a) 1 only
    (b) 2 and 3 only
    (c) 1 and 3 only
    (d) 1, 2 and 3

  • Why India’s trade deficit is not necessarily a weakness?

    Why in the News?

    India’s ongoing trade deficit, where imports exceed exports, is often viewed as a sign of weakness in Indian manufacturing.

    What is the nature of India’s trade deficit?

    • Trade Deficit in Goods: As of October 2024, India recorded a merchandise trade deficit of $27.1 billion, which narrowed from $31.5 billion in the same month the previous year.
    • Net Exporter of Services: India has established itself as a significant player in the global services market, with services exports constituting a substantial portion of its overall trade.
      • In FY 2023-24, India’s services exports amounted to approximately $309 billion, contributing significantly to offsetting the goods trade deficit
    • Foreign Capital Inflows: The trade deficit is often viewed positively as it correlates with India’s ability to attract foreign investment.
      • For instance, India’s current account deficit was about 1.1% of GDP in June 2024, indicating that capital inflows are necessary to balance this outflow.
    • Current Account Balance: The current account deficit (CAD) reached approximately $9.7 billion in the April-June 2024 quarter, reflecting the need for capital inflows to support economic growth and stability.
      • India’s current account deficit has been maintained at around 2% of GDP, which is generally considered manageable within the context of its economic growth and investment strategies.

    Why do we hold reserves?

    • Cushion Against Economic Shocks: Reserves are held as a safeguard against potential economic disruptions, such as sudden spikes in oil prices that could worsen the current account deficit.
    • For Cost Management: While holding reserves incurs costs (e.g., lower returns on reserves compared to returns on foreign investments), they are essential for maintaining economic stability and investor confidence.
    • Optimal Level of Reserves: India aims to maintain adequate reserves without excessive accumulation. This involves balancing the need for emergency funds against the costs associated with holding those reserves.

    What are the Steps taken by the Government? 

    • Make in India Initiative: Launched in 2014, this initiative aims to boost domestic manufacturing by encouraging both foreign and domestic companies to manufacture their products in India.
      • It focuses on sectors such as electronics, automobiles, and pharmaceuticals to increase production capabilities, reduce dependency on imports, and enhance export competitiveness.
    • Production-Linked Incentive (PLI) Scheme: Introduced in 2020, the PLI scheme provides financial incentives to manufacturers across various sectors, including electronics, textiles, and pharmaceuticals.
      • This program is designed to attract investments, promote local manufacturing, and increase exports by enhancing the global competitiveness of Indian products.

    What strategies can mitigate the effects of the trade deficit? (Way forward)

    • Boosting Domestic Demand: Encouraging greater domestic consumption can help increase manufacturing output. Rising domestic demand can lead to higher production levels without necessarily increasing imports.
    • Enhancing Export Competitiveness: Focusing on sectors where India has a comparative advantage, such as pharmaceuticals and automobiles, can help increase export volumes and reduce the trade deficit.
    • Diversifying Import Sources: Reducing reliance on specific countries for imports (e.g., crude oil) by diversifying sources can help stabilize import costs and mitigate fluctuations in global prices.
    • Investing in Manufacturing Capabilities: Strengthening domestic manufacturing through policies supporting local industries can reduce import dependency and enhance export capacity.

    Mains PYQ:

    Q Craze for gold in India has led to a surge in the import of gold in recent years and put pressure on the balance of payments and the external value of the rupee. In view of this, examine the merits of the Gold Monetization scheme. (UPSC IAS/2015)

  • Are CSR contributions to agriculture properly tracked?

    Why in the News?

    Ten years ago, India became the first country to legally mandate Corporate Social Responsibility (CSR). The section 135 of the Companies Act 2013 establishes the rules governing CSR. 

    • According to the National CSR Portal, ₹1.84 lakh crore in CSR funds was disbursed between 2014 and 2023.

    About CSR: 

    Corporate Social Responsibility (CSR) is a business practice where companies contribute to social, economic, and environmental betterment, addressing societal needs alongside their profit-making objectives.

    • In India, the minimum percentage of a company’s net profit that must be spent on corporate social responsibility (CSR) is 2%.

    Sectoral division of CSR: 

    • Education: Receives the highest CSR share (33%-40%) for building schools, scholarships, infrastructure, and vocational training.
    • Health Care: Allocates 20%-30% of CSR funds to hospitals, health camps, sanitation, and disease prevention.
    • Environmental Sustainability: Accounts for 5%-10% of CSR funds, with projects in biodiversity conservation, waste management, and renewable energy.

    CSR’s Role in Agriculture

    • Claims 10%-15% of CSR funds, targeting infrastructure, agricultural practices, and livelihood support.
    • Since the enactment of the Companies Act in 2013, which mandates CSR spending, a total of Rs 1.84 lakh crore has been disbursed in CSR funds from 2014 to 2023. 
      • These funds have increasingly targeted sustainability initiatives within agriculture, with 23% of surveyed companies prioritizing “environment and sustainability” in their CSR activities.
    • Over 90.8% of farmers involved in CSR programs reported improvements in income or risk reduction due to these initiatives.  

    How much of an impact does Agriculture have on India’s GDP? 

    • Agriculture contributes approximately 15% to 18.2% of India’s GDP, reflecting a decline from 35% in 1990-91 due to rapid growth in the industrial and service sectors. The average annual growth rate of the agricultural sector has been around 4% over the last five years. (acc to pib data)
    • Agriculture remains crucial for employment, providing livelihoods for about 42% of the population, which is significantly higher than the global average of 25%.

    What are the key requirements to improve agricultural sustainability?

    • Investment in Infrastructure: There is a pressing need for capital investment in infrastructure development, including irrigation systems, cold storage, and transportation networks to reduce post-harvest losses and improve market access.
    • Technological Advancements: Adoption of modern agricultural practices and technologies is essential. This includes better seed varieties, efficient irrigation methods, and sustainable farming techniques to enhance productivity.
    • Environmental Sustainability Initiatives: Projects focusing on water conservation, energy-efficient irrigation, and agroforestry are critical for maintaining ecological balance while improving agricultural output.

    What hinders CSR’s potential for agriculture?

    • Lack of Clear Reporting Mechanisms: One of the main obstacles is the absence of robust frameworks to track and categorize CSR funding specifically directed towards agricultural initiatives. Current reporting practices do not emphasize agriculture-related CSR activities adequately.
    • Diverse Allocation Categories: CSR activities can fall under multiple categories (e.g., gender equality, and environmental sustainability), making it difficult to isolate funds specifically aimed at agricultural sustainability. This lack of specificity hampers effective monitoring and impact assessment.
    • Need for Distinct Sector Identification: To maximize CSR contributions to agriculture, it is crucial to identify agriculture as a distinct sector within CSR activities. This would streamline funding processes and enhance transparency and accountability in how funds are utilized for agricultural development.

    Way forward: 

    • Establish Agriculture as a Separate CSR Category: Need to create a distinct sector for agriculture in CSR reporting to streamline funding, improve transparency, and enable targeted monitoring of agriculture-focused initiatives.
    • Implement Comprehensive Reporting Frameworks: The government should develop robust mechanisms for tracking CSR funds specifically allocated to agricultural projects, ensuring clear categorization and facilitating better impact assessments.

    Mains PYQ:

    Q With a consideration towards the strategy of inclusive growth, the new Companies Bill, 2013 has indirectly made CSR a mandatory obligation. Discuss the challenges expected in its implementation in right earnest. Also discuss other provisions in the Bill and their implications. (UPSC IAS/2013)

  • Forging a future of Self-sufficiency and Economic Resilience 

    Why in the News?

    Chhattisgarh, with its cultural richness and natural resources, is starting an industrial path with the 2024-29 policy.

    • This plan is part of “Amritkaal: Chhattisgarh Vision@2047” to grow self-sufficient.

    CASE STUDY: “Amritkaal: Chhattisgarh Vision@2047

    • This policy introduces special provisions for marginalized groups, including surrendered Naxals, women, and the third-gender community. This inclusivity aims to empower these groups socio-economically.
    • Specific packages are designed to support entrepreneurship among these communities through training and financial assistance, facilitating their integration into mainstream society.
    • The ‘Amritkaal’ policy classifies development areas into three groups based on their industrialization levels, ensuring that incentives are targeted towards backward areas to promote balanced growth across the state.
      • Focus on Sustainable Industries: There is a strong emphasis on promoting pollution-free industries, particularly in electric vehicle manufacturing and environmentally friendly products, ensuring sustainable growth.
      • Support for Start-ups: A dedicated fund of ₹50 crore has been allocated to support start-ups, encouraging innovation and entrepreneurship throughout the state.

    What strategies can be implemented to enhance economic resilience in communities?

    • For Targeted Training Programs: Implementing skill development initiatives tailored for marginalized groups can help them acquire the necessary skills for self-employment and entrepreneurship.
    • For Financial Assistance and Subsidies: Providing subsidized loans and financial incentives can lower barriers for starting new businesses, especially for women and the third-gender community.
    • For Establishment of Industrial Corridors: Developing industrial corridors can enhance connectivity and create a conducive environment for industries to thrive, leading to job creation and economic diversification.

    How does self-sufficiency contribute to overall economic stability?

    • Reduced Dependency: Self-sufficiency allows communities to rely less on external resources, making them more resilient to economic shocks and fluctuations in global markets.
    • Local Job Creation: By fostering local industries and entrepreneurship, self-sufficiency contributes to job creation within communities, enhancing overall economic stability.
    • Sustainable Growth: Emphasizing sustainable practices ensures that economic growth does not come at the expense of environmental degradation, promoting long-term stability.

    What role do various stakeholders play in fostering economic resilience?

    • Government: The government plays a crucial role by formulating policies that provide incentives and support for industrial development. It also facilitates training programs and infrastructure development.
    • Local Businesses and Entrepreneurs: Local businesses contribute by creating jobs and stimulating the economy. Entrepreneurs drive innovation and respond effectively to local market needs.
    • Community Organizations: NGOs and community organizations can assist in identifying the needs of marginalized groups and facilitate access to resources such as training and financial assistance.

    Way forward: 

    • Integrated Community Development Programs: Establish comprehensive programs that unite training, financial assistance, and mentorship specifically for marginalized groups.
    • Public-Private Partnerships for Infrastructure Development: Encourage collaboration between the government and private sector to develop industrial corridors and infrastructure that facilitate economic activities.

    Mains PYQ:

    Q Can the strategy of regional-resource-based manufacturing help in promoting employment in India? (UPSC IAS/2019)

  • Airports where pilots could fear to land

    Why in the News?

    • The October 25, 2024, incident where a Qatar Airways Boeing 787’s landing gear sank into a collapsed ramp at Doha underscores the importance of runway safety concerns.
    • Similar risks exist in Chennai Airport’s expansion plans and the greenfield project at Parandur, where soil stability and structural integrity are critical issues that must not be overlooked.

    Background 

    • The Chennai airport expansion, initially proposed in 2007, faced design and safety issues, including unsuitable soil for a parallel runway and violations in bridge construction standards, raising concerns about infrastructure reliability and potential flooding risks in future projects.

    What are the specific challenges and risks pilots face when landing at these airports?

    • Runway Integrity: Pilots may encounter challenges if the runway or taxiways have structural weaknesses or are poorly designed, such as in the case of Doha, where the ground beneath collapsed under the aircraft’s weight.
    • Crosswinds and Weather Conditions: Airports located near water bodies or in regions with extreme weather may present challenges during landing, such as turbulence from crosswinds or sudden weather changes, increasing the risk of hard landings or runway excursions.
    • Ground Handling: The condition of the ground infrastructure, including taxiways and ramps, is critical. Pilots must be cautious of soft spots or areas not properly constructed to withstand aircraft weight, which can lead to accidents.
    • Limited Runway Width and Length: Airports with insufficient runway dimensions may restrict landing and takeoff performance for larger aircraft, posing risks during adverse conditions where longer stopping distances are required.
    • Inadequate Visual Aids: Poorly designed lighting and navigational aids can impair a pilot’s ability to assess runway conditions, especially in low visibility scenarios.
    • Safety Compliance: Non-compliance with international aviation standards during the design and construction phases may lead to operational hazards that pilots must navigate.

    How do airport design and infrastructure impact aviation safety?

    • Structural Reliability: The strength and reliability of runway surfaces directly affect safety. Insufficient ground support may lead to structural failures under heavy loads, as seen in the Doha incident.
    • Drainage Systems: Effective drainage systems are vital for preventing water accumulation on runways, which can lead to hydroplaning and loss of control during landings.
    • Environmental Considerations: The placement of airports in flood-prone areas without adequate flood management strategies can compromise safety during heavy rainfall, as experienced in Chennai.
    • Design Standards: Compliance with International Civil Aviation Organization (ICAO) standards is crucial for ensuring that airports are capable of safely accommodating various aircraft types.
    • Construction Quality: The choice of construction materials and techniques directly impacts the longevity and safety of airport infrastructure. Cost-cutting measures may lead to substandard designs.

    What measures are being taken to enhance pilot training and operational procedures at these high-risk airports? (Way forward) 

    • Enhanced Simulation Training: Pilots receive advanced simulation training to handle specific challenges associated with landing at high-risk airports, including crosswind landings and emergencies on compromised runways.
    • Regular Safety Audits: Conduct audits and inspections of airport facilities and infrastructure to ensure compliance with safety standards and identify potential hazards.
    • Real-time Weather Updates: Implementation of systems that provide pilots with real-time updates on weather conditions and runway status, helping them make informed decisions during landings.
    • Collaboration with Engineers: Continuous collaboration between pilots and airport engineers during the planning and construction phases to address potential safety issues upfront.
    • Training on Emergency Protocols: Training programs that include scenarios specific to airports with known risks, ensuring pilots are prepared for emergencies related to runway or taxiway failures.

    Mains PYQ: 

    Q Examine the development of Airports in India through joint ventures under Public – Private Partnership (PPP) model. What are the challenges faced by the authorities in this regard. (2017)

  • [pib] Pradhan Mantri Mudra Yojana (PMMY)

    mudra

    Why in the News?

    • The Centre has doubled the limit of Mudra loan amount under the PMMY to Rs 20 lakh from Rs 10 lakh under a new ‘Tarun Plus’ category to promote entrepreneurship in the country.
      • This higher loan limit is available to entrepreneurs who have previously taken and successfully repaid loans under the existing ‘Tarun’ category.

    About Pradhan Mantri Mudra Yojana (PMMY):

    Details
    Launch  Launched on April 8, 2015, by Prime Minister.
    Objective
    • To provide financial assistance and support to non-corporate, non-farm small and micro-entrepreneurs through collateral-free loans.
    • Non-corporate, non-farm small and micro-entrepreneurs are individuals or entities that operate small-scale businesses outside the corporate and agricultural sectors. 
    • These include self-employed workers, small retail shops, artisans, repair services, and other informal sector businesses, often with limited capital and workforce.
    Recent Update Loan limit increased from Rs 10 lakh to Rs 20 lakh under the new Tarun Plus category, announced in July 2024.
    Loan Categories • Shishu: Loans up to Rs 50,000
    • Kishore: Loans between Rs 50,000 and Rs 5 lakh
    • Tarun: Loans between Rs 5 lakh and Rs 10 lakh
    • Tarun Plus: Loans between Rs 10 lakh and Rs 20 lakh
    Loan Performance (2023-24) • 66.8 million Loans sanctioned totaling Rs 5.4 trillion.
    • Over 487.8 million loans worth Rs 29.79 trillion sanctioned since launch.
    NPA Statistics • NPA of public sector banks under Mudra loans decreased to 3.4% in FY24, down from 4.77% in 2020-21.
    • Gross NPA for scheduled commercial banks at 2.8% as of March 2024.
    Target Beneficiaries Aims to empower women, minorities, and marginalized communities by facilitating easy access to credit.
    Technological Intervention
    • MUDRA Card: An innovative credit product that offers an overdraft facility and can be used like a debit card for transactions.
    • MUDRA MITRA App: A mobile application providing information about MUDRA and its schemes, guiding loan seekers to approach banks for availing loans.

     

    PYQ:

    [2016] Pradhan Mantri MUDRA Yojana is aimed at:

    (a) Bringing the small entrepreneurs into formal financial system.

    (b) Providing loans to poor farmers for cultivating particular crops.

    (c) Providing pension to old and destitute persons.

    (d) Funding the voluntary organizations involved in the promotion of skill development and employment generation.

  • Sustainability science for FMCGs

    Why in the News?

    India’s Anusandhan National Research Foundation and the BioE3 policy promote academia-industry collaboration, driving the bioeconomy for economic growth, sustainability, and climate action commitment.

    What is BioE3 policy? 

    The BioE3 policy aims to transform chemical industries into sustainable bio-based models, promoting biotechnology to drive economic growth, protect the environment, and create jobs, supporting India’s sustainable development and climate goals.

    Primary Environmental impacts associated with FMCG production and consumption:

    • Resource Depletion: The production of FMCGs often requires significant natural resources, such as water, energy, and raw materials. For example, palm oil, widely used in food and personal care products, leads to deforestation when forests are cleared for plantations.
    • Greenhouse Gas Emissions: The manufacturing and distribution of FMCGs contribute to greenhouse gas emissions at multiple stages, from sourcing raw materials to production processes and transportation.
    • Waste Generation: FMCGs, especially those with single-use packaging (e.g., plastics), generate a considerable amount of waste, which ends up in landfills or the ocean, causing environmental pollution.
    • Water Pollution: The production and use of FMCGs, such as soaps, detergents, and other chemicals, can lead to water pollution through the discharge of untreated wastewater containing harmful substances.
    • Loss of Biodiversity: The agricultural practices used to source raw materials like palm oil can lead to habitat destruction, thereby threatening biodiversity. Monoculture farming and deforestation disrupt ecosystems and endanger wildlife.

    How can FMCG companies implement sustainable practices across their supply chains?

    • Companies should adopt responsible sourcing policies, such as using certified sustainable palm oil and other raw materials that adhere to ‘No Deforestation, No Peat’ policies.
    • Implementing energy-efficient processes, switching to renewable energy sources, and optimizing logistics to reduce emissions can minimize the carbon footprint across the supply chain.
    • Emphasizing recycling, reusing materials, and developing biodegradable or compostable packaging can help reduce waste and resource depletion.
    • The integration of bio-based or synthetic alternatives to traditional materials can also be beneficial.
    • Companies should implement measures to reduce water usage in manufacturing and treat wastewater to prevent water pollution.
    • Working with smallholder farmers to implement regenerative agricultural practices can help restore soil health, improve biodiversity, and support sustainable livelihoods.

    What metrics should be used to measure the effectiveness of sustainability initiatives in FMCGs?

    • Carbon Footprint Reduction: Tracking greenhouse gas emissions across the supply chain and setting targets for reducing Scope 1, 2, and 3 emissions.
    • Sustainable Sourcing Percentage: Measuring the proportion of raw materials sourced sustainably, such as certified palm oil or recycled materials.
    • Waste Reduction and Recycling Rates: Monitoring the volume of waste generated, the amount sent to landfills, and the recycling rate of packaging materials.
    • Water Usage and Pollution Levels: Tracking water consumption in production and measuring the quality of wastewater discharged to ensure compliance with environmental standards.
    • Biodiversity Impact: Assessing the effect of sourcing practices on ecosystems and tracking initiatives to protect or restore biodiversity.
    • Product Sustainability Index: Developing a sustainability index for products that takes into account their entire life cycle, from raw material extraction to end-of-life disposal.

    Way forward: 

    • Strengthen Collaboration and Innovation: Foster partnerships between academia, industry, and government to drive research and development of sustainable alternatives to traditional materials, such as palm oil, and implement innovative practices throughout the FMCG supply chain.
    • Implement Comprehensive Sustainability Frameworks: Establish regulatory frameworks that incentivize sustainable practices, including mandatory reporting on sustainability metrics, eco-labelling for products, and support for circular economy initiatives to minimize waste and resource depletion.

  • Fair Trade 

    Why in the News?

    In preparation for the 29th edition of the COP in Baku, Azerbaijan, next month, there is renewed momentum within government circles to expedite the transition of Indian industry to carbon markets.

    What is meant by the Carbon Trade Policy?

    • It is a market-based approach to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants.
    • It sets a quantitative limit on emissions, by allowing member countries with lower emissions to sell rights to emit carbon to higher-emitting entities, promoting cost-effective carbon reduction.

    Why India must develop a transparent Carbon Trade Policy?

    • A clear and transparent policy will boost investor confidence, attracting both domestic and foreign investments in green technologies and carbon-reduction projects.
    • Establishing robust verification and reporting mechanisms will enhance the integrity of carbon credits, preventing issues like double counting and greenwashing, and fostering trust among stakeholders.
    • A transparent policy will help align India’s efforts with global climate commitments, enabling effective tracking of emissions reductions and promoting sustainable economic growth.

    How effective is ‘Fair Trade’ in achieving its Goals?

    • Promotion of Sustainable Practices: Just as Fair Trade supports environmentally sustainable agriculture practices, carbon markets incentivize companies to adopt greener technologies and reduce emissions. Both aim to create a more sustainable future.
    • Empowerment of Stakeholders: Fair Trade empowers marginalized producers by providing fair prices and market access, similar to how carbon markets can benefit developing countries like India by enabling them to sell carbon credits generated from emissions reductions.
    • Economic Benefits: Fair Trade aims to create economic stability for producers, while carbon markets can generate revenue for countries that invest in carbon-reduction projects, creating a financial incentive for participating in emissions trading.
    • Global Impact Awareness: Both Fair Trade and carbon markets raise awareness about global issues—Fair Trade regarding trade equity and carbon markets regarding climate change, fostering a sense of responsibility among consumers and companies.

    What are the limitations and challenges facing Fair Trade certification?

    • Certification Costs: The financial burden of obtaining Fair Trade certification can be a significant barrier for small producers. Similarly, transitioning to carbon markets may involve high initial costs for companies to implement the necessary technologies and processes.
    • Market Accessibility: Fair Trade products may not have guaranteed market access, mirroring potential challenges in carbon markets where the demand for carbon credits may fluctuate based on regulations and market conditions.
    • Complex Standards: Just as Fair Trade certification has varying standards, the guidelines under Article 6 of the Paris Agreement can also lead to confusion about which carbon-reduction activities are eligible for trading.

    How can consumers effectively support Fair Trade initiatives?

    • Support Certified Products: Consumers can choose Fair Trade products, which, like carbon credits, require a conscious decision to support ethical and sustainable practices.
    • Educate and Advocate: Just as consumers can promote Fair Trade awareness, they can also advocate for transparent carbon markets and support policies that foster sustainable practices.
    • Engagement with Companies: Consumers can encourage businesses to participate in Fair Trade and carbon markets by demanding accountability and sustainability in their supply chains.
    • Community Participation: Involvement in local Fair Trade events can parallel participation in climate action initiatives, such as local carbon offset programs or sustainability projects, thereby supporting both movements.
    • Utilizing Social Media: Consumers can leverage social media to share information about Fair Trade and carbon markets, helping to amplify their importance and drive consumer engagement.

    Way forward: 

    • Strengthen Certification Accessibility: Lower the cost and simplify the certification process to make Fair Trade more accessible for small-scale producers, boosting their participation and benefits.
    • Enhance Consumer Education: Increase awareness campaigns about the impact of Fair Trade, encouraging more people to support certified products and promoting ethical consumption habits.