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GS Paper: GS3-02.Inclusive growth and issues therein

  • Household Consumption Expenditure Survey, 2023-24

    Why in the News?

    The Household Consumption Expenditure Survey (HCES) 2023-24 highlights key trends in consumption patterns across India. It is conducted by the National Statistical Office (NSO) every 5 years.

    Household Consumption Expenditure Survey, 2023-24

    Important Highlights of HCES, 2023-24:

    • Rural Spending: Monthly per capita consumption expenditure (MPCE) increased by 9.3% to ₹4,122 in 2023-24 (from ₹3,773 in 2022-23); significantly higher than ₹1,430 in 2011-12.
    • Urban Spending: MPCE rose by 8.3% to ₹6,996 (from ₹6,459 in 2022-23); up from ₹2,630 in 2011-12.
    • Rural-Urban Gap: Narrowed to 69.7% in 2023-24, compared to 71.2% in 2022-23 and 83.9% in 2011-12.
    • Food Expenditure: Share increased to 47.04% in rural and 39.68% in urban households, reversing a decades-long decline.
      • Rural households spent most on beverages and processed food (11.09%), followed by milk products (8.44%) and vegetables (6.03%).
      • Urban households spent most on beverages and processed food (9.84%), milk products (7.19%), and vegetables (4.12%).
      • Decline in expenditure on sugar and salt, with rising spending on beverages and processed foods, signaling dietary shifts.
    • Non-Food Expenditure: Accounted for the majority in both rural (52.96%) and urban areas (60.32%).
      • Major rural non-food expenses: Conveyance (7.59%), medical expenses (6.83%), and clothing & bedding (6.63%).
      • Major urban non-food expenses: Conveyance (8.46%), entertainment (6.92%), and durable goods (6.87%).
        – Regional Variations:
    • Highest MPCE: Sikkim (Rural – ₹9,377; Urban – ₹13,927) and Chandigarh (Rural – ₹8,857; Urban – ₹13,425).
    • Lowest MPCE: Chhattisgarh (Rural – ₹2,739; Urban – ₹4,927).
    • States with largest rural-urban gaps: Meghalaya (104%), Jharkhand (83%), and Chhattisgarh (80%).
    • Consumption Inequality: Gini coefficient declined from 0.266 to 0.237 in rural areas and 0.314 to 0.284 in urban areas, indicating reduced income disparity.

    Features and Significance

    • Consumption Trends: Indicates rising food expenditure driven by inflation and evolving post-pandemic behaviors.
    • Narrowing Rural-Urban Gap: Highlights improved rural consumption growth outpacing urban areas.
    • Changing Diet Patterns: Increased preference for beverages and processed foods in both rural and urban households reflects dietary shifts.
    • Regional Disparities: Offers insights into high- and low-spending regions, aiding targeted interventions.
    • Policy Implications: Highlights the need for price stabilization for essentials, rural infrastructure investments, and urban employment growth to address income disparities and rising expenses.

    PYQ:

    [2019] In a given year in India, official poverty lines are higher in some States than in others because:

    (a) poverty rates vary from State to State
    (b) price levels vary from State to State
    (c) Gross State Product varies from State to State
    (d) quality of public distribution varies from State to State

  • Employees’ Pension Scheme (EPS)

    Why in the News?

    The Parliamentary Standing Committee on Labour has recommended increasing the minimum pension of ₹1,000 paid by the Employees’ Provident Fund Organisation (EPFO) under the Employees’ Pension Scheme (EPS).

    About the Employees’ Pension Scheme (EPS):

    Details
    • Introduced in 1995 by the Employees Provident Fund Organisation (EPFO) under the Ministry of Labour and Employment.
    • Provides pension benefits to employees in the organized sector.
    Aims and Objectives
    • To provide pension benefits to employees in the organized sector.
    • Ensures financial security for employees post-retirement or in case of disability or death.
    Features and Significance
    • Employee and Employer Contribution: Both contribute 12% of the salary towards the EPF.
    • Employer’s Contribution: 8.33% of the employer’s contribution goes towards the pension fund.
    • Union Government Contribution: 1.16% of the employee’s basic salary is contributed to the pension fund.
    • Pension Fund Setup: The fund is created by allocating 8.33% of the employer’s contribution from the EPF corpus.
    Structural Mandate and Implementation Supreme Court in November 2022, the court upheld the Employees’ Pension (Amendment) Scheme, 2014, extending the deadline for opting for the new scheme by 4 months.

    • Pre-Amendment Scheme: Pensionable salary was based on the average salary of the last 12 months prior to exiting the pension fund.
    • Post-Amendment Scheme (2014): Pensionable salary based on average salary of the last 60 months (5 years).
    Eligibility Criteria
    • Applies to employees whose basic salary exceeds ₹15,000 per month.
    • Employees who are members of the Employees’ Provident Fund (EPF) and meet the contribution requirements are eligible for the scheme.

     

    PYQ:

    [2021] With reference to casual workers employed in India, consider the following statements:

    1. All casual workers are entitled for Employees Provident Fund coverage.

    2. All casual workers are entitled for regular working hours and overtime payment.

    3. The government can by a notification specify that an establishment or industry shall pay wages only through its bank account.

    Which of the above statements are correct?

    (a) 1 and 2 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

  • [pib] India Post Payments Bank (IPPB)

    Why in the News?

    The Minister of State for Communications has provided crucial information about the India Post Payments Bank (IPPB).

    About India Post Payments Bank (IPPB):

    Details
    What is it? Division of India Post under the Ministry of Communications, launched in 2018.

    Operates as payments bank.
    Vision and Principles • Objective: Promote financial inclusion by providing accessible and affordable financial services.
    • Customer-Centric: Focuses on delivering secure and affordable banking to rural and underserved areas.
    Empowerment Initiatives by IPPB • Financial Inclusion: Offers savings accounts, current accounts, money transfers, bill payments, and insurance.
    • Aadhaar-Linked Services: Implements Aadhaar-enabled Payment System (AePS) for easy and secure transactions.
    • Doorstep Banking: Provides banking services through 3 lakh postmen and Grameen Dak Sewaks.
    • Rapid Expansion: Reached 4 crore customers by December 2020 and crossed 8 crore customers by January 2022, with over 9 crore customers as of March 2024.

     

    Back2Basics: Payments Bank

    • A payments bank operates like a regular bank but without credit risk.
    • It was set up based on the recommendations of the Nachiket Mor Committee.
    • Objective: To promote financial inclusion, especially in unbanked areas, serving migrant workers, low-income households, and small entrepreneurs.
    • Payments banks are registered as public limited companies under the Companies Act, 2013, and licensed under the Banking Regulation Act, 1949.
    • Governed by the Banking Regulation Act, RBI Act, 1934, and the Foreign Exchange Management Act, 1999.
    • Services Offered:
        • Minimum paid-up equity capital is Rs. 100 crores.
        • Can accept deposits up to Rs. 2,00,000 in savings and current accounts.
        • 75% of deposits must be invested in government securities (SLR), with the remaining 25% placed as time deposits with other scheduled commercial banks.
        • Offers remittance services, mobile payments, ATM/debit cards, net banking, and third-party fund transfers.
        • Act as a banking correspondent (BC) for credit and other services.
    • Limitations:
      • Cannot issue loans or credit cards.
      • Cannot accept time deposits or NRI deposits.
      • Cannot set up subsidiaries for non-banking financial activities.

     

    PYQ:

    [2018] Which one of the following links all the ATMs in India?

    (a) Indian banks’ Association

    (b) National Securities Depository Limited

    (c) National Payments Corporation of India

    (d) Reserve Bank of India

  • Can India get rich before growing old?

    Why in the News?

    Since liberalization opened up new opportunities, there has been a lot of excitement about India’s demographic dividend, which is the advantage of having a large working-age population but there are major challenges like the middle-income trap.

    Can India leverage its sustained economic growth?

    • Harnessing the Demographic Dividend: With a large working-age population, India has a potential advantage, but it must ensure that this workforce is employed in productive sectors, particularly by shifting labor from low-productivity agriculture to higher-productivity manufacturing and services.
    • Strengthening the Manufacturing Sector: The manufacturing sector, especially labor-intensive industries like textiles, has the potential to create millions of jobs. By addressing barriers such as complex regulations, high tariffs, and infrastructure constraints, India can boost manufacturing growth, empower women, and drive economic mobility.
    • Reforming Infrastructure and Business Environment: Improving ease of doing business, simplifying trade and labor regulations, and increasing investment in infrastructure are critical for unlocking India’s potential for sustained growth. These reforms will enable large-scale job creation and enhance India’s global competitiveness.

    Challenges arising due to the middle-income trap

    • Declining Demographic Dividend: The proportion of working-age individuals in India’s population is set to decline in the coming decade, marking the potential end of the demographic dividend. Fertility rates have dropped across various states, which means India may face an aging population sooner than expected.
    • Stagnation in Key Sectors: India has struggled to reduce its agricultural workforce in the same way China did after liberalisation, making it harder to transition people to higher-productivity industries. Despite some growth in the services sector, manufacturing has stagnated and failed to generate the necessary number of jobs, especially in labor-intensive industries.
    • Limited Economic Mobility: High levels of youth unemployment and the lack of opportunities for individuals to move up the economic ladder have hindered India’s economic progress. The country’s labor force participation rate (LFPR) remains low, particularly among women, and urban job creation has not been sufficient to absorb the growing population.
    • Infrastructure and Regulatory Bottlenecks: The business environment is constrained by complex regulations, high tariffs, cumbersome licensing procedures, and a lack of access to land, all of which prevent the manufacturing sector from thriving. India’s slow regulatory reforms have stifled growth in manufacturing, which is essential for absorbing the workforce.

    How the Manufacturing sector can help India grow?

    • Job Creation: Manufacturing, especially in labour-intensive sectors like textiles and apparel, can create large numbers of jobs. This is vital for absorbing the surplus labour from agriculture and providing employment opportunities for the youth.
      • For example, the textile and apparel industry employs 45 million people compared to just 5.5 million in IT-BPM, highlighting its potential for mass employment.
    • Women’s Empowerment: Manufacturing, particularly industries like textiles, offers significant employment to women (60-70% of factory workers), helping reduce gender disparities in the labour force.
    • Economic Mobility: By creating better job opportunities, manufacturing helps people transition from low-productivity agricultural jobs to higher-wage, more stable positions in the industrial and service sectors. This transition is key to achieving sustained economic growth and avoiding the middle-income trap.
    • Global Competitiveness: Reducing barriers to manufacturing — such as simplifying business licensing, lowering tariffs on inputs, improving access to land, and streamlining trade regulations — can help India increase its competitiveness globally. Expanding market access through free trade agreements and making the business environment more conducive to manufacturing can unlock the potential of this sector.

    Steps taken by the government: 

    • “Make in India” Initiative: Launched in 2014, this initiative aims to transform India into a global manufacturing hub by promoting domestic production, reducing regulatory hurdles, and attracting foreign direct investment (FDI) in key manufacturing sectors such as electronics, textiles, and automobiles.
    • Atmanirbhar Bharat (Self-reliant India): This program focuses on reducing dependence on imports by boosting local manufacturing, especially in strategic sectors like defense, electronics, and pharmaceuticals.
      • It includes initiatives such as the Production-Linked Incentive (PLI) scheme, which offers incentives for manufacturing and exporting specific products like electronics, textiles, and solar panels.

    Way forward: 

    • Enhance Skill Development and Workforce Transition: India must invest in targeted skill development programs to equip its labor force, particularly those transitioning from agriculture, with the necessary skills for higher-productivity manufacturing and services sectors.
    • Accelerate Regulatory and Infrastructure Reforms: To unlock the full potential of the manufacturing sector, India should expedite regulatory reforms, simplify land acquisition processes, and enhance infrastructure.

    Mains PYQ:

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

  • NABARD Survey on Rural Financial Inclusion

    Why in the News?

    The National Bank for Agriculture and Rural Development (NABARD) has published findings from its second All India Rural Financial Inclusion Survey (NAFIS) 2021-22.

    About the NAFIS 2021-22

    • The survey gathered primary data from 1 lakh rural households across 28 states and Union Territories of Jammu & Kashmir and Ladakh.
    • The first NAFIS survey was conducted for the agricultural year 2016-17, with results released in 2018.
    • This survey provides valuable information on rural economic and financial indicators, especially in the post-COVID period.

     

    Key Highlights from NAFIS 2021-22:

    Details
    1. Increase in Average Monthly Income • Average monthly income increased by 57.6% from Rs. 8,059 in 2016-17 to Rs. 12,698 in 2021-22, indicating a nominal CAGR of 9.5%.
    • Agricultural households earned slightly more, with an average income of Rs. 13,661, compared to Rs. 11,438 for non-agricultural households.
    • Salaried employment was the largest income source for all households, accounting for approximately 37% of total income.
    • For agricultural households, cultivation was the main income source, contributing about one-third of their monthly earnings.
    • For non-agricultural households, government/private services contributed 57% of the total household income.
    2. Rise in Average Monthly Expenditure • Average monthly expenditure increased from Rs. 6,646 in 2016-17 to Rs. 11,262 in 2021-22.
    • Agricultural households had higher expenditure at Rs. 11,710, compared to Rs. 10,675 for non-agricultural households.
    • In states like Goa and Jammu & Kashmir, monthly household expenditure exceeded Rs. 17,000.
    • Overall, agricultural households demonstrated both higher income and expenditure levels than non-agricultural households.
    3. Increase in Financial Savings • Annual average financial savings rose to Rs. 13,209 in 2021-22 from Rs. 9,104 in 2016-17.
    • 66% of households reported saving money in 2021-22, up from 50.6% in 2016-17.
    • 71% of agricultural households reported savings, compared to 58% of non-agricultural households.
    • States with 70% or more households saving money include Uttarakhand (93%), Uttar Pradesh (84%), and Jharkhand (83%).
    • States with less than half of households reporting savings are Goa (29%), Kerala (35%), Mizoram (35%), Gujarat (37%), Maharashtra (40%), and Tripura (46%).
    4. Kisan Credit Card (KCC) Usage • 44% of agricultural households possessed a valid Kisan Credit Card (KCC).
    • Among those with land holdings greater than 0.4 hectares or who had taken agricultural loans from banks in the past year, 77% had a valid KCC.
    5. Insurance Coverage • Households with at least one member covered by any form of insurance increased from 25.5% in 2016-17 to 80.3% in 2021-22.
    • 80.3% means that four out of every five households had at least one insured member.
    • Agricultural households had higher insurance coverage than non-agricultural households by about 13 percentage points.
    • Vehicle insurance was the most prevalent, with 55% of households covered.
    • Life insurance coverage extended to 24% of households, with agricultural households showing slightly higher penetration (26%) compared to non-agricultural ones (20%).
    6. Pension Coverage • Households with at least one member receiving any form of pension increased from 18.9% in 2016-17 to 23.5% in 2021-22.
    • Overall, 54% of households with at least one member over 60 years old reported receiving a pension.
    • Pensions included old age, family, retirement, or disability pensions, highlighting their importance in supporting elderly members of society.
    7. Financial Literacy • Respondents demonstrating good financial literacy increased from 33.9% in 2016-17 to 51.3% in 2021-22, a rise of 17% points.
    • Individuals exhibiting sound financial behavior increased from 56.4% to 72.8% during the same period.
    • When assessed on financial knowledge, 58% of rural respondents and 66% of semi-urban respondents answered all questions correctly.

    Key aspects that contribute to Rural Empowerment

    • The survey shows significant progress in rural financial inclusion since the first survey in 2016-17.
    • Rural households have seen improvements in income, savings, insurance coverage, and financial literacy.
    • Government schemes like Pradhan Mantri Kisan Samman Nidhi, MGNREGS, and PMAY-G have contributed to the improvement in the lives of rural people.

    PYQ:

    [2015] Pradhan Mantri Jan-Dhan Yojana was launched by the Prime Minister of India Narendra Modi on 28 August 2014. What is the main objective of the scheme?

    (a) To provide housing loan to poor people at cheaper interest rates

    (b) To promote women’s Self Help Groups in backward areas

    (c) To promote financial inclusion in the country

    (d) To provide financial help to marginalised communities

  • [pib] CIL ASHIS Scheme

    Why in the News?

    Coal India Limited (CIL) has launched a CSR initiative named CIL ASHIS to provide scholarships to children who lost their parents to COVID-19 and were unable to continue their studies.

    What is CIL ASHIS Scheme?

    • The CIL ASHIS Scheme, launched by Coal India Limited (CIL), stands for Ayushman Shiksha Sahayata.
    • The scheme aims to provide financial support for the education of children who lost their parents to COVID-19, ensuring they can continue their studies and achieve their dreams.

    Features of the CIL ASHIS Scheme

    • Each eligible child receives a scholarship worth ₹45,000 per year.
    • The scholarship is provided for a period of 4 years.
    • The scheme targets 1,645 children who have been identified as needing assistance.
    • Compassionate Appointment for:
      • Dependents of CIL employees who lost their lives while in service.
      • Beneficiaries need to apply for compassionate appointments through CIL’s established procedures.

    PYQ:

    [2024] With reference to Corporate Social Responsibility (CSR) rules in India, consider the following statements:

    1. CSR rules specify that expenditures that benefit the company directly or its employees will not be considered as CSR activities.
    2. CSR rules do not specify minimum spending on CSR activities.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

  • India’s Fintech funding plummets amid global slowdown, shows report    

    Why in the news? 

    Despite achieving a significant milestone in H1 2024, the fintech sector has encountered notable funding difficulties.

    What is the Fintech Sector?

    • The fintech sector encompasses technologies and innovations that aim to compete with traditional financial methods in the delivery of financial services. This includes a wide range of applications like mobile banking, online payments, digital lending, and blockchain technology.

    Present Report Insights

    • Funding Decline: The Indian fintech sector recorded $795 million in funding in H1 2024, a decrease of 11% from H2 2023 and 59% from H1 2023.
    • Global Ranking: Despite the decline, the Indian fintech ecosystem ranked among the top three globally funded sectors alongside the US and UK in H1 2024.
    • Major Transactions: Only two funding rounds exceeded $100 million in 2024, with Perfios becoming the only unicorn. Bengaluru led the funding, followed by Mumbai and Pune.
    • Segment Performance: Alternative Lending, RegTech, and BankingTech were the top-performing segments, with Alternative Lending securing $646 million, making up 81% of the total funding.
    • Acquisitions and IPOs: There were six acquisitions and five IPOs in H1 2024, marking significant activity despite the overall funding challenges.

    Significance of Fintech Sector

    • Financial Inclusion: Fintech innovations enhance financial inclusion by providing access to financial services to unbanked and underbanked populations.
    • Economic Growth: The sector contributes significantly to economic growth by fostering innovation, creating jobs, and boosting consumer spending.
    • Efficiency and Transparency: Fintech solutions improve efficiency and transparency in financial transactions, reducing costs and fraud.
    • Support for Startups: The sector offers numerous opportunities for startups, driving entrepreneurship and competition.

    Challenges 

    • Data Security: Fintech companies must implement strong security measures to protect sensitive customer data from cyber-attacks and data breaches. For example, Acko, a leading Indian fintech startup, has faced issues with data breaches in the past, highlighting the importance of robust data security protocols in the industry.
    • Regulatory Compliance: The fintech industry is highly regulated, requiring companies to stay updated on the latest government policies and ensure compliance to avoid penalties. For example, the Reserve Bank of India (RBI) has issued guidelines to protect consumers from predatory lending practices by digital lenders, underscoring the need for fintech firms to navigate the evolving regulatory landscape.
    • Customer Acquisition and Retention: Attracting and retaining customers is critical for fintech firms. For example, BharatPe, a prominent Indian fintech company, has faced challenges in customer retention due to its focus on merchant acquisition.
    • Funding and Investment: Securing adequate funding and investments remains a challenge for many fintech startups.  For example, Paytm, one of India’s largest fintech companies, has faced scrutiny from investors due to its inability to achieve profitability

    How India Can Improve Its Fintech Sector

    • Supportive Regulatory Environment: Create a regulatory framework that encourages innovation while ensuring consumer protection and systemic stability, facilitating a balanced growth of the fintech ecosystem.
    • Infrastructure Development: Invest in digital infrastructure, such as high-speed internet and mobile connectivity, to support the widespread adoption and efficient functioning of fintech applications across the country.
    • Focus on Cybersecurity: Ensure robust cybersecurity measures to protect against fraud and cyber-attacks, building trust among users and maintaining the integrity of fintech services.
    Steps taken by the government: 

    • Regulatory Sandbox: The Securities and Exchange Board of India (SEBI) introduced a framework for regulatory sandbox in 2020 to allow fintech companies to experiment with new products and services in a controlled environment.
    • Digital Personal Data Protection Bill: Introduced in 2022, this bill aims to create a framework for the protection of personal data collected by fintech companies.
    • Guidelines on Digital Lending: In 2022, the Reserve Bank of India (RBI) issued guidelines to protect consumers from predatory lending practices by digital lenders.
    • Promoting Financial Inclusion: The Pradhan Mantri Jan Dhan Yojana (PMJDY) has helped in enrolling over 523.9 million beneficiaries for new bank accounts, enabling fintech startups to reach a large consumer base.
    • Aadhar and UPI: The unique biometric identification system Aadhar and the Unified Payments Interface (UPI) have improved transparency and delivery of financial service

    Conclusion: Fintech companies in India face challenges including data security, regulatory compliance, customer acquisition, and securing investments. Addressing these ensures sustainable growth and trust in a competitive market environment.

    Mains PYQ: 

    Q Has digital illiteracy, particularly in rural areas, coupled with a lack of Information and Communication Technology (ICT) accessibility hindered socio-economic development? Examine with justification. (UPSC IAS/2021)

  • Women get only 7% MSME credit: RBI ED  

    Why in the News?

    • The RBI has highlighted that low labour force participation among women is a significant barrier to financial inclusion and broader economic growth.
      • It pointed out that only 7% of the outstanding loans to micro, small, and medium enterprises (MSMEs) are to women-led businesses.

    Barriers to Financial Inclusion

    • Economic Participation: RBI emphasized that greater participation of women in economic activities is essential for financial inclusion and economic growth.
    • Participation Disparity: Official data shows female labor force participation at 32.8% in FY22, compared to over 77% for men.
    • Credit Disparity: Women-led businesses constitute nearly a fifth of MSMEs, yet they receive only 7% of the outstanding credit to this sector, highlighting a significant disparity.

    Efforts and Challenges in Financial Inclusion

    • Successes: RBI expressed satisfaction with access to financial services, citing the success of the Pradhan Mantri Jan-Dhan Yojana (PMJDY) scheme and social security transfers.
    • Addressing Demand-side Issues: While supply-side challenges have been addressed, demand-side issues still need attention.
    • Structural Barriers: Structural issues such as low levels of capital, labour participation, societal norms restricting women from inheriting property, and limited access to education and training impede women’s financial inclusion.

    Stereotyping and Behavioral Issues

    • Higher Risk Perception: Nigam noted that women borrowers often face stereotyping by financiers, being considered higher risks, leading to higher interest rates, greater insistence on collateral, or outright loan rejections.
    • Behavioural Challenges: He also mentioned behavioural issues among women borrowers, such as being more risk-averse, less confident in negotiating loan terms, and less likely to apply for new loans due to fear of rejection.

    Policy Moves: Priority Sector Lending and Financial Literacy Initiatives

    • Priority Sector Lending (PSL): The PSL mandate has become a viable business model for banks and micro-lenders, but demand-side constraints persist.
    • RBI Initiatives: To address these challenges, the RBI has initiated financial inclusion efforts, including opening 2,400 financial literacy centres at the block level in partnership with nonprofits and requiring lead banks to have a literacy centre in each district.

    Government Schemes:

    Stand Up India Scheme Mudra Yojana Scheme Annapurna Scheme
    Launched April 2016 April 2015 (under PMMY) –
    Objective To promote entrepreneurship among women and SC/ST To provide financial support to non-corporate, non-farm small/micro enterprises To support women entrepreneurs in the food catering business
    Eligibility Women entrepreneurs and SC/ST entrepreneurs above 18 years of age All non-farm enterprises, including women-owned businesses Women entrepreneurs planning to start or expand their food catering business
    Loan Amount INR 10 lakh to INR 1 crore Up to INR 10 lakh, categorized into three types:            

    1. Shishu: Up to INR 50,000           
    2. Kishor: INR 50,001 to INR 5 lakh            
    3. Tarun: INR 5,00,001 to INR 10 lakh
    		 Up to INR 50,000
    Purpose For setting up a greenfield enterprise in manufacturing, services, or trading sectors For business activities in manufacturing, processing, trading, or service sectors For starting or expanding the food catering business
    Repayment Period Up to 7 years with a maximum moratorium period of 18 months – 36 months, including a grace period of 1 month

    About SEHER Program (In News)

    • The Women Entrepreneurship Platform (WEP) and TransUnion CIBIL have launched SEHER, a pioneering credit education program aimed at empowering women entrepreneurs in India.
    • SEHER aims to facilitate their access to financial tools crucial for business growth and employment creation.

  • Unemployment Vs Wages

    Why in the news?

    Recently, there have been contentious talks regarding Pakistan’s unemployment being lower than India’s.

    According to Keynes, lower wage rate will lead to lower income of workers and thus to lower demand of goods. Lower demand will lower output that in turn will lower employment.

    Issues related to Unemployment vs Wages

    • Questioning on Data Accuracy and Interpretation: There is skepticism about the accuracy of unemployment data, particularly regarding the CMIE Consumer Pyramids Household survey. This raises questions about the basis of claims regarding unemployment rates and the subsequent policy responses.
    • Labor Force Participation: Concerns are raised about the significant withdrawal of individuals from India’s labor force, indicating potential issues with labor force participation rather than solely unemployment rates.
    • Youth Unemployment: The high youth unemployment rate of 45% is highlighted as a significant concern, suggesting challenges in integrating young people into the workforce and addressing their employment needs.
    • Informal Employment: The prevalence of informal employment, such as subsistence agriculture and informal wage employment, is noted as a structural issue in the labor market, potentially impacting wages and job quality.
    • Wage Levels: Despite low reported unemployment rates, there are concerns about the adequacy of wages, particularly for the poor. This raises questions about the quality of employment and the extent of underemployment or disguised unemployment.
    • Policy misalignment: Certain policy proposals, such as increasing public sector employment or implementing fiscal job guarantees, are critiqued for potentially misdiagnosing the problem and offering unsustainable solutions that may not address underlying wage issues.

    Steps taken by the Government: 

    • Pradhan Mantri Rojgar Protsahan Yojana (PMRPY): This scheme incentivizes employers to generate employment by having the government pay the entire 12% employer’s contribution to the Employees’ Provident Fund and Employees’ Pension Scheme for new employees for the first three years of their employment
    • Pradhan Mantri Mudra Yojana (PMMY): This scheme provides collateral-free loans up to ₹10 lakh to micro and small businesses and individuals to help them set up or expand their enterprises, thereby promoting self-employment.
    • Aatmanirbhar Bharat Package: This economic stimulus package, announced in response to the COVID-19 pandemic, includes various long-term schemes and policies aimed at making India self-reliant and creating employment opportunities.
    • Garib Kalyan Rojgar Abhiyaan: This 125-day campaign was launched to boost employment and livelihood opportunities for migrant workers and others affected in 116 districts across 6 states.
    • PM GatiShakti: This is a multi-modal connectivity plan that aims to create infrastructure and generate employment opportunities in sectors like roads, railways, airports, ports, and logistics.

    Way forward: 

    • Addressing Labor Force Participation: Implement policies aimed at increasing labor force participation, particularly among youth and marginalized groups, by creating more formal employment opportunities.
    • Improving Informal Employment Conditions: Develop strategies to formalize the informal sector by providing incentives for informal employers to register their businesses, improve working conditions, and ensure compliance with labor laws.
    • Enhancing Wage Levels: Take steps to improve wage levels, particularly for low-skilled workers engaged in subsistence agriculture, marginal self-employment, and informal wage employment.

    Mains PYQ:

    Q Besides the welfare schemes, India needs deft management of inflation and unemployment to serve the poor and the underprivileged sections of the society. Discuss.

  • This is the year to get the Sustainable Development Goals back on track

    Why in the News? 

    2024 is an election year across the world and newly elected governments need to focus on the all-important sustainability issue. Year 2024 is an election year across the world.

    • At least 64 countries, both developed and developing, accounting for 49% of the world population, will go to the polls.

    Causes of Global Slow Progress: 

    • Impact of Global Crises: The outbreak of the COVID-19 pandemic and other global crises virtually halted progress towards the SDGs. These crises have diverted attention and resources away from sustainable development efforts.
    • Neglect of Environmental Goals: There has been little to no attention towards goals related to the environment and biodiversity, including responsible consumption and production, climate action, life below water, and life on land.
    • Defiance of Integrated Nature of SDGs: The current practice of pursuing SDGs is criticized for defying the integrated and indivisible nature of the goals. This lack of integration hampers efforts to achieve sustainable development outcomes comprehensively.
    • Risk of Environmental Degradation: The slow progress and neglect of environmental goals pose a significant risk of accelerated environmental degradation. This threatens the overarching target of balancing human well-being and a healthy environment.

    Why the world is not on track to achieve most SDGs by 2030?

    • Insufficient Progress: Despite reaffirmations of commitment by world leaders, progress towards achieving the SDGs remains slow. The world is only on track to meet 15% of the 169 targets that comprise the 17 goals.
    • Investment Gap: There is a significant gap in investment for SDGs, particularly in developing countries. The estimated investment gap exceeds $4 trillion, with nearly $2 trillion needed for the energy transition alone.
    • Lack of Synergistic Action: There is a lack of synergistic action in addressing SDGs, despite the integrated nature of the goals. Few studies and empirical evidence exist on the synergies and trade-offs among SDGs, hindering progress.
    • Barriers to Synergies: Various barriers, including knowledge gaps, political and institutional barriers, and economic issues, impede synergistic action.Inadequate data collection, and an inability to attribute co-benefits to specific actions hinder progress.
    • Misaligned Policies: Policies may be misaligned, leading to barriers for meeting greater targets. For example, ambitious renewable energy targets may not align with smaller-scale of steps taken to achieve SDG goal.
    • Limited Understanding of Cost Estimation: Exploiting resources without considering climate change impacts and synergistic opportunities can be detrimental to national and global efforts.

    Way forward:

    • Call for Action: There is a call for action to strengthen the environment for synergistic action, transparently identify opportunities and limits to synergies, and develop reporting frameworks to assess the value created from specific SDG interventions.
    • Urgent Action Areas Identified: The UN SDG Report, 2023 identified five key areas for urgent action, including commitments of governments, concrete policies to eradicate poverty and reduce inequality, strengthening of national and subnational capacity, recommitment of the international community, and strengthening of the UN development system.
    • Global Reaffirmation and Commitment: World leaders acknowledged the situation and reaffirmed their commitments to delivering the SDGs by 2030. However, the effectiveness of these global pronouncements at the ground level remains uncertain.

    Mains PYQ 

    Q National Education Policy 2020 isin conformity with the Sustainable Development Goal-4 (2030). It intends to restructure and reorient education system in India. Critically examine the statement. (2020)