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GS Paper: Indian Economy

  • BHAVYA Scheme  

    Why in the News

    • The Union Cabinet has approved the Bharat Audyogik Vikas Yojana (BHAVYA) with an outlay of ₹33,660 crore to develop 100 plug-and-play industrial parks by 2032.
    • The National Industrial Corridor Development Programme (NICDP) framework is the foundation for the BHAVYA (Bharat Audyogik Vikas Yojna) scheme. Approved on March 18, 2026, with a ₹33,660 crore outlay,

    What is BHAVYA?

    • A government scheme to create future-ready industrial parks across India
    • Designed to provide:
      • Ready infrastructure
      • Seamless connectivity
    • Focus on: Manufacturing competitiveness and investment

    Key Features

    1. Scale and Timeline

    • Total parks: 100
    • Duration: 6 years (starting 2026–27)
    • First phase: 50 parks

    2. Land Requirement

    • Minimum:
      • 100 acres (general)
      • 25 acres (hilly and North Eastern states)
    • Maximum: 1,000 acres

    3. Funding Pattern

    • Central Government:
      • Up to ₹1 crore per acre
    • Implementation:
      • Joint effort of: Central government, State governments, and Private sector

    4. Plug-and-Play Model

    • Industrial units get:
      • Pre-developed land
      • Power, water, roads
      • Logistics connectivity

    5. Integration with National Infrastructure

    • Linked with: PM GatiShakti
    • Benefits:
      • Multimodal connectivity (road, rail, ports)
      • Efficient logistics
      • Last-mile connectivity

    6. Ease of Doing Business

    • Features include:
      • Single-window clearance systems
      • Simplified approvals
      • Investor-friendly policies
      • State-led reforms
    • Primary beneficiaries: Manufacturing units, MSMEs, startups, and global investors seeking ready-to-use industrial infrastructure
    [2016] Recently, India’s first ‘National Investment and Manufacturing Zone’ was proposed to be set up in:
    (a) Andhra Pradesh
    (b) Gujarat
    (c) Maharashtra
    (d) Uttar Pradesh

  • India’s Rice Exports Decline  

    Why in the News?

    • India’s rice exports fell by 7.5% to $11.53 billion in 2025–26 due to disruptions caused by the West Asia crisis.

    Key Data

    Export Performance

    • 2025–26: $11.53 billion
    • 2024–25: ~$12.5 billion
    • March 2026: Decline of 15.36% (to ~$997 million)

    West Asia Crisis Impact

    • Conflict affecting trade with: Iran, United Arab Emirates, Saudi Arabia, Oman
    • Issues faced:
      • Payment delays
      • Order cancellations
      • Shipping disruptions
    • Iran Major importer of Basmati rice

    India’s Rice Sector  

    • Production:Output (2024–25): ~150 million tonnes
    • Cultivation area: ~47 million hectares
    • India contributes: ~28% of global rice production
    • Exported to: 170+ countries
    • Yield Improvement
      • 2014–15: 2.72 tonnes/hectare
      • 2024–25: ~3.2 tonnes/hectare

    Top Producers

    • China: Leads with ~208-214 million tonnes annually, focusing on hybrid varieties. 
    • India: Second at ~195-196 million tonnes; top exporter despite domestic consumption. Bangladesh: ~57 million tonnes; high per capita reliance. 
    • Indonesia, Vietnam: ~54-55M and ~42-43M tonnes respectively. 
    • Others: Thailand (~34M), Myanmar, Philippines round out top 10.
    [2019] Among the following, which one is the largest exporter of rice in the world in the last five years? 
    (a) China  
    (b) India  
    (c) Myanmar  
    (d) Vietnam

  • SBI Targets 25% of India’s GDP Balance Sheet

    Why in the News?

    • State Bank of India (SBI) aims to expand its balance sheet to 25% of India’s GDP by 2030 (from ~20% currently).

    What is a Bank’s Balance Sheet

    • A balance sheet shows: Liabilities + Capital = Assets

    Components

    1. Liabilities

    • Deposits
    • Borrowings
    • Other obligations

    2. Capital

    • Tier I capital
    • Tier II capital
    • Reserves

    3. Assets

    • Loans and advances
    • Investments
    • Cash balances (including with Reserve Bank of India)
    [2018] With reference to the governance of public sector banking in India, consider the following statements:
    1. Capital infusion into public sector banks by the Government of India has steadily increased in the last decade.
    2. To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected. 
    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
    [2015] With reference to ‘Basel III Accord’, sometimes seen in the news, which of the following statements is/are correct?
    1. It strives to improve the banking sector’s ability to deal with financial and economic stress and improve risk management.
    2. It aims at making the banks more capital-intensive. 
    Select the correct answer:
    (a) 1 only(b) 2 only(c) Both 1 and 2(d) Neither 1 nor 2

  • Deceptively benign: On retail inflation, oil-import-dependency

    Why in the News?

    India’s March inflation data presents a deceptive stability, with CPI at 3.4% (within RBI’s tolerance band), yet WPI surged to a 38-month high of 3.88%, revealing hidden inflationary pressures. The divergence between CPI and WPI, driven by fuel costs, rupee depreciation (2.5–3%), and global disruptions like the U.S.-Israel-Iran conflict, marks a sharp shift from earlier trends of synchronized inflation. This raises concerns of imported inflation and emerging stagflation risks, making it a significant macroeconomic warning.

    What is imported inflation?

    Imported inflation is a general rise in prices within a country caused by increasing costs of imported goods, services, or raw materials. It occurs when global commodity prices rise or a nation’s currency depreciates, making foreign purchases more expensive. This often leads to higher production costs for domestic manufacturers and increased prices for consumers.

    Primary Drivers in India

    1. Currency Depreciation: When the Indian Rupee weakens against the US Dollar, it takes more rupees to buy the same amount of foreign goods, directly increasing their “landed cost”.
    2. Global Commodity Prices: Surges in international prices for crude oil (which India imports ~85% of) or edible oils (60% imported) lead to higher local costs for fuel, transport, and food.
    3. Global Supply Chain Disruptions: Geopolitical conflicts, such as the Israel-Iran-US war, Russia-Ukraine war or West Asia tensions, can cause shortages and drive up the price of critical inputs.

    Current Impact (as of April 2026)

    1. Rising Contribution: According to SBI Research, imported inflation reached 6.49% in March 2026, contributing approximately 43% to India’s overall inflation rate.
    2. Regional Variance: Some states, like Telangana, have seen imported inflation exceed 12%, while others like Kerala and Uttar Pradesh hover around 7.5%. 

    What is the divergence between the Wholesale Price Index (WPI) and the Consumer Price Index (CPI)?

    The divergence between the Wholesale Price Index (WPI) and the Consumer Price Index (CPI) occurs when the prices paid by manufacturers for bulk goods move at a different rate than the retail prices paid by consumers. As of March 2026, India’s WPI has surged to a 38-month high of 3.88%, while retail CPI remains lower at 3.4%. 

    Meaning of the Divergence

    1. Producer vs. Consumer View: WPI measures “factory-gate” inflation (what businesses pay), whereas CPI measures the “cost of living” (what households pay).
    2. Supply-Side Pressure: A higher WPI indicates that production costs, such as raw materials and energy, are rising rapidly, even if those costs haven’t fully reached the end consumer yet.

    Reasons for the Gap

    The primary cause of the current gap is the different “baskets” of goods and services each index tracks: 

    1. Energy & Fuel Sensitivity: WPI gives a much higher weight (~13.2%) to Fuel & Power compared to CPI (~6.8%). Recent surges in global crude oil prices (up nearly 50% month-on-month due to West Asia tensions) hit the WPI immediately.
    2. Manufacturing vs. Food:
      1. WPI: Heavily weighted toward manufactured products (64.2%), which are sensitive to global commodity prices like chemicals and metals.
      2. CPI: Heavily weighted toward food and beverages (~45% in the old series; 36.75% in the new 2024 series). In March 2026, wholesale food inflation remained steady at 1.8%, keeping CPI lower despite the spike in fuel.
    3. Services Exclusion: WPI excludes the services sector (education, health, transport), while these form a significant part of the CPI basket.
    4. New CPI Base Year: MoSPI recently rebased the CPI to 2024 (released Feb 2026), updating consumption weights to reflect modern habits, while WPI still uses the 2011-12 base year.

    Why does CPI appear benign while underlying inflation pressures rise?

    1. CPI Stability: Reflects moderate retail inflation at 3.4% in March, within RBI’s 4-6% tolerance band, masking deeper issues.
    2. WPI Surge: Increased from 2.4% (Feb) to 3.88% (March), indicating rising input costs.
    3. Core-WPI vs. Core-CPI Divergence: While core inflation (excluding food and fuel) remained relatively steady in CPI, “Core-WPI” (non-food manufactured items) has accelerated to a 41-month high of 3.7%, signaling that factory-gate pressures are high and may eventually impact consumer prices in the coming months.
    4. Government Interventions and Rupee Impact: Government controls on food prices (like selling “Bharat” brand items) and a 2.5-3% fall in the rupee have created mixed pressures. Import costs have risen, pushing up WPI, while retail prices (CPI) stay relatively stable due to government intervention.
    5. Muted Transmission: Food prices show limited increase (CFPI from ~3.4% to ~3.8%), delaying retail inflation impact.

    How does fossil fuel dependence amplify imported inflation?

    1. Dollar-denominated Trade: Crude oil and gas priced in dollars, exposing India to currency fluctuations.
    2. Rupee Depreciation: Declined by 2.5-3%, increasing import costs across sectors.
    3. Input Cost Inflation: Raises prices of fertilizers, plastics, petrochemicals, affecting pharmaceuticals, textiles, automobiles.
    4. Energy Dependence:  High reliance on imported oil increases vulnerability to global shocks.

    What role do global geopolitical disruptions play in inflation?

    1. Supply Chain Disruptions: Triggered by U.S.-Israel-Iran conflict, affecting fuel supply.
    2. Global Price Transmission: Increased crude prices transmit inflation across economies.
    3. War-induced Trade Impact: Decline in exports (3-4% YoY) and imports (5-6% YoY) reflects supply-side constraints.

    Why is inflation currently suppressed despite rising costs?

    1. Corporate Absorption: Firms temporarily absorb rising input costs, compressing margins.
    2. Domestic Redirection: Exporters (especially MSMEs) shift output to domestic markets.
    3. Supply Gluts: Increased domestic supply delays price rise.
    4. Policy Relaxations: Allow greater domestic sales from export-oriented units.

    Does this trend indicate emerging stagflation risks?

    1. Delayed Inflation Surge: Cost pressures likely to pass through eventually.
    2. Growth Slowdown: IMF projects India’s FY27 growth at ~6.2%, indicating moderation.
    3. Stagflation Indicators: Combination of rising inflation + slowing growth.
    4. RBI Concerns: Acknowledges vulnerability from imported inflation.

    Why is energy transition critical for macroeconomic stability?

    1. Structural Vulnerability: Oil-import dependence exposes economy to external shocks.
    2. Renewable Shift: Reduces exposure to volatile global fuel markets.
    3. Inflation Control: Limits cost-push inflation from energy imports.
    4. Strategic Autonomy: Enhances long-term economic resilience.

    Conclusion

    India’s current inflation scenario reflects a temporary calm masking structural risks. The divergence between CPI and WPI signals latent inflationary pressures driven by external vulnerabilities. Addressing fossil fuel dependence is essential to ensure long-term macroeconomic stability.

    PYQ Relevance

    [UPSC 2024] What are the causes of persistent high food inflation in India? Comment on the effectiveness of the monetary policy of the RBI to control this type of inflation.

    Linkage: The PYQ directly links to inflation dynamics (CPI vs WPI, cost-push factors like fuel, imports, rupee depreciation). It tests understanding of policy limitations when inflation is supply-driven/imported, as discussed in the article.

  • Bank Nationalisation in India  

    Why in the News?

    • The 55th anniversary of bank nationalisation (1969) has revived debate on its long-term economic impact.

    What is Bank Nationalisation

    • Transfer of private banks into government ownership
    • Objective:
      • Align banking with national development goals
      • Move control of finance to the public sector

    Phases of Nationalisation

    Phase 1 (1955)

    • Nationalisation of Imperial Bank of India
    • Converted into: State Bank of India

    Phase 2 (1969)

    • 14 major banks nationalised
    • Criteria: Deposits ≥ ₹50 crore
    • Led by: Indira Gandhi
    • Covered about 85–90% of banking sector

    Phase 3 (1980)

    • 6 more banks nationalised
    • Increased state control over banking

    Objectives

    • Expand banking in Rural and semi-urban areas
    • Provide credit to: Agriculture, Small industries, and Weaker sections
    • Reduce: Concentration of wealth
    • Support: Planned economic development
    [2018] Consider the following events: 
    1 The first democratically elected communist party government formed in a State in India. 
    2 India’s then largest bank, ‘Imperial Bank of India’, was renamed ‘State Bank of India’. 
    3 Air India was nationalised and became the national carrier. 
    4 Goa became a part of independent India. 
    Which of the following is the correct chronological sequence of the above events? 
    a) 4 – 1 – 2 – 3
    b) 3 – 2 – 1 – 4
    c) 4 – 2 – 1 – 3
    d) 3 – 1 – 2 – 4

  • Why India Slipped to 6th Largest Economy

    Why in the News

    • According to the International Monetary Fund World Economic Outlook (2026), India slipped to the 6th-largest economy, with the United Kingdom and Japan overtaking it.

    Latest GDP Rankings (2026)

    • USA: ~$32.3 trillion
    • China: ~$20.8 trillion
    • Germany, Japan, UK, India: ~around $4 trillion range
    • Recently, India has now ranked 6th

    Key Reason: How the IMF Calculates GDP

    • IMF ranking depends on:
      • GDP in local currency
      • Exchange rate (currency vs US dollar)
    • Both factors worsened for India

    Reasons for India’s Decline

    1. Revision of GDP Data

    • New base year introduced
    • GDP revised downward:
      • ₹357 trillion → ₹345 trillion
    • Earlier estimates were overstated

    2. Rupee Depreciation

    • Indian rupee weakened against US dollar
    • Dollar also weakened against: Pound and Yen
    • Double impact:
      • India’s GDP falls in dollar terms
      • UK & Japan appear stronger

    3. Dollar-Based Ranking Effect

    • Even if real growth continues:
      • Dollar conversion reduces ranking
    • Example: India GDP revised: $4.1 trillion → $3.9 trillion

    Why the UK & Japan Overtook India

    • Stronger currencies (pound, yen)
    • India’s GDP revision downward
    • Exchange rate disadvantage

    Important Concept

    Nominal GDP vs Real Strength

    • IMF rankings use: Nominal GDP (in USD)
    • Not: Purchasing Power Parity (PPP)
    • India still ranks 3rd in PPP terms

    Future Outlook

    • IMF projection:
      • India likely to regain 4th position by 2027
      • May become 3rd largest by ~2031

    Key Insight

    • Top 2 economies (US & China) are far ahead
    • Next 4 economies (Germany, Japan, UK, India):
      • Very close (~$4 trillion range)
    • Small changes in exchange rate can change rankings
    [2019] Consider the following statements:
    1. Purchasing Power Parity (PPP) exchange rates are calculated by comparing the prices of the same basket of goods and services in different countries
    2. In terms of PPP dollars, India is the sixth largest economy in the world.
    Which of the statement given above is/are correct?
    [A] 1 only [B] 2 only [C] Both 1 and 2 [D] Neither 1 nor 2

  • WPI Inflation Hits 3-Year High  

    Why in the News?

    • India’s Wholesale Price Index (WPI) inflation rose to a 38-month high of 3.88% in March 2026, driven by a sharp surge in crude oil prices due to the West Asia conflict.

    Key Highlights

    • WPI Inflation (March 2026): 3.88%
    • WPI Inflation (February 2026): 2.13%
    • Highest level in over 3 years
    FeatureWholesale Price Index (WPI)Consumer Price Index (CPI)
    Primary FocusPrices at the wholesale/producer level.Prices at the retail/consumer level.
    CompositionOnly Goods.Both Goods and Services.
    Who publishes it?Ministry of Commerce and Industry.National Statistical Office (NSO).
    Key ComponentsFuel, Power, Manufactured products.Food, Beverages, Housing, Education, Health.
    ImpactReflects business-to-business (B2B) costs.Reflects the cost of living (B2C).
    Base YearCurrently 2011-12 (in many regions), but changed the base from 2011-12 to 2022-23Base revised from 2012 to 2024 using Household Consumption Expenditure Survey 2023-24
    [2020] Consider the following statements: 
    1.The weightage of food in the Consumer Price Index (CPI) is higher than that in the Wholesale Price Index (WPI). 
    2.The WPI does not capture changes in the prices of services, which the CPI does. 
    3.The Reserve Bank of India uses WPI as its key measure of inflation to decide changes in policy rates. 
    Which of the statements given above is/are correct? 
    [A] 1 and 2 only [B] 2 and 3 only [C] 1 and 3 only [D] 1, 2 and 3

  • Behind worker’s protest: High costs, stagnant wages

    Why in the News?

    Recent protests by factory workers in Noida, Ghaziabad and Manesar have brought attention to a sharp divergence between rising inflation and stagnant wages. CPI-IW (base year 2016) shows industrial worker inflation rising by 24.8% nationally (Feb 2021-Feb 2026), while key industrial clusters recorded even higher inflation: 27.9% in Gurugram, 27.2% in Faridabad, and ~27.4% in Ghaziabad, Noida, and Delhi. In contrast, minimum wages increased at a much slower pace, Haryana (~15%), Delhi (~20.6%), Uttar Pradesh (~24.6%). This widening gap has reduced real wages, triggering protests.

    Why are workers protesting despite periodic wage revisions?

    1. Real Wage Erosion: Indicates decline in purchasing power; inflation (24.8%) exceeded wage growth across states.
    2. Regional Inflation Spike: Shows concentrated distress; Gurugram (27.9%), Faridabad (27.2%), Noida/Delhi (~27.4%).
    3. Inadequate Wage Growth: Reflects disparity. In Haryana, wages saw a lower increase (~15%) compared to the ~27.9% inflation rate before the April 2026 revision. Similarly, in Uttar Pradesh, the 10-year wage increase (42%) is significantly lower than the cost of living increase, resulting in lower real wages compared to a decade ago.
    4. Cost of Living Pressures: Includes rent, LPG, food; example, workers report LPG cylinder costs exceeding ₹4,000 in informal markets.
    5. Expectation Gap: Indicates mismatch between announced revisions and actual income improvements.

    How has inflation outpaced wages structurally?

    Inflation has structurally outpaced wage growth in India by creating a persistent gap where rising living costs (food, rent, fuel) consistently exceed nominal salary adjustments, leading to a decline in real purchasing power. This phenomenon is driven by a failure in the wage-indexation mechanism, regional disparities in inflation, and a shift towards variable pay that does not match the rapid rise of essentials.

    1. CPI-IW Linkage Failure: Shows weak adjustment of wages with CPI-IW (base 2016).
      1. Weak Adjustment: Wage revisions, particularly in manufacturing, often lag behind CPI-IW movements, meaning workers feel the price rise long before they receive any compensation.
      2. Time Lag: The 6-monthly Variable Dearness Allowance (VDA) adjustment is often too slow during high-inflation periods, leaving workers vulnerable
    2. National vs Regional Gap: Demonstrates divergence; national inflation (24.8%) lower than industrial clusters (~27%).
    3. Nominal vs Real Wages: Indicates nominal increase but real decline.
      1. While nominal salaries have increased (often 8-10% annually), the “real wage” (purchasing power) has remained flat or declined because essential costs have risen faster.
    4. Multi-component Inflation: Includes housing, fuel, food simultaneously rising.
      1. Housing & Fuel: Fuel costs rise and feed into logistics and travel, increasing costs of goods. Rent in urban industrial areas also frequently spikes, placing pressure on lower income brackets.
      2. Food and Beverages: This category, taking a high weight in worker consumption, often witnesses high volatility and consistent upward pressure, hitting low-income households hardest
    5. Labour Bureau Data: Labour Bureau data highlights that corporate profits in many sectors (e.g., manufacturing/engineering) have grown much faster than wage shares.
      1. Wage-Share Decline: Between 2015 and 2023, corporate profits as a share of GDP rose from 3.8% to 5.2%, while the wage share declined.
      2. Productivity Gap: Indian workers are becoming more productive (higher output per worker), but these gains are translating into corporate profits rather than increased wage rates, resulting in a structural gap

    What are the new Labour Codes and what do they assure?

    1. Code on Wages, 2019: Ensures universal minimum wage and timely payment across sectors.
    2. Industrial Relations Code, 2020: Regulates hiring, firing, and dispute resolution mechanisms.
    3. Code on Social Security, 2020: Extends social protection to unorganised and gig workers.
    4. Occupational Safety, Health and Working Conditions Code, 2020: Ensures safety standards, working hours, and welfare provisions.
    5. Assurance Framework: Establishes 8-hour workday norm, 48-hour weekly cap, overtime compensation, and safe working conditions.

    What is happening in implementation on the ground?

    1. Delayed Notification: While effective from Nov 2025, not all state rules are fully notified or uniformly enforced, leading to partial implementation.
    2. Employer Discretion: The flexibility provided has seen reports of increased working hours (up to 12 hours/day) and worker complaints about non-payment or underpayment of overtime, particularly in manufacturing hubs.
    3. Worker Complaints: Highlights non-payment or underpayment of overtime in factories in Noida and Manesar.
    4. Administrative Gaps: Demonstrates lack of inspection and enforcement capacity.
      1. There is a notable lack of enforcement capacity, with a shift from “Inspector Raj” to an “Inspector-cum-Facilitator” system.
    5. Transition Uncertainty: Reflects confusion during shift from old laws to new codes.

    Why is there confusion around working hours and overtime?

    1. Definition Gaps: Shows ambiguity between “working hours” and “spread-over”; example-12-hour presence including breaks treated as normal shift in some factories.
    2. State-Level Rules: Indicates variation; example: different states interpreting overtime eligibility differently under draft rules.
    3. Spread-over Norms: Includes rest intervals within 12-hour cap; example: worker present for 12 hours but paid for 8 hours citing breaks.
    4. Overtime Ambiguity: Highlights unclear thresholds; example: workers exceeding 8 hours not always compensated at double rate.
    5. Inspection Challenges: Demonstrates weak monitoring; example: industrial clusters with limited labour inspections.

    What are the structural issues in wage determination?

    1. Irregular Revision Cycle: Shows failure of annual revision mechanism.
    2. State Disparity: Indicates uneven wage standards across Haryana, UP, Delhi.
    3. Categorisation Complexity: Includes multiple wage categories (skilled/unskilled).
    4. Pandemic Disruption: Highlights delayed revisions during Covid-19 period.
    5. Weak Enforcement: Demonstrates gaps in compliance monitoring.

    What are the broader economic implications?

    1. Demand Compression: Reduces consumption due to declining real incomes.
    2. Labour Unrest: Increases frequency of industrial protests.
    3. Productivity Impact: Affects industrial output in key clusters.
    4. Informalisation: Encourages off-the-books employment practices.
    5. Inequality Expansion: Widens gap between labour and capital incomes.

    Way Forward

    1. CPI-Linked Wage Indexation: Ensures automatic revision of minimum wages with CPI-IW; prevents real wage erosion amid 24-28% inflation trends.
    2. Clear Labour Code Rules: Defines working hours, overtime, and spread-over explicitly; removes ambiguity in 12-hour shift interpretation.
    3. Uniform National Floor Wage: Establishes enforceable baseline wage across states; reduces disparities such as Haryana vs Uttar Pradesh.
    4. Overtime Enforcement Mechanism: Ensures double wages beyond 8 hours; strengthens compliance in industrial clusters like Noida-Manesar.
    5. Strengthened Labour Inspection System: Deploys digital inspections and audits; improves enforcement and reduces informal labour practices.

    Conclusion

    The divergence between inflation and wage growth reflects structural inefficiencies in India’s labour economy. Strengthening CPI-linked wage revision, ensuring clarity in Labour Code rules, and improving enforcement mechanisms remain essential.

    PYQ Relevance

    [UPSC 2024] Discuss the merits and demerits of the four ‘Labour Codes’ in the context of labour market reforms in India. What has been the progress so far in this regard?

    Linkage: The PYQ directly aligns with the article’s focus on Labour Codes, especially issues of implementation, wage protection, and working-hour ambiguities. It extends the debate from policy intent (merits) to ground realities (demerits), including wage stagnation, enforcement gaps, and labour unrest.

  • Startup India Fund of Funds (FoF) 2.0  

    Why in the News?

    • Government notified Startup India FoF 2.0 (April 13, 2026) with a ₹10,000 crore corpus to boost startup funding.

    About FoF 2.0

    What it is

    • A government-backed Fund of Funds
    • Invests in: Alternative Investment Funds
    • These AIFs then invest in startups
      • Indirect funding mechanism (not direct investment)

    Institutional Framework

    • Nodal Department: Department for Promotion of Industry and Internal Trade
    • Implementation Agency: Small Industries Development Bank of India
    • Regulator for AIFs: Securities and Exchange Board of India

    Background

    • FoF 1.0 (2016) under Startup India Action Plan
    • FoF 2.0 builds on it with:
      • More focus on advanced technologies
      • Stronger capital mobilization
    [2025] With reference to investments, consider the following: 
    I. Bonds 
    II. Hedge Funds 
    III. Stocks
    IV. Venture Capital 
    How many of the above are treated as Alternative Investment Funds? 
    (a) Only one (b) Only two (Hedge Funds and Venture Capital) (c) Only three (d) All the four

  • Retail Inflation Rises to 3.4% in March  

    Why in the News?

    Retail inflation based on Consumer Price Index (CPI) increased marginally to 3.4% in March 2026 from 3.21% in February 2026, mainly due to a rise in food prices.

    Key Highlights

    • Retail Inflation (March 2026): 3.4%
    • Retail Inflation (February 2026): 3.21%
    • Food Inflation (March 2026): 3.87%
    • Food Inflation (February 2026): 3.47%
      • Despite the increase, inflation remains below RBI’s target of 4%.

    RBI Inflation Target

    • RBI target inflation: 4%
    • Tolerance band: 2% to 6%
    • Current inflation: Within safe range

    Items Showing High Inflation

    • Gold and silver jewellery, Coconut (copra), Tomato, and Cauliflower

    Items Showing Negative Inflation 

    • Onion, Potato, Garlic, Arhar dal, and Chickpeas 

    Other Sector Inflation

    • Inflation in electricity, gas and other fuels rose to 1.65% in March from 1.52% in February.
    • Reason:
      • Impact of West Asia crisis
      • Increase in LPG and alternate fuel prices
    [2022] In India, which one of the following is responsible for maintaining price stability by controlling inflation? 
    (a) Department of Consumer Affairs 
    (b) Expenditure Management Commission 
    (c) Financial Stability and Development Council 
    (d) Reserve Bank of India