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GS Paper: GS3

  • Quick fix: On India’s Research Development and Innovation scheme

    Why in the News?

    The Union Cabinet has recently approved a ₹1-lakh crore Research Development and Innovation (RDI) scheme to encourage private companies to invest more in basic scientific research.

    What are the aims and design of the ₹1-lakh crore RDI scheme?

    • Promote Private Investment in Basic Research: The scheme aims to shift the R&D funding balance by incentivising the private sector to invest in foundational scientific research, reversing the current trend where the government contributes around 70% of total R&D spending.
    • Special Purpose Fund under ANRF: A dedicated fund will be set up within the Anusandhan National Research Foundation (ANRF), which will act as a custodian of ₹1-lakh crore and offer low-interest loans to eligible research projects.
    • Single-Window Clearance Mechanism: ANRF is designed as an independent institutional body with oversight from the Ministry of Science, providing a streamlined funding mechanism for universities and research institutions.
    • Targeting Mid-Stage Innovations (TRL-4 and Above): The scheme prioritises projects at Technology Readiness Level 4 or above, focusing on research that has demonstrated lab-scale feasibility and market potential, rather than early-stage, high-risk science.

    Why is ANRF’s role in research funding considered innovative?

    • Single-Window Clearance for R&D Funding: The Anusandhan National Research Foundation (ANRF) offers a unified platform to fund research across academic and industrial institutions, reducing bureaucratic delays. Eg: Instead of applying to multiple agencies like DST, DBT, and CSIR, universities can now approach ANRF for consolidated support.
    • Private Sector Integration in Basic Research: ANRF aims to source 70% of its budget from private players, incentivising corporate investment in long-term, foundational science rather than only market-ready products. Eg: Tech companies can fund AI or clean energy research at IITs through ANRF, blending commercial interest with academic innovation.
    • Bridging Academic-Industry Gaps: By acting as a funding bridge between universities, startups, and industries, ANRF fosters collaboration that accelerates the conversion of research into scalable solutions. Eg: A university developing a green hydrogen prototype can partner with a renewable energy firm under ANRFguidance and funding.

    How does the TRL-4 condition affect R&D inclusivity?

    • Excludes Early-Stage Fundamental Research: The requirement of Technology Readiness Level-4 (TRL-4) support means only projects with demonstrated application potential are eligible. This excludes TRL-1 to TRL-3 projects, which involve basic, foundational research. Eg: A university lab studying the quantum behaviour of materials may be denied funding despite its long-term potential.
    • Narrows Innovation Pipeline: Focusing only on mid-to-late stage research limits the scope for high-risk, high-reward innovation, which often begins at lower TRLs. This curbs diverse and disruptive innovations from entering the ecosystem. Eg: Internet and GPS started as risky low-TRL military projects—India might miss such breakthroughs by ignoring early research.

    What global lessons can India adopt to boost core innovation?

    • Invest in Early-Stage Research through Public Funding: Countries like the United States and Germany fund basic science heavily through institutions like the NSF and Max Planck Society, recognising that core innovation often starts at low Technology Readiness Levels (TRLs). Eg: The U.S. government’s early funding of ARPANET (precursor to the Internet) shows how foundational research can lead to transformative technologies.
    • Link Academia, Industry, and Government: Nations such as South Korea and Israel foster strong collaboration between universities, industries, and the state to accelerate innovation from lab to market. Eg: South Korea’s “Innovation Clusters” connect academic research with industrial application, leading to global tech giants like Samsung.

    Why does brain drain persist despite new research schemes?

    • Limited Research Infrastructure and Bureaucracy: Many Indian institutions lack state-of-the-art labs, smooth funding access, and administrative efficiency, discouraging cutting-edge work. Eg: A 2023 study by IISc found that over 40% of PhD graduates in STEM preferred postdoctoral positions abroad due to better facilities and research environments.
    • Lack of Competitive Salaries and Academic Freedom: Indian researchers often face lower salaries, rigid hierarchies, and limited autonomy compared to global peers. Eg: According to a DST report, Indian scientists earn 3–4 times less than those in OECD nations, prompting talent to settle in countries like the US and Germany.
    • Weak Industry-Academia Collaboration: Private sector investment in R&D is low, leading to few applied research opportunities or innovation ecosystems. Eg: In South Korea, over 75% of R&D is industry-funded, whereas India’s share is just around 37%, limiting prospects for applied researchers.

    Way forward: 

    • Strengthen Research Ecosystems and Autonomy: Invest in world-class infrastructure, streamline funding mechanisms, and provide greater academic freedom to scientists and institutions to pursue innovative research without bureaucratic hurdles.
    • Enhance Industry Collaboration and Incentives: Foster stronger industry-academia linkages by offering tax benefits, matching grants, and innovation clusters to attract private R&D investment and create lucrative opportunities for researchers in India.

    Mains PYQ:

    [UPSC 2024] What are the intellectual property rights with respect to life materials? Although, India is second in the world to file patents, still only a few have been commercialized. Explain the reasons behind this less commercialization.

    Linkage:  The article discusses the Union Cabinet’s approval of a ₹1-lakh crore Research Development and Innovation (RDI) scheme aimed at incentivizing the private sector to invest in basic research. This PYQ directly addresses the challenge of commercialization of patents in India, a critical bottleneck in the country’s innovation ecosystem that the implicitly highlights by article.

  • Rare Great Hornbill sighted in Kerala

    Why in the News?

    The Great Hornbill (Malamuzhakki Vezhambal)—Kerala’s State bird and a symbol of forest biodiversity—was spotted far outside its usual habitat.

    Rare Great Hornbill sighted in Kerala

    About the Great Hornbill (Malamuzhakki Vezhambal)

    • Overview: The Great Hornbill (Buceros bicornis) is the largest hornbill species found in India.
    • Attributes: It is known for its striking yellow casque on the upper mandible, which is hollow and used in vocalisation and courtship.
    • Official Recognition: It is the State Bird of Kerala (as well as Arunachal Pradesh) and is revered in many indigenous cultures for its majestic appearance.
    • Conservation Status: It is listed as Endangered by the IUCN and is protected under Schedule I of the Indian Wildlife (Protection) Act, 1972.
    • Habitat: It primarily inhabit evergreen and moist deciduous forests, especially in the Western Ghats, the Himalayan foothills, and Northeast India.
    • Prey Behaviour: They are frugivorous, feeding mainly on figs and other forest fruits, but they may occasionally consume small mammals, birds, and insects.
    • Ecological Significance:  They are known as ‘forest engineers’ or ‘farmers of the forest’, they play a key role in seed dispersal of tropical trees, indicating the health and balance of their forest ecosystems.
    [UPSC 2016] In which of the following regions of India are you most likely to come across the ‘Great Indian Hornbill’ in its natural habitat? Options: (a) Sand deserts of northwest India (b) Higher Himalayas of Jammu and Kashmir (c) Salt marshes of western Gujarat (d) Western Ghats *

     

  • RECLAIM Framework for Inclusive Mine Closure

    Why in the News?

    The Ministry of Coal has launched RECLAIM Framework— A Community Engagement and Development Framework for Mine Closure and Repurposing.

    About the RECLAIM Framework:

    • Launch: The Ministry of Coal has launched the RECLAIM framework to guide inclusive and sustainable coal mine closures in India.
    • Developed By: The framework was developed by the Coal Controller Organisation in collaboration with the Heartfulness Institute.
    • Objective: It aims to ensure a just, inclusive, and locally relevant transition for communities affected by mine closures.
    • Inclusivity Measures: The framework places special emphasis on gender equity, the inclusion of vulnerable groups, and alignment with Panchayati Raj Institutions to enhance accountability and relevance.

    Key Features of the Framework:

    • Guidelines: Mine closure guidelines were introduced in 2009 and revised in 2013 and 2020 to improve environmental safety and social accountability.
    • Community Engagement: The framework promotes community-centric planning by actively involving local stakeholders in mine closure processes.
    • Equity and Representation: It prioritizes the inclusion of women and marginalized groups to ensure that benefits are distributed equitably.
    • Institutional Convergence: RECLAIM aligns mine closure planning with existing institutional structures, especially Panchayati Raj Institutions and local governance systems.
    • Phased Implementation: The framework follows three phases:
      • Pre-Closure: Includes needs assessments and capacity building.
      • Closure: Involves participatory execution of closure plans.
      • Post-Closure: Focuses on monitoring, livelihood restoration, and asset repurposing.
    • Support Tools: RECLAIM is backed by field-tested tools, templates, and methodologies tailored to the Indian mining context.
    • Broader Impact: It supports the achievement of Sustainable Development Goals (SDGs) and can be replicated in other resource-intensive sectors and states.

    Challenges in Coal Mine Closure in India:

    • Policy–Practice Gap: Despite guidelines issued in 2009, only three coal mines have been formally closed as of 2024.
    • Low Compliance: Out of 299 non-operational coal mines, only eight have applied for formal closure, while the rest remain unscientifically abandoned.
    • Environmental Risks: Abandoned mines lead to methane emissions, ecological degradation, increased accident risks, and illegal mining.
    • Community Displacement: Unsustainable mining has caused unemployment and migration, reducing community engagement during closure planning.
    • Land Return Issues: India lacks a clear policy for returning post-mining land to original owners or communities.
    • Policy Gaps in Draft Bill: The 2024 Draft Coal Bearing Areas (CBA) Amendment Bill proposes land return but lacks clarity on enforcement mechanisms.
    • Financial Barriers: High escrow fund requirements—₹14 lakh per hectare for opencast mines—discourage mine operators from initiating closure processes.

     

    [UPSC 2019] Consider the following statements:

    1. The coal sector was nationalized by the Government of India under Indira Gandhi.
    2. Now, coal blocks are allocated on lottery basis.
    3. Till recently, India imported coal to meet the shortages of domestic supply, but now India is self-sufficient in coal production.

    Which of the statements given above is/are correct?

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

     

  • Vera C Rubin Observatory 

    Why in the News?

    The Vera C. Rubin Observatory has recently begun a 10-year project to study dark matter and dark energy using a 3,200-megapixel camera (of the Simonyi Survey Telescope) from its site in the Chilean Andes.

    Vera C Rubin Observatory 

    About Vera C. Rubin Observatory:

    • Location: The Vera C. Rubin Observatory is situated on Cerro Pachón in the Chilean Andes, at an altitude of 8,684 feet.
    • Naming: It is named after Vera C. Rubin, the astronomer who first provided robust observational evidence for the existence of dark matter in the 1970s.
    • Survey Duration: The observatory will carry out a 10-year continuous survey of the entire southern sky.
    • Data Volume: It is designed to collect approximately 20 terabytes of astronomical data per night.
    • Observation System: The telescope operates using an automated scripting system that selects observation targets dynamically, rather than through manual scheduling.
    • Objectives: Its key goals include understanding the formation of galaxies, identifying a possible ninth planet, detecting potentially hazardous asteroids, and studying the nature of dark matter and dark energy.

    Key Features:

    • Telescope Design: The observatory uses the Simonyi Survey Telescope, which features a three-mirror optical system for wide-field imaging.
    • How big is it: It has a field of view of 9.6 square degrees (compared to 0.04 sq. deg. for Hubble and 0.11 sq. deg. for James Webb), a 3,200-megapixel camera (vs. Hubble’s ~1.0 MP).
    • Field of View: It can capture a field of view equivalent to 40 full Moons in a single exposure — far wider than traditional space telescopes.
    • Spectral Filters: The camera includes six optical filters that capture data from across the electromagnetic spectrum, including ultraviolet and infrared light.
    • Slewing Speed: The telescope is the fastest-moving large telescope, capable of repositioning and stabilizing in just 5 seconds.
    • Imaging Frequency: It can take up to 1,000 images per night, allowing it to scan the entire sky every three nights.
    • Change Detection: Its automated software compares new and old images to detect changes, issuing up to 10 million alerts per night for transient astronomical events.

    Breakthrough Discoveries:

    • First Light: The observatory released its first test images on June 23, 2025.
    • Initial Discoveries: Within 10 hours of collecting engineering data, it identified 2,104 new asteroids, including 7 near-Earth objects (NEOs).
    • Expected Discoveries: Over the full 10-year mission, it is projected to discover over 5 million asteroids and around 100,000 NEOs.
    • Impact on Database: These findings would triple the current global inventory of known asteroids.
    • Universe Mapping: The observatory will produce the most detailed map of the large-scale structure of the universe to date.
    • Dark Matter Study: The data will support analysis of dark matter, which constitutes 27% of the universe’s composition.
    • Dark Energy Study: It will also help scientists understand dark energy, which makes up 68% of the universe and drives cosmic expansion.
    • Visible Matter Context: Only 5% of the universe is composed of visible matter, making the observatory’s data essential to studying the remaining 95%.
    [UPSC 2002] The world’s highest ground-based telescopic observatory is located in:

    Options: (a) Colombia (b) India (c) Nepal (d) Switzerland

     

  • Rising seas, shifting lives and a test of democratic values

    Why in the News?

    India is seeing a worrying rise in people being forced to leave their homes due to climate change along its coasts, revealing serious gaps in how the country manages the environment and supports affected communities.

    What are the socio-economic impacts of coastal climate change?

    • Displacement of Coastal Communities: Rising sea levels, saltwater intrusion, and erosion force people from traditional coastal villages to resettlement colonies. Eg: In Satabhaya, Odisha, entire villages have been submerged, displacing residents with little access to sustainable livelihoods.
    • Loss of Traditional Livelihoods: Coastal degradation affects fishing and agriculture, disrupting long-standing economic systems. Eg: In Honnavar, Karnataka, fishing communities face livelihood loss due to mangrove destruction and tourism development.
    • Forced Migration to Urban Informal Sectors: Displaced people migrate to cities and enter unprotected labour markets, often in exploitative conditions. Eg: Many end up as construction or brick kiln workers in cities like Mumbai or Chennai, without labour rights.
    • Labour Exploitation and Gender Vulnerability: Migrants, especially women, face debt bondage, abuse, and trafficking due to informal employment and lack of legal safeguards. Eg: Displaced women entering domestic work are underpaid and vulnerable to exploitation.
    • Social Inequality and Lack of Legal Protection: The absence of targeted legal frameworks leads to exclusion from welfare schemes and labour protections, worsening socio-economic inequality. Eg: Existing laws like the BOCW Act, 1996, do not cover climate migrants, leaving them unprotected.

    How does climate-induced displacement test India’s democratic values?

    • Right to Life and Dignity (Article 21): Climate displacement challenges the constitutional guarantee of life with dignity, as displaced communities often lack shelter, healthcare, and livelihood.
    • Denial of Free, Prior, and Informed Consent (Article 19(1)(a)): Many infrastructure and tourism projects along the coast proceed without consulting local communities, violating their freedom of expression and participation in governance.
    • Suppression of Protest and Association (Article 19(1)(b) and 19(1)(c)): Environmental defenders and activists resisting unjust displacement face police action, surveillance, and criminalisation, undermining their freedom to protest and form associations.

    Why is a legal framework for climate migrants essential?

    • To Recognise and Protect the Rights of the Displaced: Climate migrants often lose access to housing, work, and basic services. A legal framework ensures their right to life and dignity is upheld under Article 21 of the Constitution. Eg: Villagers displaced from Satabhaya, Odisha, lack legal recognition as climate migrants, preventing access to structured rehabilitation.
    • To Fill Gaps in Existing Laws and Policies: Current laws like the Disaster Management Act, 2005 and CRZ Notification, 2019 focus on emergency response or environmental regulation, not long-term rehabilitation or labour rights. Eg: The NAPCC identifies vulnerability but has no mechanism to integrate displaced people into labour or housing policies.
    • To Prevent Labour Exploitation and Ensure Social Justice: Without legal safeguards, climate migrants, especially in urban informal sectors, face wage theft, abuse, and gendered violence. Eg: Migrants working in brick kilns or as domestic workers in cities remain outside labour codes, exposing them to exploitation.

    What is the role of local movements in protecting coastal communities?

    • Grassroots Resistance Against Destructive Projects: Local movements mobilize communities to protest against unsustainable infrastructure and industrial projects that threaten coastal ecosystems. Eg: The Save Satabhaya campaign in Odisha resisted sea-erosion-driven displacement and demanded proper rehabilitation.
    • Advocacy for Environmental Justice and Rights: These movements highlight environmental injustices, defend the livelihoods of traditional communities, and demand informed consent and legal protection. Eg: Pattuvam Mangrove Protection Movement.
    • Challenging Development Narratives and Policy Gaps: Local struggles question top-down development policies, push for sustainable alternatives, and expose policy loopholes that ignore climate and social impacts. Eg: Protests against the Adani port expansion at Ennore Creek, Tamil Nadu.

    Which reforms can ensure rights-based climate migration policies? (Way forward)

    • Legal Recognition of Climate Migrants: Integrate climate-induced displacement into national migration and disaster policies to ensure affected individuals are officially recognized and protected under law.
    • Labour Code Reforms for Informal Workers: Amend existing labour laws to include climate migrants, especially those in vulnerable sectors like construction and domestic work, ensuring fair wages, social security, and workplace protections.
    • Participatory Coastal Zone Management: Redesign Coastal Regulation Zone (CRZ) rules to prioritize ecological sustainability and the rights of local communities, with mandatory community consent before approving commercial projects.

    Mains PYQ:

    [UPSC 2024] What is sea surface temperature rise? How does it affect the formation of tropical cyclones?

    Linkage: The article highlights “rising seas, saltwater intrusion” and “coastal degradation” as impacts of climate change. This question directly relates to a key oceanic phenomenon influenced by climate change and its effect on extreme weather events like cyclones.

  • Women MSMEs still struggle for credit despite schemes

    Why in the News?

    Women-led MSMEs are a key part of India’s economic growth, but they still remain underserved. Even though they make up 20% of all registered MSMEs, they contribute only 10% of the total income and receive disproportionate credit and lack of support.

    Why do women-led MSMEs face persistent credit gaps?

    • Discriminatory Credit Disbursement: Women face a higher credit gap (35%) compared to men (20%), as per SIDBI reports. Eg: Despite applying for ₹10 lakhs in business loans, many women entrepreneurs receive only ₹6.5 lakhs, limiting their operational expansion.
    • Lack of Collateral and Property Ownership: Many women lack land or asset ownership, making it difficult to meet banks’ collateral requirements. Eg: A rural woman running a tailoring unit may not own property, so her loan request is denied despite good business potential.
    • Lower Financial Literacy: Many first-generation women entrepreneurs, especially in rural areas, lack awareness of financial schemes and documentation processes. Eg: Women in small towns often don’t know how to access PMMY or Stand-Up India loans, resulting in underutilisation of available credit.
    • Gender Bias in Credit Risk Assessment: Financial institutions often perceive women as risky borrowers, especially if they operate in informal sectors.
    • Overdependence on Informal Credit Sources: Due to a lack of formal access, many women rely on moneylenders, who charge high interest rates and offer no legal protection. Eg: In the absence of bank loans, women-led microenterprises may borrow from informal lenders at 24% interest, leading to debt traps.

    What limits the effectiveness of schemes like PMMY?

    • Low Sanction-to-Application Ratio: While a high number of women open loan accounts, the actual sanctioned amount is disproportionately lower. Eg: In 2024, women held 64% of PMMY accounts, but received only 41% of the total disbursed amount, reflecting a gap in meaningful financial access.
    • Administrative Inefficiencies: Delays and inconsistencies in processing applications, verification, and disbursal reduce scheme impact.
    • Lack of Awareness: Many potential beneficiaries, especially in rural or semi-urban areas, are unaware of PMMY’s features or how to apply. Eg: Women entrepreneurs with informal businesses often fail to access collateral-free loans due to absence of facilitation from banks or local agencies.

    How does low financial literacy hinder women entrepreneurs?

    • Inability to Navigate Formal Banking Systems: Lack of knowledge in budgeting, credit scores, or interest rates discourages women from applying for loans. Eg: First-generation entrepreneurs in rural areas avoid formal credit channels and depend on informal moneylenders with high-interest rates.
    • Limited Confidence in Business Decision-Making: Low financial skills reduce confidence in investment planning, profit calculation, and risk management, hampering business growth. Women running micro-enterprises often hesitate to expand operations or apply for working capital loans, fearing repayment complexities.

    What is the role of the Udyam Assist Portal in women’s empowerment?

    • Formal Recognition of Informal Enterprises: The portal helps register Informal Micro Enterprises (IMEs), especially women-led ones, bringing them into the formal financial ecosystem. Eg: In 2024, 70.5% of IMEs registered on the portal were women-owned, enabling access to priority sector lending.
    • Improved Access to Formal Credit: By assigning a Udyam Registration Number, it enables collateral-free loans and better eligibility under various government credit schemes. Eg: Registered women entrepreneurs can now avail benefits under schemes like PMMY and Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
    • Boost to Employment and Income Generation: The portal supports women in starting and scaling up their enterprises, thus enhancing livelihood security and job creation. Eg: Women-led IMEs contributed over 70.8% to employment generation in the informal micro-business segment.

    Which reforms can improve credit access for women-led IMEs? (Way forward)

    • Expand Collateral-Free Credit Schemes: Widen the reach of schemes like PMMY and CGTMSE with targeted provisions for first-generation women entrepreneurs and flexible documentation norms. Eg: Lower the threshold for loan amounts and simplify eligibility for Udyam-registered IMEs.
    • Strengthen Financial Literacy and Credit Counselling: Launch grassroots training programmes in regional languages to raise awareness about credit products, budgeting, and digital banking. Eg: Tie-up with SHGs and local NGOs to educate women in rural and semi-urban areas.
    • Mandate Gender-Sensitive Banking Practices: Instruct public and private banks to set quotas for women-led MSME lending, and monitor disbursal with gender-segregated data. Eg: Introduce incentive-based targets for bank branches lending to women-run enterprises.

    Mains PYQ:

    [UPSC 2021] Can the vicious cycle of gender inequality, poverty and malnutrition be broken through microfinancing of women SHGs? Explain with examples.

    Linkage: The article explicitly highlight the how government schemes like the Pradhan Mantri MUDRA Yojana (PMMY) aim to support self-employment and financial independence for women, which aligns with microfinancing efforts. This question is highly relevant as it directly addresses the effectiveness of “microfinancing of women” as a tool for empowerment and breaking negative societal cycles.

     

  • Operation Med Max

    Why in the News?

    The Narcotics Control Bureau (NCB) has busted a global drug network spanning four continents through secret Operation Med Max.

    Back2Basics: Narcotics Control Bureau (NCB)

    • Institutional Mandate: The NCB is India’s central drug law enforcement and intelligence agency, functioning under the Ministry of Home Affairs.
    • Establishment: It was established on 14th November 1985 under the Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985.
    • Role: The agency works closely with Customs, State Police, Intelligence Bureau, and international agencies like Interpol and the US DEA.
    • International Treaty Compliance: NCB is responsible for monitoring India’s compliance with global drug control conventions and facilitating cooperation with foreign drug enforcement bodies.
    • Operational Network: It maintains zonal offices nationwide and is staffed by officers from IPS, IRS, paramilitary forces, and direct recruits.
    • Financial Surveillance Role: The NCB is a member of the Economic Intelligence Council, reflecting its role in tracking financial transactions linked to drug crimes.
    • Digital Intelligence Focus: The agency is now expanding into cyber surveillance, targeting darknet networks, crypto-based payments, and online narcotics trade.

    About Operation Med Max:

    • Launch: It was initiated by the Narcotics Control Bureau (NCB) in May 2024, beginning with the interception of a car in Delhi, it seized 3.7 kg of Tramadol tablets.
    • Uncovering a Global Syndicate: Investigations revealed a transnational drug syndicate using encrypted apps, drop shipping, and cryptocurrency payments to smuggle controlled pharmaceutical drugs across four continents and over 10 countries.
    • Global Ramifications: The probe triggered international enforcement actions, including the arrest of a money launderer in Alabama (USA), closure of an illegal pill factory in Australia, and identification of a UAE-based drug kingpin.

    Also in News: Operation MELON

    • Overview: It was a coordinated crackdown on India’s top-rated darknet drug vendor, alias “Ketamelon”, active for over two years.
    • Drug and Crypto Seizures: The raid led to the seizure of 1,100 LSD blots, 131 grams of Ketamine, and ₹70 lakh worth of cryptocurrency, stored in a hardware wallet.
    • Darknet Threat: Ketamelon was classified as a Level 4 darknet vendor, the highest possible rank, underscoring the growing cyber-narcotics threat and NCB’s technical capacity to counter it.
    [UPSC 2024] Consider the following activities:

    1. Identification of narcotics on passengers at airports or in aircraft

    2. Monitoring of precipitation

    3. Tracking the migration of animals

    In how many of the above activities can the radars be used?

    Options: (a) Only one (b) Only two* (c) All three (d) None

     

  • Invisible Exports of India

    Why in the News?

    As of 2024–25, India’s “invisibles” trade—comprising services exports and private money transfers—has not only surpassed its merchandise exports but also emerged as a key stabiliser of the current account deficit.

    What are Invisible Exports (in India’s context)?

    • What is it: Invisible exports refer to international trade in services and income flows that do not involve physical goods crossing borders. These transactions are digital or financial, rather than visible at ports or airports.
    • Types of Services Included: They comprise a wide range of service-based exports such as IT services, financial consulting, legal and accounting services, R&D, and BPO operations.
    • Inclusion of Remittances: Private remittances—money sent home by Indians working abroad—are counted as part of invisibles in India’s Balance of Payments (BoP).
    • BoP Classification: These transactions are recorded under the “Current Account” of the BoP, specifically in the sub-categories of services, primary income, and secondary income.
    • Characteristics: Unlike physical exports, invisible exports do not require shipping, face fewer trade barriers, and rely heavily on skilled human capital.
    • Leading Examples: India’s key invisible exports include software and IT-enabled services (by firms like Infosys, TCS, Wipro), Global Capability Centers, financial and legal services, and education, tourism, and medical services.
    • Role of Migrant Remittances: Remittances from NRIs and migrant workers play a crucial role and are one of the largest components of India’s invisible receipts.

    Their Contribution in Trade

    • Higher Value than Goods Exports: In 2024–25, India’s gross invisible receipts reached $576.5 billion, surpassing merchandise exports of $441.8 billion. Services alone brought in $387.5 billion, a major leap from $26.9 billion in 2003–04, while remittances added $135.4 billion.
    • Buffer Against Trade Deficits: While the merchandise trade deficit stood at $287.2 billion, a net invisible surplus of $263.8 billion helped reduce the overall current account deficit to just $23.4 billion, providing crucial stability.
    • Resilience Across Global Crises: Invisible exports remained strong during major disruptions like the 2008 financial crisis, COVID-19 pandemic, and ongoing geopolitical tensions, showcasing greater resilience than merchandise trade.
    • Human Capital-Driven Growth: Services exports are powered by India’s skilled workforce, not physical infrastructure. India thrives as the “office of the world”, moving beyond the traditional “back office” label.
    • Less Policy Dependence: Growth in invisible exports occurred largely without heavy government incentives or trade agreements. India still lacks strong service-sector provisions in its major trade deals.
    [UPSC 2006] Assertion (A): Balance of Payments represents a better picture of a country’s economic transactions with the rest of the world than the Balance of Trade.

    Reason (R): Balance of Payments takes into account the exchange of both visible and invisible items whereas Balance of Trade does not.

    Options: (a) Both A and R are individually true and R is the correct explanation of A **  (b) Both A and R are individually true and R is not the correct explanation of A (c) A is true but R is false (d) A is false but R is true

     

  • Concern over falling household savings in India – what can be done

    Why in the News?

    India’s household savings rate fell to 29.7% of GDP in 2022–23, the lowest level in 40 years, down from 34.6% in 2011–12.

    What led to the decline in household financial savings in India?

    • Rise in Consumption Expenditure: After the COVID-19 pandemic, households increased spending on consumer durables, travel, and lifestyle, reducing the capacity to save.
    • High Inflation: Persistent rise in prices of essentials like food, fuel, and healthcare eroded disposable income and limited savings.
    • Shift Towards Riskier Financial Assets: Investments in mutual funds and equities increased, with SIP contributions rising significantly, while traditional savings like fixed deposits declined.
    • Slow Income Growth and High Interest Rates (Fisher Effect): Stagnant wages and low nominal income growth, coupled with high interest rates and loan EMIs, reduced household savings potential.
    • Rising Household Debt: Household liabilities reached 6.4% of GDP in FY24, due to more borrowing for housing, education, and personal loans.
    • Reversal of COVID-Era Forced Savings: Savings spiked during lockdowns but dropped sharply as economic activity resumed and pent-up demand surged.

    Why is the shift to financial assets important for capital formation?

    • Improves Resource Mobilisation: Financial assets like deposits, mutual funds, and pension funds channel household savings into productive sectors, supporting investment and infrastructure growth.
    • Enhances Financial Intermediation and Efficiency: Financial institutions act as intermediaries, allocating savings to sectors with higher returns and productivity, ensuring efficient capital use. Eg: Banks mobilise savings into loans for MSMEs, which contribute significantly to employment and GDP.
    • Reduces Idle Capital and Boosts Formal Economy: Unlike physical assets (like gold and real estate), financial assets contribute to the formal economy, increasing credit availability and financial inclusion. Eg: Shift from gold to digital savings accounts increases liquidity and boosts credit growth in the economy.

    How has rising household debt impacted financial stability?

    • Increased Vulnerability to Economic Shocks: High debt levels reduce households’ ability to absorb income shocks (like job loss or medical emergencies), leading to loan defaults and stress on financial institutions. Eg: During the COVID-19 pandemic, many households defaulted on EMIs due to income loss, affecting NBFCs and banks.
    • Reduced Net Financial Savings: Growing liabilities shrink the net financial savings rate, limiting the funds available for productive investments and weakening domestic capital formation. Eg: In FY24, household liabilities rose to 6.4% of GDP while financial savings fell to 5.1%, a four-decade low.
    • Pressure on Banking and Credit Systems: High levels of unsecured loans (like personal and gold loans) increase credit risk, prompting regulatory tightening and affecting credit flow to the economy. Eg: RBI imposed stricter norms on personal loans in FY25 to prevent systemic risk from unsecured lending growth.

    What steps can improve savings among rural and low-income groups?

    • Promote Micro-Savings Products: Introduce low-ticket savings schemes tailored for daily or weekly contributions. Eg: The PM Jan Dhan Yojana encourages basic savings with zero-balance accounts.
    • Provide Government-Backed Guarantees and Incentives: Offer interest subsidies, insurance cover, or guaranteed returns to build trust among low-income savers. Eg: The Kisan Vikas Patra and Public Provident Fund (PPF) offer guaranteed returns with sovereign backing.
    • Expand Financial Literacy Campaigns: Run focused awareness drives on budgeting, saving, and investment options in local languages. Eg: RBI’s Financial Literacy Week and SEBI’s village workshops educate people on safe saving practices.
    • Leverage Digital and Fintech Solutions: Use mobile wallets, micro-investing apps, and digital payment systems to make saving more accessible. Eg: Platforms like Paytm Payments Bank and Airtel Payments Bank offer micro-savings and insurance.
    • Revamp and Strengthen Post Office Schemes: Modernise postal savings with better accessibility, digital interface, and doorstep banking. Eg: Rural Post Offices now offer core banking services, enabling safer and formal saving options.
    • Introduce Default Saving Options (Behavioral Nudges): Implement opt-out pension schemes or auto-enrollment in saving plans for informal workers. Eg: The Atal Pension Yojana encourages informal sector workers to save for retirement through auto-debits.

    Way forward: 

    • Develop a National Household Savings Strategy: Create a coordinated policy framework across ministries with clear targets, integrating financial literacy, product innovation, and social security measures for underserved populations.
    • Encourage Inclusive Fintech Innovations: Promote user-friendly micro-investing platforms, AI-driven financial guidance, and blockchain-based savings tools to enable secure, transparent, and accessible savings for rural and low-income households.

    Mains PYQ:

    [UPSC 2017] Among several factors for India’s potential growth, savings rate is the most effective one. Do you agree? What are the other factors available for growth potential?

    Linkage: The artilce explicitly state that India’s gross domestic savings rate fell to its lowest in four decades (29.7% of GDP in 2022-23). This question directly related to the importance of the savings rate for India’s growth, which aligns with the concern over falling household savings. 

  • International Treaty on Plant Genetic Resources for FAO

    Why in the News?

    India has expressed serious concerns over proposed changes to the International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA)—popularly known as the Plant Treaty.

    About the Plant Treaty, 2001:

    • Adoption: It was adopted by the FAO on 3rd November 2001 and came into force in 2004.
    • Purpose: It governs the Multilateral System (MLS) for the access and benefit-sharing of Plant Genetic Resources for Food and Agriculture (PGRFA).
    • Key Features:
      • Coverage of Crops: The MLS currently includes 64 essential food crops and forages listed in Annex I, which together meet around 80% of the world’s plant-based food needs.
      • Access Mechanism: Access to these genetic materials is provided for research, breeding, and training purposes through a Standard Material Transfer Agreement (SMTA).
      • Benefit-Sharing Approach: The Treaty incorporates monetary and non-monetary benefit-sharing mechanisms, with a focus on supporting biodiversity in developing countries.
      • IP Restrictions: It prohibits any intellectual property claims over the raw genetic materials accessed under the system.
      • Recognition of Farmers’ Rights: It affirms farmers’ rights, such as the protection of traditional knowledge, equitable benefit-sharing, and participation in national decisions about PGRFA use and conservation.
    • India’s Participation: India is a signatory and active participant and implements the Treaty alongside domestic legislation like the Protection of Plant Varieties and Farmers’ Rights (PPV&FR) Act, 2001.

    Proposed Amendments:

    • Objective: The upcoming proposal aims to expand the scope of the MLS to include all PGRFA, not just those in Annex I.
    • New Inclusions: The expansion would bring in indigenous varieties, non-commercial crops, and community-protected heirloom seeds under the MLS framework.
    • Impact on India’s Obligations: If passed, the amendment would mandate countries like India to share all plant germplasm through the existing SMTA process.
    • No Change in Benefit Terms: The amendment retains current benefit-sharing mechanisms, which critics argue are often non-monetary or merely symbolic.
    • Concerns over IP Rights: The broadened scope may lead to intellectual property loopholes if traditional seeds are repackaged or genetically altered.
    • Allegations of Biopiracy: Critics argue the proposal enables “backdoor biopiracy”, especially of the Global South’s rich seed diversity.

    India’s Concerns:

    • Loss of Seed Sovereignty: India fears it will lose discretion over which seeds to share, weakening its ability to protect unique plant biodiversity.
    • Undermining of Farmers’ Rights: The proposal might override the rights granted to farmers under the Plant Treaty and India’s PPV&FR Act, which view them as custodians of seed heritage.
    • Erosion of National Authority: The expansion could violate Articles 10 and 11 of the Treaty, which grant countries sovereign control over their genetic resources.
    • Violation of Federal Principles: The lack of consultation with States is seen as a breach of India’s federal structure, as agriculture is a State subject under Schedule VII of the Constitution.
    • Marginalization of Biodiversity Boards: The role of State Biodiversity Boards may be diminished, despite their importance in regulating local germplasm and community rights.
    • Lack of Equitable Returns: India argues that the global system offers little real benefit, raising doubts about fairness and justice in benefit-sharing.
    [UPSC 2014] Consider the following international agreements:

    1. The International Treaty on Plant Genetic Resources for Food and Agriculture.

    2. The United Nations Convention to Combat Desertification.

    3. The World Heritage Convention. Which of the above has/have a bearing on the biodiversity?

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