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GS Paper: GS3

  • [pib] Exercise INIOCHOS 25

    Why in the News?

    The Indian Air Force will participate in Exercise INIOCHOS-25 hosted by the Hellenic Air Force at Andravida Air Base, Greece.

    About Exercise INIOCHOS

    • INIOCHOS is a biennial multinational air exercise that provides air forces with a platform to enhance their operational readiness.
    • It is hosted by the Hellenic (Greek) Air Force and brings together military aviation units from various countries, promoting international cooperation.
    • It was first conducted in the late 1980s, as a small-scale tactical level exercise.
    • Objective: To allow air forces to practice Combined Air Operations and share tactical knowledge through realistic combat scenarios.

    Key Features of Exercise INIOCHOS:

    • It integrates air and surface assets from fifteen countries, promoting multinational cooperation in air warfare.
    • It will simulate modern-day air warfare challenges, providing a real-world training environment for participating air forces.
    • It will be placed on planning and executing Combined Air operations, refining tactics in complex air warfare scenarios.

    Strategic Importance for India:

    • India’s participation in INIOCHOS-25 underlines its commitment to global defence cooperation and showcases its ability to work seamlessly in joint operations.
    • The exercise will reinforce India’s strategic partnerships with other nations and further enhance its readiness for joint operations in complex and dynamic air warfare environments.

  • Tri-services Exercise Prachand Prahaar

    Why in the News?

    The Indian Army conducted a Tri-Service integrated multi-domain warfare exercise, called ‘Prachand Prahaar’, in the high-altitude terrain of Arunachal Pradesh.

    About Exercise Prachand Prahaar

    • It is a tri-service integrated multi-domain warfare exercise involving the Army, Indian Air Force (IAF), and Indian Navy.
    • It is conducted in the high-altitude terrain of Arunachal Pradesh, near the Line of Actual Control (LAC), which spans 3,488 km.
    • The exercise was carried out under the aegis of the Eastern Army Command.
    • The primary objective was to validate a fully integrated approach to surveillance, command and control, and precision firepower across all three services.
    • The exercise aimed at simulating future warfare scenarios with a synergised combat drill.

    Key Components and Execution:

    • The exercise began with the deployment of advanced surveillance resources from all three services, which included:
      • Long-range surveillance aircraft from the IAF.
      • Maritime domain awareness aircraft from the Indian Navy.
      • Helicopters and Unmanned Aerial Vehicles (UAVs).
      • Space-based resources and the Indian Army’s elite special forces.
    • These resources created seamless domain awareness, which allowed for the identification of simulated targets.

    Related Previous Exercises:

    • The Prachand Prahaar exercise builds upon the momentum of Exercise Poorvi Prahar, which was held in November 2024.
    • The focus of Poorvi Prahar was on the integrated application of aviation assets.

  • [pib] 10 Years of Sagarmala Project

    Why in the News?

    The Sagarmala Programme, launched in 2015 by the Ministry of Ports, Shipping, and Waterways (MoPSW), has completed 10 years of transformative success, positioning India as a maritime powerhouse.

    About Sagarmala Programme

    • The Sagarmala Programme was launched in 2015 by the Ministry of Ports, Shipping, and Waterways (MoPSW).
    • It aims to transform India’s maritime sector by enhancing port-led development, modernizing ports, and promoting sustainable coastal development.
    • The program is a key part of the Maritime Amrit Kaal Vision 2047 (MAKV), which aims to make India a global maritime leader by 2047.
    • Five Key Components:
    1. Port Modernization & New Port Development: Upgrading ports to boost efficiency and capacity.
    2. Port Connectivity Enhancement: Improving multimodal logistics and port hinterland connectivity.
    3. Port-Led Industrialization: Establishing industrial clusters near ports to foster economic growth.
    4. Coastal Community Development: Supporting skill development and livelihood opportunities for coastal communities.
    5. Coastal Shipping & Inland Waterways Transport: Promoting eco-friendly coastal shipping and inland waterways to reduce congestion.
    • Implementation & Funding
      • Implementation: Managed by Major Ports, central ministries, State Governments, and agencies.
      • Funding: Primarily through Public-Private Partnerships (PPP), IEBR, Grant-in-Aid, and Equity (Sagarmala Development Company Limited).

    Maritime Amrit Kaal Vision, 2047 (MAKV):

    The MAKV sets ambitious targets for India’s maritime sector:

    • 4 million GRT of shipbuilding capacity.
    • 10 billion metric tons of port handling annually.
    • Aiming for top five shipbuilding nations by 2047.

    Progress Till Date:

    • 839 projects identified with ₹5.79 lakh crore investment; 272 completed with ₹1.41 lakh crore investment.
    • 118% growth in coastal shipping over the past decade, reducing logistics costs and emissions.
    • 700% increase in inland waterway cargo, easing road and rail congestion.
    • Over 40 lakh passengers transported via Ro-Pax ferries.
    • Nine Indian ports ranked among the top 100 globally.
    • Sagarmala 2.0 focuses on shipbuilding, repair, recycling, and modernization with a ₹40,000 crore budget.
    • Sagarmala Startup Innovation Initiative (S2I2) launched in March 2025 to support startups in green shipping and sustainable development.
    [UPSC 2019] With reference to India’s projects on connectivity, consider the following statements :

    1. East-West Corridor under Golden Quadrilateral Project connects Dibrugarh and Surat.

    2. Trilateral Highway connects Moreh in Manipur and Chiang Mai in Thailand via Myanmar.

    3. Bangladesh-China -India -Myanmar Economic Corridor connects Varanasi in Uttar Pradesh with Kunming in China.

    How many of the above statements are correct?

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

     

  • India BioEconomy Report

    Why in the News?

    The India BioEconomy Report has pegged the value of India’s bioeconomy in 2024 at more than $165 billion, accounting for over 4.2% of the country’s GDP.

    What is Bioeconomy?

    • Bioeconomy refers to the industrial use of biological resources (plants, animals, and microorganisms) and the replication of natural biological processes to produce goods and services.
    • It incorporates sustainable methods to replace traditional, resource-intensive production systems.
    • Applications:
      • Biofuels, bioplastics, medicines, synthetic biology, and agriculture are key sectors where bioeconomy is being applied.
        • Ex. Ethanol produced via microorganisms from crops like sugarcane and corn is a prime example of bioeconomy’s impact on reducing reliance on hydrocarbon-based fuels.

    Key Highlights of the India Bioeconomy Report:

    • Growth in Market Value:
      • India’s bioeconomy has nearly doubled in value from $86 billion in 2020 to $165 billion in 2024.
      • There has been a 90% increase in the number of companies in the bioeconomy sector, from 5,365 in 2021 to 10,075 in 2024, with projections to double again by 2030.
    • Key Sectors:
      • Industrial Sector: Contributes nearly $78 billion, driven by biofuels and bioplastics.
      • Pharmaceuticals: Accounts for 35% of the total bioeconomy value, primarily driven by vaccines.
      • Research and IT: The fastest-growing segment, especially in biotech software development and clinical trials.
    • Regional Contribution:
      • Maharashtra, Karnataka, Telangana, Gujarat, and Andhra Pradesh account for over two-thirds of the bioeconomy value.
      • The Eastern and Northeastern regions contribute less than 6%.
    • Global Comparison:
      • India’s bioeconomy share in GDP (4.2%) is comparable to countries like the US and China.
      • However, countries like Spain and Italy have bioeconomy contributing more than 20% of their GDP.
    • Policy Direction:
      • The BioE3 policy (Biotechnology for Economy, Environment, and Employment), launched in 2024, aims to establish India as a global hub for bio-manufacturing and a major center for biotech R&D.
      • The policy targets growth in areas such as bio-based chemicals, functional foods, precision biotherapeutics, marine and space biotechnology, and climate-resilient agriculture.

    India BioEconomy Report

    [UPSC 2024] Consider the following materials:

    1. Agricultural residues

    2. Corn grain

    3. Wastewater treatment sludge

    4. Wood mill waste

    Which of the above can be used as feedstock for producing Sustainable Aviation Fuel?

    (a) 1 and 2 only (b) 3 and 4 only (c) 1,2,3 and 4  (d) 1,3 and 4 only

     

  • GAIA Mission

    Why in the News?

    The European Space Agency (ESA) officially shut down its Global Astrometric Interferometer for Astrophysics (GAIA) Mission, which had been operational for over a decade.

    About the GAIA Mission

    • It was launched in December 2013 with the primary goal to create the most accurate three-dimensional map of the Milky Way galaxy.
    • It sought to measure the positions, distances, and movements of stars and other celestial bodies.
    • Gaia was designed for astrometry, focusing on precise measurements of celestial object locations and motions.
    • Positioned at Lagrange Point 2 (L2), 1.5 million kilometres behind Earth (as viewed from the Sun), Gaia was able to observe the universe without interference from Earth, the Sun, or the Moon.
    • Gaia was equipped with two telescopes and a camera with nearly 1 billion pixels, the largest camera ever sent to space. Key instruments include:
    1. Astrometer: Measured the location and motion of stars.
    2. Photometer: Measured brightness of celestial objects.
    3. Spectrometer: Analyzed the composition and movement of stars.
    • Discoveries and Achievements:
      • Gaia mapped the Milky Way in 3D, uncovering its shape, structure, and movement. It also detected warping and wobbling in the galaxy.
      • Gaia identified new types of black holes by observing their gravitational effects and tracked over 150,000 asteroids, contributing insights on their orbits and future impacts on Earth.
      • Additionally, it provided new understanding of stellar evolution and the formation of stars, including the Sun.
    • Gaia accumulated over 3 trillion observations, contributing to more than 13,000 scientific papers, revolutionizing knowledge about the Milky Way, the solar system, and galactic dynamics.

    Why is Gaia being Decommissioned?

    • After more than a decade of operations, the Gaia mission reached the end of its operational lifespan, making it unsustainable to continue its activities.
    • After over 10 years in space, Gaia’s technology showed signs of wear, and continuing operations became unfeasible.
    • On March 27, 2025, Gaia was successfully passivated, draining all internal energy sources. This means it can no longer be restarted or resumed for future operations.
    [UPSC 2023] Consider the following pairs: Objects in space Description

    1. Cepheids : Giant clouds of dust and gas in space

    2. Nebulae : Stars which brighten and dim periodically

    3. Pulsars : Neutron stars that are formed when massive stars run out of fuel and collapse

    How many of the above pairs are correctly matched?

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

     

  • [27th March 2025] The Hindu Op-ed: The issue is about the ‘quality’ of India’s publications 

    PYQ Relevance:

    Question: “Although, India is second in the world to file patents, still only a few have been commercialized. Explain the reasons behind this less commercialization.” (UPSC 2024)

    Reason: This question looks at how useful India’s intellectual work is. It focuses on patents instead of research papers but raises a similar point—whether filing many patents leads to real-world applications. Here, commercialization means using intellectual property, which also reflects the quality of India’s research output.

    Mentor’s Comment: At a National Science Day event in February 2025, the Union Science Minister stated that India could surpass the U.S. in scientific publications by 2029. China leads with 8,98,949 papers, followed by the U.S. (4,57,335) and India (2,07,390). He emphasized the need for large-scale investments in education and R&D to match China’s long-term scientific growth.

    Today’s editorial analyzes India’s scientific publications and compares them with developed countries like the USA and China. This analysis is useful for writing answers in GS Paper 3 (UPSC Mains)

    _

    Let’s learn!

    Why in the News?

    Science officials should focus on improving the quality of India’s research publications instead of just being satisfied with the increasing number of papers.

    What are the quality issues in Indian publications? 

    • High Presence in Predatory Journals: Many Indian researchers publish in low-quality or predatory journals that lack proper peer review. Example: A 2018 study found that 35% of papers in predatory journals came from India, reducing credibility.
    • Low Citation Impact: Indian research papers often have fewer citations, indicating limited global influence and impact. Example: While China contributes heavily to high-impact journals like Nature and Science, India lags in such publications.
    • Plagiarism & Research Misconduct: Cases of plagiarism, data fabrication, and duplicate publications undermine research integrity. Example: In 2019, over 1,000 Indian research papers were retracted due to ethical violations.
    • Weak Industry-Academia Linkages: Research often lacks practical applications, with minimal collaboration between academia and industry. Example: Unlike China, where AI and 5G research directly benefit Huawei and Tencent, India’s industry-research link is weak.
    • Limited Breakthrough Research in Frontier Technologies: India lags in deep-tech areas like AI, quantum computing, and biotechnology due to inadequate funding and infrastructure. Example: While Google (USA) and Alibaba (China) lead in quantum computing, India mostly imports technology.

    What are the key factors contributing to China’s dominance in scientific research output compared to India?

    Key Factor China’s Strength Example
    Heavy Investment in R&D 2.4% of GDP spent on R&D, significantly higher than India’s 0.67% Medium-to-Long-Term Plan (2006-2020) led to advancements in AI, biotechnology, and materials science.
    Strong University and Institutional Support Massive government funding and autonomy for research institutions Tsinghua University, Peking University, and CAS contribute thousands of high-impact research papers annually.
    Focus on High-Quality Publications Researchers publish extensively in top journals like Nature, Science, and JACS CAS alone contributed 444 papers in JACS (2017–2024), while all CSIR labs in India contributed only 29.
    Strategic Talent Development and Global Collaboration Attracts global talent and fosters domestic researchers through international partnerships Thousand Talents Plan recruited top global scientists, boosting innovation.
    Industry-Academia Linkages and Patent Filing Strong collaboration between research institutions and industries, leading to high patent filings China dominates AI, quantum computing, and 5G, with companies like Huawei, Baidu, and Tencent integrating research into industry applications.

    How does India’s research spending compare to other advanced nations, and what are the effects?

    • Low R&D Expenditure as % of GDP: India spends ~0.67% of GDP on R&D, significantly lower than USA (3.4%), China (2.4%), Germany (3.1%), South Korea (4.8%), and Israel (5.6%). This leads to slower technological advancements and reduced global competitiveness. Example: India lags behind in semiconductor manufacturing, relying on imports instead of domestic production like China, Taiwan, and the US.
    • Dominance of Government Funding: Government funds ~56% of R&D in India, whereas in advanced nations, private sector contributes 70-80%. The limited commercialization of research and weaker industry-academia collaboration hinder innovation.Example: ISRO’s space research is globally recognized, but private sector participation in space technology is still nascent compared to SpaceX (USA) or CASC (China).
    • Lower Patent Filings & Innovation Output: India’s patent filings are much lower than leading economies. In 2023, India filed ~58,502 patents, whereas China filed 1.58 million. The slow innovation cycle increases reliance on foreign technologies. Example: China dominates 5G patents (~40%), while India relies on foreign telecom firms like Nokia and Ericsson for 5G deployment.
    • Brain Drain and Researcher Exodus: Indian researchers often migrate abroad due to limited funding, better salaries, and superior research infrastructure. The talent loss weakens India’s domestic research ecosystem. Example: Many IIT and IISc graduates move to the US, UK, or Europe for research positions in top institutions like MIT, Stanford, or Oxford.
    • Limited Breakthroughs in Deep-Tech & Frontier Research: India has limited presence in deep-tech areas like AI, quantum computing, and biotechnology, where the US, China, and EU invest heavily. Dependence on foreign companies for cutting-edge technology continues to grow. Example: India imports most quantum computing hardware, while Google (US) and Alibaba (China) lead the sector.

    What are the major ethical concerns in Indian research, and where does India stand in research integrity?

    • Plagiarism & Research Misconduct: Cases of plagiarism, data fabrication, and duplicate publications are prevalent in Indian academia. Weak enforcement of ethical guidelines leads to compromised research integrity. Example: In 2019, a major controversy arose when over 1,000 Indian research papers were retracted due to ethical violations.
    • Predatory Journals & Substandard Publications: Many Indian researchers publish in low-quality or predatory journals due to pressure for academic promotions. This dilutes the credibility of Indian research on the global stage. Example: A 2018 study found that over 35% of papers in predatory journals were from India, raising concerns about academic standards.
    • Lack of Strong Ethical Oversight & Whistleblower Protection: Institutional Ethics Committees (IECs) often lack independence and fail to take strict action against misconduct. Whistleblowers face retaliation, discouraging the reporting of unethical practices. Example: In cases like the AIIMS ethics review controversies, concerns were raised over conflicts of interest and leniency towards fraudulent research.

    What are the steps taken by the Indian government? 

    • Increased R&D Funding & Policy Initiatives: The government has launched schemes like National Research Foundation (NRF) with a ₹50,000 crore corpus to boost R&D across sectors. Atal Innovation Mission (AIM) promotes startups, research incubation, and industry-academia collaboration. Example: IMPRINT (Impacting Research Innovation and Technology) supports research in key areas like healthcare, AI, and advanced materials.
    • Strengthening Research Ethics & Quality Publications: UGC-CARE List was introduced to ensure publication in quality journals and curb predatory publishing. Draft National Policy on Research and Development (2023) aims to streamline ethical research guidelines. Example: AIIMS and IITs have implemented stricter plagiarism checks and ethical review mechanisms.
    • Boosting Deep-Tech & Patent Ecosystem: The National Quantum Mission (NQM) aims to position India as a global leader in quantum computing and communication. Simplified patent filing processes and incentives under Start-up India & Make in India encourage innovation. Example: India’s patent filing growth (58,502 in 2023), with initiatives like Mission on Cyber-Physical Systems (CPS) to develop AI, robotics, and IoT.

    Way forward: 

    • Increase R&D Investment & Industry Collaboration: Raise India’s R&D spending to at least 2% of GDP, with a greater role for private sector funding. Strengthen industry-academia linkages to boost innovation and commercialization, similar to China’s model.
    • Enhance Research Integrity & Quality Standards: Implement stricter regulations to curb plagiarism, predatory publishing, and unethical practices. Strengthen peer review mechanisms, independent ethics committees, and whistleblower protections to uphold research credibility.

  • Govt discontinues Gold Monetization Scheme

    Why in the News?

    The Centre has decided to discontinue the Gold Monetization Scheme (GMS) starting from March 26, 2025, considering evolving market conditions.

    The short-term deposits (1-3 years) will continue at the discretion of individual banks based on commercial viability, highlighting a shift towards flexible, shorter-term options.

    About Gold Monetization Scheme (GMS) and its Features

    • The GMS was launched in November 2015 as an enhanced version of the Gold Deposit Scheme (GDS) and Gold Metal Loan (GML) Scheme.
    • The main goal was to mobilize idle gold from households and institutions into the formal economy, thereby reducing the country’s reliance on gold imports and improving the current account deficit (CAD).
    • Objectives: Aimed at mobilizing gold, reducing gold imports, and utilizing gold to generate interest as a financial asset, thereby strengthening the economy.
    • The GMS included three deposit options:
      • Short-Term Gold Deposit (STGD): 1-3 years
      • Medium-Term Gold Deposit (MTGD): 5-7 years
      • Long-Term Gold Deposit (LTGD): 12-15 years
    • Interest and Redemption:
      • Short-Term Deposits: Interest rates determined by individual banks; redemption could be in cash or gold.
      • Medium- and Long-Term Deposits: Fixed interest rates at 2.25% (medium-term) and 2.5% (long-term), with cash redemption only.
    • Eligibility Criteria:
      • Open to individuals, institutions, and government entities.
      • Gold tendering accepted only at designated Collection and Purity Testing Centres (CPTC) or through GMS Mobilisation Agents.
      • Deposits were accepted only if the value exceeded ₹1 lakh.

    Reasons for Discontinuation  

    • The Finance Ministry discontinued the Medium-Term and Long-Term Deposits due to changes in the gold market.
    • Gold prices surged by 41.5% from ₹63,920 per 10 grams in January 2024 to ₹90,450 per 10 grams by March 2025.
    • This rise in gold value reduced the attractiveness of schemes like GMS for both depositors and the government.
    • With the closure of the Sovereign Gold Bond Scheme, the government aims to shift towards more market-oriented solutions for gold-related financial products.
    [UPSC 2016] What is/are the purpose/purposes of the Government’s ‘Sovereign Gold Bond Scheme’ and ‘Gold Monetization Scheme’?

    1. To bring the idle gold lying with Indian households into the economy.

    2. To promote FDI in the gold and jewellery sector

    3. To reduce India’s dependence on gold imports

    Select the correct answer using the code given below:

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

     

  • DRDO tests Vertically Launched Short-Range Surface-to-Air Missile (VLSRSAM)

    Why in the News?

    The DRDO has successfully tested the Vertically- Launched Short-Range Surface-to-Air Missile (VLSRSAM) for the Indian Navy.

    About VLSRSAM

    • The VLSRSAM is a ship-borne surface-to-air missile designed to counter various aerial threats, particularly at short ranges.
    • The missile is intended for neutralizing airborne threats at close ranges, including aircraft, helicopters, drones, and other incoming missiles, which are critical for naval defence operations.
    • The VLSRSAM weighs around 170 kg and is powered by a solid propellant.
    • The missile can reach a maximum speed of Mach 4.5.
    • The missile can reach altitudes of 16 km and has a range sufficient to engage high-speed targets.
    • Guidance System:
      • Mid-course phase: The missile uses a fibre-optic gyroscope-based inertial guidance system, ensuring stable flight towards the target.
      • Terminal phase: It switches to active radar homing for precise target acquisition and guidance, ensuring that it can engage targets with high accuracy even at low altitudes.

    Strategic Significance

    • With advanced guidance systems, the VLSRSAM demonstrates agility and precision in targeting, ensuring it is highly effective even against fast-moving, low-flying aerial threats.
    • The missile has been tested for reliability and accuracy, successfully engaging targets at close range and low altitudes.
    • It is seen as a force multiplier for the Indian Navy, significantly enhancing its air defence capabilities, particularly in protecting high-value assets in the maritime domain.
    [UPSC 2018] What is “Terminal High Altitude Area Defense (THAAD)”, sometimes seen in the news ?

    (a) An Israeli radar system

    (b) India’s indigenous anti-missile programme

    (c) An American anti-missile system

    (d) A defence collaboration between Japan and South Korea

     

  • Growth in most Southern States is concentrated in a few districts

    Why in the News?

    Economic growth in southern states lagged behind India’s overall growth in 2023-24. Despite a large working population, unemployment rates in these states remain a major concern, as seen in their Budget and Economic Surveys.

    Growth in most southern States is concentrated in a few districts

    What are the key reasons behind the economic growth of southern states lagging behind India’s overall growth in 2023-24?

    • Lower Growth Rates Compared to National Average – While India’s economy grew at 9.2%, southern states like Tamil Nadu (8.2%) and Telangana (7.4%) recorded slower growth, with Karnataka, Kerala, and Andhra Pradesh growing at over 6%.
    • Regional Income Disparities – Economic advantages are concentrated in select districts, limiting broad-based growth. For example, only 8 of 38 districts in Tamil Nadu and 3 of 33 in Telangana had higher per capita income than their state averages.
    • Unemployment and Labour Force Challenges – Despite a significant working population, labour force participation rates (LFPR) in Tamil Nadu (58.8%), Karnataka (56.8%), and Kerala (56.2%) were below the national average of 60.1%, affecting economic output.
    • Shift Towards Self-Employment – There is a decline in casual labour and an increase in self-employment, often in household enterprises, leading to a lack of stable wage employment. Example: In Telangana, self-employment rose by 8% to 55.9%, while casual labour fell by 5.7% to 18.7%.
    • Slower Industrial and Manufacturing Growth – Despite industrial pushes, manufacturing contributes less than 20% of southern states’ economies, limiting their overall economic expansion.

    Which southern state has the most equitable distribution of per capita income across its districts? 

    • More Even Income Spread: Kerala has 7 out of 14 districts with a per capita income above the state average, making it the most balanced among southern states. In contrast, Tamil Nadu (8 out of 38), Telangana (3 out of 33), and Karnataka (4 out of 31) show higher income concentration in a few districts.
    • Unlike Telangana, where Rangareddy district’s per capita income is more than three times the state average, Kerala’s income distribution is less skewed, ensuring better regional development and social welfare across the state.

    Why is this significant?

    • Reduced Regional Disparities: A more balanced income distribution ensures that economic benefits are spread across districts, preventing excessive wealth concentration in urban centers. Example: Unlike Telangana, where Rangareddy dominates income levels, Kerala’s development is more uniform, reducing economic inequalities.
    • Better Social and Human Development Indicators:  Equitable income distribution translates into better education, healthcare, and infrastructure across all districts, improving overall quality of life. Example: Kerala consistently ranks high in Human Development Index (HDI) due to its statewide access to education and healthcare.
    • Sustainable and Inclusive Growth: A well-distributed economy supports long-term stability by ensuring that no district lags significantly behind, leading to lower migration pressures and balanced urbanization. Example: Unlike Tamil Nadu, where Chengalpattu’s income is double the state average, Kerala’s economy avoids overburdening specific urban hubs, leading to sustainable development.

    Why is unemployment still a pressing concern in southern states?

    • Higher Labour Force Participation but Fewer Job Opportunities – While more people are seeking work, the availability of stable, well-paying jobs remains limited. Example: In 2023-24, Tamil Nadu (58.8%), Karnataka (56.8%), and Kerala (56.2%) had labour force participation rates lower than the national average (60.1%), indicating fewer employment opportunities relative to job seekers.
    • Shift from Casual Labour to Self-Employment Without Formal Jobs Growth – More people are moving away from casual labour towards self-employment, but the growth of regular salaried jobs remains stagnant. Example: In Telangana, the self-employed workforce increased by 8% (to 55.9%), while casual labour declined by 5.7%, reflecting a lack of structured employment.
    • Dominance of the Services Sector with Limited Manufacturing Growth – The services sector contributes over 50% of economic output, but it often lacks the capacity to absorb large numbers of workers, especially in lower-income groups. Example: In Tamil Nadu, despite an industrial push, manufacturing has not significantly increased its share in the state economy, limiting job creation in this sector.

    What role does the services sector play in the economies of southern states?

    • Primary Driver of Economic Growth – The services sector contributes over 50% of economic output in most southern states, making it the main engine of economic expansion. Example: In Karnataka and Telangana, the IT and software services industry significantly boosts state GDP, with Bengaluru and Hyderabad being major global tech hubs.
    • Uneven Job Creation Across Skill Levels – While the services sector creates high-value jobs in IT, finance, and healthcare, it does not generate enough employment for lower-skilled workers, contributing to persisting unemployment. Example: Kerala, despite its strong service-driven economy (tourism, healthcare, remittances), struggles with high unemployment rates due to a lack of blue-collar service jobs.

    Way forward: 

    • Diversify Economic Growth Beyond Services – Strengthen manufacturing and industrial sectors to create stable, large-scale employment opportunities, especially for lower-skilled workers. Example: Expanding MSMEs and industrial corridors in Tamil Nadu and Karnataka can boost job creation.
    • Enhance Skill Development and Labour Market Reforms – Improve vocational training and upskilling programs to align with industry demands, ensuring better job-market absorption. Example: Kerala can integrate its educated workforce into high-value sectors like healthcare and renewable energy.

    Mains PYQ:

    Question: What is regional disparity? How does it differ from diversity? How serious is the issue of regional disparity in India? (UPSC 2024)

    Reason: This question’s demand is directly linked with the regional inequality, which explains why economic growth is concentrated in certain parts of a state. Understanding this helps us see why some districts develop faster than others.

  • RBI revises Priority Sector Lending (PSL) guidelines

    Why in the News?

    The RBI has issued revised guidelines for Priority Sector Lending (PSL), effective from April 1, 2025, to improve the targeting of bank credit to key sectors of the economy.

    About Priority Sector Lending (PSL)

    What is it?
    • PSL refers to the portion of bank lending that must be directed to specific sectors identified as priorities for national development.
    • The RBI mandates that banks must allocate a specified portion of their credit to these sectors to ensure inclusive growth.

    Origin of PSL:

    • PSL was introduced in India in the late 1960s.
    • The term “priority sector” was first used in 1967 by Morarji Desai, then Deputy Prime Minister, and it led to legislative measures for social control over banks.
    • In 1972, the RBI formally defined priority sectors, focusing initially on agriculture and small-scale industries.
    Which Banks are Covered Under PSL? 1. Domestic Scheduled Commercial Banks, Cooperative Banks, and Foreign Banks: 40% of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure (CEOBSE), whichever is higher.

    2. Small Finance Banks and Regional Rural Banks (RRBs): 75% of ANBC or CEOBSE, whichever is higher.

    3. Payment Banks: NOT subject to PSL targets.
    Priority Sector Categories • Agriculture • Micro, Small, and Medium Enterprises (MSMEs) • Export Credit • Education • Housing • Social Infrastructure • Renewable Energy

    • Others, including Scheduled Castes, Scheduled Tribes, and Persons with Disabilities.

    • Micro Finance Institutions (MFIs) offering loans to individuals and Self-Help Groups (SHGs) are also eligible for PSL classification.
    Consequences of Failing to Meet PSL Norms 1. Investment in Rural Infrastructure Development Fund (RIDF): Banks falling short of PSL targets may be required to invest in the Rural Infrastructure Development Fund (RIDF), managed by NABARD, or other designated funds like those managed by SIDBI and NHB.

    2. Purchase of PSL Certificates: Banks can purchase Priority Sector Lending Certificates (PSLCs) to meet their PSL targets.
    Priority Sector Lending Certificates (PSLCs)
    • Tradable certificates issued against priority sector loans by banks.
    • Banks can purchase PSLCs to meet PSL targets if they fall short, while incentivizing surplus banks to lend more to these sectors.

    Revised PSL Guidelines for 2025:

    • Revised PSL guidelines for 2025 will enhance the targeting of bank credit to priority sectors.
    • Loan limits for housing have been increased, with differentiated limits based on population size: ₹50 lakh (population ≥ 50 lakh), ₹45 lakh (population 10-50 lakh), and ₹35 lakh (population < 10 lakh).
    • Renewable energy loans: Up to ₹35 crore for power generators and public utilities, and ₹10 lakh for individual households.
    • Urban Cooperative Banks (UCBs) have a revised PSL target of 60% of Adjusted Net Bank Credit (ANBC).
    • Weaker Section borrowers expanded and the cap on loans to individual women beneficiaries has been removed.
    [UPSC 2012] The basic aim of Lead Bank Scheme is that the –

    (a) big banks should try to open offices in each district

    (b) there should be stiff competition among the various nationalized banks

    (c) individual banks should adopt particular districts for intensive development

    (d) all the banks should make intensive efforts to mobilize deposits