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GS Paper: GS3

  • PSU banks more efficient than private peers: EAC-PM

    PSU banks more efficient than private peers: EAC-PM

    Why in the News

    A paper by two economists for the Economic Advisory Council to the Prime Minister (EAC-PM), a body that advises the Prime Minister on economic policy questions, found that public sector banks (PSBs) are more efficient than private and foreign banks.

    Titled “Reforms, Efficiency, and Productivity of Indian Banking Sector in the Last Decade: DEA Approach”, the paper used Data Envelopment Analysis (DEA), a method that measures how far a unit could shrink its inputs while producing the same output, to compare 47 banks.

    What does the study find?

    1. PSBs improved significantly: During 2014-15 to 2025-26, PSBs recorded average efficiency of 88.53%, compared with 85.62% for private banks. Foreign banks led over the full period: Foreign banks had the highest 12-year average of 88.98%, but their efficiency declined from 95.86% in 2014-15. Most efficient banks:
    2. HSBC and JPMorgan Chase: 100% efficiency in all 12 years.
    3. HDFC Bank: 97.54% average efficiency among private banks.
    4. State Bank of India (SBI): 97.49%, highest among PSBs.
    5. DBS Bank India: Lowest single-year efficiency of 40.12% in 2021-22, linked to its merger with Lakshmi Vilas Bank.
    6. Impact of PSB mergers: PSBs were relatively less efficient than private banks during FY2019 to FY2022, partly due to the merger and rationalisation of branches, employees and business operations.

    Data Envelopment Analysis (DEA)

    1. DEA is a method for measuring the relative efficiency of units, here banks, that produce the same kind of output from different combinations of inputs.
    2. An efficiency score below 100% means the unit could reduce its inputs by that shortfall and still produce the same output. Eg. A score of 85% means the unit could cut inputs by 15% without any loss of output.

    “[2024] Consider the following statements:
    Statement-I: Syndicated lending spreads the risk of borrower default across multiple lenders.
    Statement-II: The syndicated loan can be a fixed amount/lump sum of funds, but cannot be a credit line.
    Which one of the following is correct in respect of the above statements?
    (a) Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
    (b) Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
    (c) Statement-I is correct, but Statement-II is incorrect
    (d) Statement-I is incorrect, but Statement-II is correct

  • How can States use disaster funds for heatwaves?

    How can States use disaster funds for heatwaves?

    Why in the News

    The Ministry of Home Affairs told the Lok Sabha on 4 August 2026 that heatwaves and lightning have been added to India’s list of notified natural calamities, taking the list to 14 items. The change follows a recommendation of the Sixteenth Finance Commission (FC-XVI), the constitutional body under Article 280 that recommends the distribution of resources including disaster funds between the Centre and the states, and operational guidelines issued on 30 June 2026. Heatwaves are now eligible for the full State Disaster Risk Management Fund pool rather than the capped local-disaster route states previously had to use.

    What changes for states?

    1. Removal of the funding ceiling: A state could previously notify a heatwave only as a “local disaster” and draw on the State Disaster Response Fund (SDRF) up to a 10% annual cap, after setting its own compensation norms. Other notified disasters such as floods and cyclones faced no such ceiling. The new notification removes this asymmetry.
    2. Two distinct funding routes now available: Under the SDRF, states can fund relief and compensation for heat-related losses. Under the State Disaster Mitigation Fund (SDMF), a fund meant for longer-term risk reduction rather than immediate response, states can finance cooling shelters and early-warning systems.
    3. Scale of the fund pool: FC-XVI recommended Rs 2.04 lakh crore for state disaster funds over 2026-27 to 2030-31, about 28% more than the previous Commission’s allocation, split Rs 1.6 lakh crore to the SDRF and the rest to the SDMF. It separately recommended Rs 79,406 crore for national disaster funds that states can draw on when a disaster exceeds their own resources.

    What challenges are in the way of using the funds effectively?

    1. Uneven heat action planning: Twelve states have notified heatwaves locally, but only around 300 cities and districts across 23 heatwave-prone states have Heat Action Plans (HAPs), leaving roughly 4,800 urban local bodies and 800 districts without one. Fix. Heat-specific SDMF guidelines, still awaited, will need to be paired with the risk and vulnerability assessments already required before any project proposal.
    2. Limited technical capacity to convert plans into proposals: A 2023 review found 79% of existing HAPs asked city departments to self-fund interventions rather than costing a proposal against the new fund. Fix. States need model mitigation proposals suited to local climate and geography, since many local bodies lack the capacity to prepare fundable projects on their own.
    3. Weak loss-and-damage data: Relief payouts under the new notification will depend on accurate heat mortality and morbidity data. The Health Ministry’s surveillance system, covering over 51,000 reporting units, recorded 4,853 heatstroke cases and 20 confirmed heatstroke deaths between 1 March and 26 July, but it does not capture the wider toll from heart, lung and kidney conditions worsened by heat.

    Conclusion

    The notification closes a genuine funding gap between heat and other disasters, but the benefit depends on state capacity to plan, cost and document heat interventions. Parametric insurance, which pays out automatically once a set temperature threshold is crossed, similar to Nagaland’s existing rainfall insurance, is one fast-disbursing tool states can pair with the new fund access.

    Back2Basics: State Disaster Risk Management Fund

    1. It is the combined pool of the State Disaster Response Fund (SDRF), for immediate relief and reconstruction after a disaster, and the State Disaster Mitigation Fund (SDMF), for interventions that reduce the risk of a hazard becoming a disaster.
    2. The Finance Commission fixes the inter-state distribution using a disaster risk index built from hazard frequency and intensity, exposure, vulnerability, and a state’s expenditure record in the previous Commission’s period.

    “[2024, GS3, 15 marks] What is disaster resilience? How is it determined? Describe various elements of a resilience framework. Also mention the global targets of the Sendai Framework for Disaster Risk Reduction (2015-2030).”

  • Nuclear power operator plans new design unit to support pvt players

    Nuclear power operator plans new design unit to support pvt players

    Why in the News

    The Nuclear Power Corporation of India Limited (NPCIL) is setting up a new design vertical to support private companies deploying Pressurised Heavy Water Reactor (PHWR) technology. This follows recent legal reform enabling private participation in civil nuclear power. The move marks a shift from NPCIL’s traditional role as sole builder and operator of India’s nuclear fleet toward a design-support role for private entrants, addressing India’s stated need to scale nuclear capacity to meet rising electricity demand while keeping deployment within a technology NPCIL already operates at scale.

    Why does India favour PHWR technology for private entry?

    1. Established domestic supply chain: PHWR technology has been indigenised in India since the 1980s, giving it a mature domestic manufacturing and fuel-cycle base that a newly entering private player can draw on.
    2. Natural uranium fuel cycle: PHWRs use natural, unenriched uranium, avoiding dependence on enrichment technology that remains tightly controlled internationally.

    What does NPCIL’s new design unit change?

    1. From sole operator to technology enabler: NPCIL will now provide design support to private players rather than being the only entity that builds and runs reactors, opening a role private companies previously could not access.
    2. Institutional capacity test: Whether NPCIL’s new vertical can support multiple private projects simultaneously, without diverting engineering capacity from its own ongoing reactor construction, remains to be demonstrated.

    Pressurised Heavy Water Reactor (PHWR)

    • PHWR = Pressurised Heavy Water Reactor uses heavy water (deuterium oxide, D₂O) as moderator and Coolant
    • It uses natural, unenriched uranium as fuel.

    Key Features of PHWR

    Heavy Water

    • Heavy water contains deuterium, an isotope of hydrogen.
    • It acts as both the moderator and coolant in PHWRs.

    Natural Uranium

    • PHWRs can operate using natural uranium, avoiding the need for uranium enrichment for the reactor fuel.

    Online Refuelling

    • PHWRs permit online refuelling.
    • Fuel bundles can be replaced while the reactor continues operating.
    • Therefore, the reactor does not need to be shut down for routine fuel replacement.

    “[2017, GS3, 15 marks] Give an account of the growth and development of nuclear science and technology in India. What is the advantage of fast breeder reactor programme in India?”

    [2023] Consider the following statements:
    Statement-IIndia, despite having Uranium deposits, depends on coal for most of its electricity production.
    Statement-II:Uranium, enriched to the extent of at least 60%, is required for the production of electricity.
    Which one of the following is correct in respect of the above statements

    [A] Both Statement-I and Statement – II are correct and Statement- II is the correct explanation for Statement- I

    [B] Both Statement I and Statement II are correct and Statement-II is not the correct explanation for Statement-I.

    [C] Statement- I is Correct but Statement-II is incorrect.

    [D] Statement-I incorrect but Statement-II is correct.

  • Rural India needs jobs, not wage guarantees

    Rural India needs jobs, not wage guarantees

    Why in the News

    An opinion piece argues that a new rural wage-guarantee scheme has recorded low uptake among the rural workforce, and contends this shows rural India needs durable, income-generating employment rather than a guaranteed-wage safety net. The scheme pays a guaranteed wage for a fixed number of days, which the piece contrasts with sectors such as food processing, renewable energy and small and medium enterprises (SMEs), which it argues could generate sustained employment rather than a temporary income floor. The tension is between a safety-net approach to rural distress and a growth-oriented approach that builds durable non-farm jobs.

    Why has the wage-guarantee scheme seen low uptake?

    1. Wage ceiling below market rates: Where the scheme’s guaranteed wage sits below prevailing local market wages for casual labour, workers have limited incentive to enrol, since informal market work pays more for the same effort.
    2. Seasonal mismatch: A fixed-day guarantee does not align well with the seasonal peaks in rural labour demand during sowing and harvest, when private demand for labour already absorbs much of the available workforce.

    What alternative does the piece propose?

    1. Food processing: Expanding food processing capacity near production zones can absorb rural labour in agro-processing roles that persist beyond a single season.
    2. Renewable energy: Rural solar and biomass energy projects can generate sustained local employment in installation, operation and maintenance roles.
    3. Small and medium enterprises: Supporting rural SMEs with credit and market access can create employment that grows with demand, rather than being capped at a fixed number of guaranteed days.

    Unemployment in India

    1. The International Labour Organization (ILO) defines an unemployed person as someone of working age, without work, currently available to work and actively seeking work in a reference period.
    2. India’s unemployment carries several distinct types: frictional, structural (a mismatch between workers’ skills and market demand), cyclical, seasonal, disguised (as in agriculture, where more people are employed than the work requires), and chronic.
    3. Over 90 percent of India’s workforce remains informal, which limits meaningful, secure job creation regardless of headline employment growth.
    4. Manufacturing contributes only about 16 to 18 percent of GDP, well below China’s roughly 26 percent, constraining the sector’s capacity to absorb surplus labour.

    Government Initiatives for Employment Generation

    1. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005: Guarantees 100 days of rural wage employment a year to any adult member of a rural household, and is the specific scheme this op-ed’s wage-guarantee critique concerns.
    2. PM Vishwakarma: Provides collateral-free loans, skilling and toolkits to artisans across 18 traditional trades.
    3. PM Vishwakarma Rozgar Yojana / Employment Linked Incentive (ELI) scheme: Approved with an outlay of about 99,446 crore rupees, targeting 3.5 crore jobs over two years.
    4. e-Shram Portal: A national database that issues unorganised workers a Universal Account Number and links them to social security schemes.
    5. DAY-NRLM: Mobilises the rural poor into Self-Help Groups to build self-sustained livelihoods.

    Challenges in Unemployment

    1. Survey design undercounts informal and rural work: Household surveys do not fully capture home-based, gig or platform work within the roughly 90 percent informal workforce, and rural labour force surveys have historically run at a lower frequency than urban ones. Eg. Rural Periodic Labour Force Survey (PLFS) data was measured only annually for years, while urban data was collected quarterly, understating rural distress in real time. Fix. Move rural PLFS to the same quarterly frequency as urban surveys and explicitly incorporate underemployment into the headline definition.
    2. Capital-intensive growth limits absorption: Investment has flowed disproportionately toward information technology and infrastructure rather than labour-intensive sectors capable of absorbing low and semi-skilled workers. Eg. Services now drive the largest share of GDP growth while employing under 30 percent of the workforce, the jobless growth pattern this op-ed’s wage-guarantee critique responds to. Fix. Direct incentive schemes toward labour-intensive sectors such as textiles, leather, food processing and electronics assembly rather than capital-intensive ones alone.

    Conclusion

    The piece argues that a wage-guarantee scheme with low enrolment is evidence that rural India’s underlying problem is a shortage of durable jobs, not a shortage of a temporary income floor, and that policy should shift resources toward sectors capable of generating sustained rural employment.

    Back2Basics: Periodic Labour Force Survey (PLFS)

    1. The PLFS is India’s principal household survey for estimating employment and unemployment, conducted by the National Sample Survey Office (NSSO) under the Ministry of Statistics and Programme Implementation (MoSPI).
    2. It reports unemployment on three measures: Usual Status (activity over the preceding year), Current Weekly Status, and Current Daily Status, the last of which best captures underemployment.
    3. It has historically surveyed urban areas quarterly but rural areas only annually, a frequency gap that limits its ability to track rural distress as it develops.

    “[2023, GS3, 15 marks] Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements.”

  • Gross FDI hit 15-year high of $30.7 billion in April-June 2026

    Gross FDI hit 15-year high of $30.7 billion in April-June 2026

    Why in the News

    Reserve Bank of India (RBI) data shows gross Foreign Direct Investment (FDI) inflows reached $30.7 billion in April-June 2026, the highest quarterly figure in fifteen years. Net FDI, which nets out repatriation and disinvestment by existing foreign investors, turned positive again in June 2026 at $1.3 billion, after a period of elevated repatriation had kept it depressed. Singapore, the Netherlands, the United States and Canada led the inflows, concentrated in manufacturing. The tension is between the strength of the gross inflow figure and the much smaller net figure, since heavy repatriation by existing foreign investors has been offsetting fresh inflows for several preceding quarters.

    What does the data show?

    1. Fifteen-year high in gross inflows: Gross FDI of $30.7 billion in a single quarter is the highest recorded in fifteen years, reversing a period of relatively subdued inflows.
    2. Net FDI turns positive: Net FDI turned positive in June 2026 at $1.3 billion, after running negative or near zero in preceding months.
    3. Source and sector concentration: Singapore, the Netherlands, the United States and Canada were the leading source countries, with manufacturing the leading destination sector.

    Why does the gap between gross and net FDI matter?

    1. Repatriation pressure: A large gap between gross and net FDI signals that existing foreign investors have been exiting or repatriating profits at a pace close to new inflows. This is a different signal from headline inflow growth alone.
    2. Policy implication: A durable improvement in net FDI, not gross inflows alone, is the more reliable indicator of investor confidence in staying invested in India over the medium term.

    Gross FDI vs Net FDI

    • Gross FDI: Fresh foreign investment entering India.
    • Net FDI: Gross inflows after accounting for repatriation and disinvestment.
    • A large gap between gross and net FDI indicates that substantial investment is also flowing out through existing investors.
    • Therefore, high gross FDI does not necessarily mean high net FDI.

    “[2022] Which one of the following situations best reflects “Indirect Transfers” often talked about in media recently with reference to India ?
    (a) An Indian company investing in a foreign enterprise and paying taxes to the foreign country on the profits arising out of its investment
    (b) A foreign company investing in India and paying taxes to the country of its base on the profits arising out of its investment
    (c) An Indian company purchases tangible assets in a foreign country and sells such assets after their value increases and transfers the proceeds to India
    (d) A foreign company transfers shares and such shares derive their substantial value from assets located in India

  • Fair pricing could help sustain UPI network

    Fair pricing could help sustain UPI network

    Why in the News

    The op-ed, by a NITI Aayog consultant, argues that the zero-Merchant Discount Rate (MDR) regime underpinning Unified Payments Interface (UPI)‘s free-to-use model is financially unsustainable, and proposes a differentiated pricing structure as the Department of Financial Services examines whether to restore MDR for high-threshold transactions or merchants. The piece is pegged to a Parliamentary Standing Committee on Finance report tabled this month, which cited an industry estimate of about Rs 20,700 crore in annual UPI operating costs against a Rs 2,000 crore government allocation under the zero-MDR regime.

    What is the fiscal problem with UPI’s current pricing model, and what does the op-ed propose?

    1. The cost-subsidy gap is large and quantified: The Parliamentary Standing Committee on Finance’s report cited industry estimates of roughly Rs 20,700 crore in annual UPI operating costs, against a government allocation of only Rs 2,000 crore under the zero-MDR regime, with banks and payment companies absorbing the balance.
    2. Two restructuring options are formally under examination: The Department of Financial Services is examining restoring MDR for certain high-threshold transactions or merchants, and separately, phasing out government support through a tiered incentive structure.
    3. The op-ed’s proposed principle is differentiated, not uniform, pricing: It argues for keeping UPI free for consumers and small merchants while allowing a capped MDR for larger commercial users and higher-value transactions, on the basis that a uniform rate would be negligible for a large retailer but consequential for a street vendor.
    4. The author’s own research links merchant ecosystem formalisation to UPI adoption: Citing research with Sharon Buteau, the op-ed states that more formalised merchant ecosystems are associated with higher UPI use, and that MDR design should be calibrated to where acceptance networks are still developing rather than applied uniformly.
    5. Aggregated payment data is proposed as a second, non-MDR revenue and policy tool: The op-ed cites PhonePe’s PulsePro and a recent MoU with the Ministry of Electronics and Information Technology (MeitY) to integrate UPI transaction metrics into PM GatiShakti for infrastructure and economic planning, arguing that privacy-safe aggregated payment signals have public value independent of any pricing decision.

    Conclusion

    The op-ed’s position is that UPI’s zero-MDR model has reached a fiscal limit documented by Parliament’s own Standing Committee, and that a threshold-based, differentiated MDR, protecting small merchants and consumers while pricing larger commercial transactions, is a more sustainable path than either continuing an unfunded subsidy or imposing a uniform fee that would slow onboarding in less-formalised markets.

    Back2Basics

    1. Merchant Discount Rate (MDR): The fee a merchant pays to their bank or payment service provider for accepting digital payments, historically waived to zero on UPI and RuPay debit card transactions in India since January 2020 to encourage adoption.
    2. Unified Payments Interface (UPI): A real-time payment system developed by the National Payments Corporation of India (NPCI) that enables instant interbank transactions through a single mobile application.

    “[2023, GS3, 10 marks] What is the status of digitalization in the Indian economy? Examine the problems faced in this regard and suggest improvements.”

  • Rajnath approves transfer of missile technology to domestic defence industry

    Rajnath approves transfer of missile technology to domestic defence industry

    Why in the News

    Defence Minister Rajnath Singh has approved the transfer of technology (ToT) for all conventional missile systems developed by the Defence Research and Development Organisation (DRDO) to the Indian defence industry, opening the way for domestic private production of these systems for the first time. Until now, production had rested with Defence PSU Bharat Dynamics Limited, DRDO’s own in-house facilities, and the India-Russia joint venture that builds the BrahMos cruise missile. This is a One development, one row item; both The Hindu and The Indian Express carried the decision, and this entry is filed from the Indian Express account, which names the specific missile systems and the strategic systems excluded from transfer.

    What does the transfer of technology actually change?

    1. A closed production model opens to private industry: Production of DRDO-developed conventional missile systems was previously confined to a defence PSU and DRDO’s own facilities; the ToT decision allows private companies, MSMEs, and other technology partners to manufacture these systems, subject to qualifications, certifications, and regulatory requirements.
    2. An initial set of named systems anchors the rollout: Officials cited the beyond-visual-range air-to-air missile ASTRA, the anti-radiation missile RUDRAM, the short-range air defence system VSHORADS, the anti-tank guided missile NAG, and the Naval Anti-Ship Missile (NASM) as the systems the initiative could begin with, though the stated goal is to extend private production to all conventional missile systems.
    3. Strategic systems are explicitly carved out: The Agni series and the K-series missiles will not be part of this technology transfer, since they are classified as strategic missiles rather than conventional ones.
    4. The stated objective is industrial-scale transition: The Ministry of Defence framed the decision as enabling the transition of missile projects from the development stage to industrial-scale production, reducing import dependence and increasing indigenous value addition.

    Conclusion

    The decision restructures who is permitted to manufacture India’s conventional missile systems, shifting DRDO’s role from developer-cum-producer to developer-cum-technology-provider, and is intended to widen the industrial base, including private firms and MSMEs, that can supply the country’s expanding conventional missile requirements.

  • Minister seeks fundamental shift in fight against drought

    Minister seeks fundamental shift in fight against drought

    Why in the News

    The Union Environment Minister has called for a fundamental shift in the global approach to droughts, from reactive relief to proactive, technology-enabled resilience. He made the appeal at the Ministerial Dialogue on Accelerating Drought Resilience during the 17th Conference of Parties (COP17) of the United Nations Convention to Combat Desertification (UNCCD), held in Ulaanbaatar, Mongolia.

    What did the Minister’s statement propose?

    1. Drought is reframed as a development challenge: The Minister said drought is no longer an occasional event but a defining development challenge, citing its compounding disruptions to global water security, agricultural food systems, biodiversity, and economic stability.
    2. India’s own model was presented as a template: He highlighted India’s coordinated, multi-institutional approach integrating early warning, mitigation, relief and community resilience, where rainfall monitoring and satellite-based drought assessments trigger preparedness at the inter-ministerial and State levels.
    3. Land restoration was linked directly to water security: He called for restoring the forest before restoring the flow, underscoring India’s focus on catchment and riverscape forestry to reduce erosion, improve water retention, and recharge groundwater.
    4. The Minister called for a shift from relief to prediction: He advocated integrating predictive technologies, localised early-warning monitoring, and proactive land management policies, so vulnerable communities can anticipate and absorb environmental shocks rather than depending primarily on post-disaster relief.

    Back2Basics

    1. United Nations Convention to Combat Desertification (UNCCD): Adopted in 1994 following the 1992 Rio Earth Summit, it is one of the three Rio Conventions, alongside the United Nations Framework Convention on Climate Change (UNFCCC) and the Convention on Biological Diversity (CBD).
    2. It is the sole legally binding international agreement linking environment and development to sustainable land management. COP17, held in Mongolia under the theme “Restoring Land. Restoring Hope,” is its 17th Conference of Parties.

    Conclusion

    The Minister’s intervention at COP17 sets out India’s preparedness-first model as its negotiating position within the UNCCD process, positioning predictive, land-restoration-based resilience as the alternative to a relief-centred global response to drought.

    “[2014, GS3, 12 marks] Drought has been recognised as a disaster in view of its party expense, temporal duration, slow onset and lasting effect on various vulnerable sections. With a focus on the September 2010 guidelines from the National disaster management authority, discuss the mechanism for preparedness to deal with the El Nino and La Nina fallouts in India.”

  • NITI Aayog: Degrees like BA, B.Sc, B.Com have ‘weak job linkages’, need reforms

    NITI Aayog: Degrees like BA, B.Sc, B.Com have ‘weak job linkages’, need reforms

    Why in the News

    NITI Aayog has flagged that unemployment among graduates remains far higher than the national average, and that over-reliance on generic degrees such as BA, B.Sc and B.Com is contributing to the problem. The finding comes amid a renewed push to redesign India’s skilling architecture toward specialised, job-linked programmes.

    What does NITI Aayog’s assessment find?

    1. Most graduates work outside their field of study: Over 90% of India’s graduates are employed in roles not aligned with their qualifications.
    2. The disconnect is curriculum level: NITI Aayog states that curriculum in most institutions remains outdated and misaligned with evolving industry needs, producing degrees and diplomas with weak job linkages.
    3. The proposed direction is sector specific: The think tank makes the case for moving toward specialised, job-linked programmes in high-growth sectors such as green industries and electric vehicles, with greater emphasis on apprenticeships.

    Conclusion

    NITI Aayog’s assessment reframes graduate unemployment as a curriculum design problem rather than only a labour demand problem, and its recommendation is a shift from generic degrees toward sector-specific, apprenticeship-linked training in high-growth industries.

    “[2015, GS3, 12 marks] The nature of economic growth in India in recent times is often described as a jobless growth. Do you agree with this view? Give arguments in favour of your answer.”

  • India’s youth crisis is about the absence of jobs, not just examination reform

    India’s youth crisis is about the absence of jobs, not just examination reform

    Question (2023, GS3): Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements.
    Linkage: The editorial contends that youth agitations and demand for cheaper coaching address only the symptoms of the crisis, whereas the foundational issue is structural unemployment—the deep-seated absence of final job opportunities for qualified youths at the end of their preparation.

    Mentor comment

    The Hindu’s editorial argues that India’s youth unemployment problem is a jobs crisis, not merely an examination reform problem. The youth agitation that forced the resignation of the then Union Education Minister produced a government commitment to examination reform, including free online coaching for competitive examinations using India’s Digital Public Infrastructure. The editorial contends that cheaper coaching addresses only the preparation stage of the crisis, while the deeper problem is the absence of jobs at the end of that preparation.

    What does the data show about the scale of the crisis?

    1. Coaching costs have risen, not fallen: Private coaching now costs 16% of what an average Indian family spends on a child’s education, up from 12.5% in 2018. Nearly a quarter of that spending occurs during the higher secondary years, when students prepare for competitive examinations.
    2. Seat scarcity dwarfs coaching costs: Over 22 lakh candidates appeared for this year’s medical entrance examination for about 1.4 lakh undergraduate seats, with fewer than 10,000 of those seats at the top 50 colleges. The Joint Entrance Examination for engineering colleges shows a similar pattern.
    3. Undergraduate enrolment has fallen for the first time: For the first time since the All India Survey on Higher Education began in 2011, undergraduate enrolment fell by 93,322 in 2023-24, sharpest among young men.
    4. The fall is regionally concentrated: Uttar Pradesh recorded the steepest decline, with undergraduate enrolment down 1.53 lakh even as diploma enrolment rose 1.38 lakh, suggesting students are substituting away from degrees that do not lead to jobs.
    5. Formal, secure jobs remain rare among graduates: Periodic Labour Force Survey unit level data shows that of every 100 graduates aged 15 to 29 in 2025, only 26 held regular salaried employment, and only four held a salaried job with both a contract and social security.

    Why has growth not translated into jobs?

    1. Manufacturing has not absorbed graduates: Manufacturing, the sector best placed to absorb India’s college graduates, remains at around a sixth of gross value added, well short of the quarter of the economy the government has long promised.
    2. Private investment has retreated: Corporate investment fell from 17.3% of GDP in 2007-08 to 10.3% in 2024-25, unmoved by the cut in the corporate tax rate from 30% to 22% in 2019.
    3. Regulatory enforcement has turned selective: The editorial states that a regulatory and enforcement zeal that selectively targets enterprises has disproportionately affected medium sized companies, the segment best placed to generate jobs.

    Conclusion

    The youth employment crisis has two distinct ends: preparation for jobs, and the jobs themselves. Free coaching addresses only the first. The editorial’s position is that public investment in industrial capacity, export-disciplined industrial support, and a less selective regulatory posture toward medium sized enterprises would do more for youth employment than examination reform alone, citing Vietnam as a comparator that has used this route.