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Day: October 16, 2025

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Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

[16th October 2025 ] The Hindu Op-ed: Navigating the global economic transformation

op-ed snap | Economics | Mains Paper 3: Indian Economy

PYQ Relevance

[UPSC 2019] The long-sustained image of India as a leader of the oppressed and marginalised nations has disappeared on account of its new found role in the emerging global order.

Linkage: The question reflects India’s shift from moral leadership to strategic pragmatism in global affairs. The article builds on this, urging India to reclaim that leadership by shaping a fair, inclusive global economic order for the Global South.

Mentor’s Comment

The tectonic shifts in the world economy today echo the reshaping of global power equations. Salman Khurshid’s article presents a comprehensive analysis of how populist politics, state capitalism, and digital colonialism are reshaping the global economic order. This piece unpacks those arguments and situates them in a UPSC-relevant analytical frame, connecting them to India’s strategic choices and the future of the Global South.

Introduction: Why in the News

The world economy is undergoing a seismic transformation, marked by the U.S.–China great-power rivalry, reshaped trade flows, and the rise of state-driven capitalism. This shift is more than cyclical; it is structural, redefining the principles of globalisation itself. For the first time in decades, both economic and political systems are converging towards protectionism and state control, breaking away from the neoliberal consensus that defined the post–Cold War era. The article underscores how these disruptions open a rare opportunity for India and the Global South to shape a fairer and more inclusive global economic order.

Understanding the New Economic Paradigms

How are populist autocrats reshaping capitalism?

  1. State–capital fusion: Populist autocrats have created a “state-capital Gordian knot”, replacing laissez-faire capitalism with systems that serve oligopolies in exchange for political loyalty.
  2. Corporate dominance: Crony-capitalists now influence state policies, prioritising corporate gains over citizen welfare — mortgaging public assets and weakening the social contract.
  3. Socio-political consequences: This model centralises power, marginalises public accountability, and distorts market competitiveness — leading to plutocracies, not democracies.

Why are traditional power politics resurfacing in the economic sphere?

  1. Resurgent statecraft: America’s recalibration to “Make America Great Again” marks a return of economic nationalism.
  2. Strategic control: U.S. actions — shifting Taiwan’s chip manufacturing, securing Panama routes, weaponising rare earths, and asserting dominance in the Arctic — reflect geo-economic containment of China.
  3. Ecological imperialism: By controlling supply chains and energy corridors, global powers are expanding influence under the guise of “strategic autonomy.”
  4. Global instability: These assertive spheres of influence have led to conflicts and genocides, reigniting the dangers of zero-sum geopolitics.

How is digital colonialism reshaping global economies?

  1. Big Tech dominance: Cloud capitalists have captured value chains and data flows, influencing politics and governance.
  2. Digital imperialism: Initiatives like the AI Action Plan, Cloud Act, and SWIFT weaponisation allow powerful states to dominate financial and cyber infrastructure.
  3. Erosion of sovereignty: Over 100 central banks are piloting state-backed digital currencies, which could ease transactions but risk undermining national autonomy.
  4. Political risks: Digital finance systems complicate political funding, giving populist regimes more tools for manipulation.

How have aid withdrawals widened global inequalities?

  1. Funding collapse: G-7 nations’ $44 billion cuts in developmental aid could push 5.7 million Africans into poverty by 2026.
  2. Ripple effects: In Nepal, reduced grants for small enterprises led to eight lakh migrations, intensifying domestic dissatisfaction.
  3. Humanitarian fallout: 16.7 million people lost access to the World Food Programme in 2023, sparking recruitment into militias across the Sahel region.
  4. Moral crisis: Retrenchment of aid reflects a shift from shared prosperity to self-preservation, amplifying instability in the Global South.

What challenges and opportunities emerge for India and the Global South?

  1. Debt and inequality: Neoliberal globalisation fostered sovereign debt traps and extreme wealth concentration in the Global North.
  2. Poverty crisis: The World Bank’s 2022 Poverty and Shared Prosperity Report notes 47% of humanity lives below the $6.85 poverty line, while 735 million suffer hunger.
  3. Collaborative alternatives: India and the Global South can construct a New Economic Deal through debt-relief frameworks, institutional reforms, and South–South cooperation.
  4. Strategic vision: Building bipartisan international ties and fair trade alliances through BRICS and regional groupings will ensure resilience against Western hegemony.

How must India recalibrate its domestic policies to lead globally?

  1. State leadership: The government must play a commanding role in strategic sectors — energy, data, infrastructure, healthcare, and agriculture — as done by East Asian economies.
  2. Anti-monopoly mechanisms: Creating sovereign wealth funds (like Norway) and enforcing anti-trust norms can prevent oligarchic dominance.
  3. Reimagining PSUs: Instead of privatisation, redeploying PSUs like China’s state-owned enterprises can serve national and geopolitical goals.
  4. Knowledge economy: Heavy investment in research, education, and innovation will secure India’s place as a globally competitive power.
  5. True non-alignment: India’s foreign policy must remain substantive, not performative — driven by consensus and independence rather than partisan interests.

Conclusion

The global economic transformation is not merely about trade or finance; it is about who controls the architecture of global interdependence. As old hierarchies fracture and new alignments emerge, India stands at a crossroads, between aligning with entrenched powers or leading a new era of equitable globalization. The coming decade will test whether the Global South can collectively author a future defined by justice, sustainability, and shared prosperity. The moment is precarious, but also profoundly promising.

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The Crisis In The Middle East

The future of the IMEC

Explained | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

Introduction

In an era where connectivity defines power, the India–Middle East–Europe Economic Corridor (IMEC) emerged as a visionary project connecting India’s western ports with Europe via the Arabian Peninsula. Envisaged as a multi-modal corridor encompassing maritime, rail, energy, and digital infrastructure, IMEC sought to integrate economies across continents while promoting peace and prosperity in a historically volatile region.

However, the optimism that surrounded IMEC’s launch quickly met the harsh reality of geopolitics. The October 7 Hamas attacks and subsequent Israel–Gaza war exposed the fragility of West Asian stability, placing IMEC’s implementation in question. Yet, beyond the uncertainty lies an opportunity for India to reshape its connectivity vision, adapting routes and partnerships to new global dynamics.

Why in the News

The IMEC has resurfaced in policy discussions as its viability faces uncertainty amid the deteriorating West Asian security environment. The October 7 Hamas–Israel conflict disrupted regional optimism nurtured by the Abraham Accords and slowed progress on IMEC’s proposed transnational links. At the same time, climate-driven Arctic trade routes and Red Sea disruptions by the Houthis are redrawing global shipping patterns, forcing India and its partners to reconsider IMEC’s configuration. The issue is critical as the corridor represents both an economic and strategic counterweight to China’s Belt and Road Initiative (BRI).

The Strategic Vision Behind IMEC:

  1. Comprehensive Connectivity: IMEC aims to upgrade maritime routes between India and the Arabian Peninsula and establish high-speed rail links from UAE ports to Haifa, Israel, via Saudi Arabia and Jordan.
  2. Integration with Europe: From Haifa, goods would be shipped to Europe’s Mediterranean ports, ensuring faster, secure, and sustainable trade connectivity.
  3. Beyond Transport: The corridor also includes plans for a clean hydrogen pipeline, electricity cable, and high-speed undersea digital cable, linking energy and digital ecosystems across three continents.
  4. Strategic Objective: IMEC provides a non-Chinese, rules-based alternative to the Belt and Road Initiative (BRI), enhancing India’s strategic outreach and economic influence.

The Geopolitical Context of 2023:

  1. Favourable Climate: The Abraham Accords (2020) created optimism for regional peace, bringing Israel and several Arab states closer. This atmosphere facilitated multilateral cooperation frameworks such as I2U2 (India, Israel, UAE, U.S.), paving the way for IMEC.
  2. India’s Upward Trajectory: India’s improving ties with Saudi Arabia and the UAE, coupled with strong U.S. relations, allowed it to play a central role in IMEC’s conception.
  3. Global Endorsement: The corridor was launched at the G-20 Summit in Delhi, with support from the EU, France, Germany, Italy, and Saudi Arabia, underscoring India’s emergence as a trusted global partner.

The Security Setback and Regional Volatility

  1. Conflict Shock: Within weeks of IMEC’s announcement, the Hamas–Israel conflict erupted, reversing the post-Abraham optimism.
  2. Regional Fallout: Israel’s military operations strained ties with Arab countries, undermining cross-border infrastructure cooperation.
  3. Red Sea Disruptions: The Houthi attacks on cargo ships forced rerouting via the Cape of Good Hope, increasing transit time and cost.
  4. Lesson: The events underscore that geopolitical stability remains the cornerstone of connectivity, and corridors like IMEC must remain adaptable to shifting realities.

Europe’s Changing Maritime Interests

  1. Arctic Openings: Climate change has opened new northern sea routes, shortening Asia–Europe shipping times. Beneficiaries include Russia, the U.S., China, and northern European nations.
  2. Mediterranean Anxiety: Countries like Italy, dependent solely on the Mediterranean, fear economic marginalisation if Arctic routes dominate trade.
  3. Strategic Importance of IMEC: Hence, Mediterranean states see IMEC as a means to sustain their maritime relevance and diversify trade partnerships.
  4. India’s Role: For India, the Mediterranean remains vital, as Arctic routes offer no immediate logistical advantage.

Why IMEC Still Matters for India

  1. Economic Scale: With $136 billion in annual trade, the EU remains India’s largest trading partner, highlighting the need for resilient connectivity.
  2. Supply Chain Resilience: IMEC offers a secure, shorter route connecting India to Europe while reducing dependence on the Red Sea–Suez chokepoint.
  3. Strategic Leverage: Enhanced engagement with Arab economies can dilute Pakistan’s influence and integrate India deeper into West Asia’s economic architecture.
  4. Innovation Space: As a multi-member initiative, IMEC allows India to propose new routes via Saudi Arabia and Egypt, adapting to political flux.

Challenges and the Way Forward

  1. Security Dependencies: Ongoing instability in Gaza and Israel poses a persistent threat.
  2. Financial and Political Coordination: Multi-country infrastructure projects face coordination delays, regulatory inconsistencies, and funding constraints.
  3. Need for Parallel Efforts: India must also upgrade domestic ports and logistics infrastructure, including Sagarmala and Dedicated Freight Corridors, to complement IMEC.
  4. Diplomatic Continuity: Sustaining dialogue through I2U2 and G-20 cooperation can help preserve IMEC’s spirit even if its routes evolve.

Conclusion

The IMEC’s future will depend not merely on the pacification of West Asia but on the political agility and diplomatic imagination of its members. While the corridor’s physical routes may shift, its strategic essence remains intact, to build resilient, diversified, and sustainable connectivity between India and Europe. For India, IMEC is more than an infrastructure project; it is a statement of intent, to be at the centre of global supply chains and a stabilising power in a fractured world.

PYQ Relevance

[UPSC 2018] The China-Pakistan Economic Corridor (CPEC) is viewed as a cardinal subset of China’s larger ‘One Belt One Road’ initiative. Give a brief description of CPEC and enumerate the reasons why India has distanced itself from the same.

Linkage: While China’s CPEC runs through disputed territory, making India wary, the IMEC shows how India is building its own clean, safe, and cooperative route to connect with Europe. It’s India’s way of staying in the global connectivity game—on its own terms.

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Renewable Energy – Wind, Tidal, Geothermal, etc.

The critical factor in India’s clean energy ambition

Explained | Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.

Introduction

India’s ambition to achieve 500 GW of renewable energy by 2030 and net zero emissions by 2070 depends not just on sunlight and wind but on minerals buried beneath the earth’s surface. Lithium, cobalt, and REEs form the backbone of technologies driving the clean energy revolution. However, India imports almost all of these minerals, exposing its renewable future to external shocks. The article explores how India is gearing up to build a resilient supply chain, promote domestic mining, and move toward a circular economy, turning its green dreams into a self-reliant reality.

India’s Clean Energy Journey and the Mineral Imperative

  1. Critical minerals as enablers: They power EV batteries, solar panels, and wind turbines, the pillars of the green transition.
  2. Explosive market growth: India’s EV market is projected to grow at a 49% CAGR from 2023 to 2030, driven by the Electric Mobility Promotion Scheme (EMPS) 2024.
  3. Battery boom: The battery storage market, valued at $2.8 billion in 2023, is set to surge with renewable energy integration.
  4. Import dependency: India currently imports nearly 100% of lithium, cobalt, and nickel, and over 90% of REEs, creating severe strategic vulnerabilities.

Why Dependence is Dangerous: Global Supply Chain Vulnerabilities

  1. China’s dominance: Controls 60% of global REE production and 85% of processing capacity, giving it massive leverage.
  2. Geopolitical risks: Trade restrictions, conflicts, and supply disruptions can derail India’s energy transition plans.
  3. National security angle: Critical minerals are not just about clean energy,  they are strategic assets influencing defence, technology, and economic sovereignty.

India’s Domestic Potential: A Hidden Treasure Beneath the Soil

  1. New discoveries: The Geological Survey of India (GSI) identified 5.9 million tonnes of inferred lithium in Jammu & Kashmir in 2023, a major breakthrough.
  2. Policy push: The National Mineral Exploration Policy (NMEP), 2016, and amendments to the Mines and Minerals (Development and Regulation) Act, 2021, opened up exploration to private players.
  3. Auctions driving interest: In 2023 alone, 20 critical mineral blocks (lithium, graphite, REEs) were auctioned, attracting domestic and multinational bidders.
  4. Potential-rich states: Jammu & Kashmir, Rajasthan (lithium), Odisha, and Andhra Pradesh (REEs) have emerged as mineral hotspots.

From Discovery to Refinement: The Missing Link

  1. Production bottleneck: India contributes less than 1% of global REE production due to weak refining and processing infrastructure.
  2. Need for partnerships: Public-private collaborations can bring in advanced processing technologies and recycling systems.
  3. Government incentives: Subsidies, tax breaks, and R&D grants are critical to scale domestic lithium and cobalt pilot projects.

Investment and Policy Momentum: Building the Foundation

  1. Regulatory reforms: The Mines and Minerals (Amendment) Act, 2023 allows private exploration but the sector faces high costs and environmental concerns.
  2. Economic potential: Mining contributes only 2.5% to India’s GDP, compared to 13.6% in Australia — signalling untapped opportunity.
  3. National Critical Mineral Mission (NCMM): With an outlay of ₹34,300 crore, it aims to strengthen the value chain — from exploration to recycling.

Institutional efforts:

  1. NMDC diversifying through its Australian arm.
  2. IREL (India) Ltd. extracting REEs like neodymium, praseodymium, and dysprosium.
  3. KABIL (Khanij Bidesh India Ltd.), formed in 2019, tasked with overseas acquisitions of mineral assets.

Moving Towards a Circular Economy

  1. E-waste as opportunity: India produces 4 million metric tonnes of e-waste annually, yet only 10% is formally recycled.
  2. Recycling policies: The Battery Waste Management Rules (2022) and E-Waste Management Rules (2022) aim to improve recovery of critical minerals.
  3. Challenges: Weak enforcement, poor infrastructure, and lack of awareness hinder progress.
  4. Way forward: Public-private recycling hubs can boost technology access, cut costs, and reduce environmental footprint, paving the way for a circular economy.

Conclusion

Critical minerals are the backbone of India’s clean energy transformation. Securing them is not just about green growth, but about economic independence and strategic security. India’s policy thrust through the National Critical Mineral Mission, domestic auctions, and recycling reforms signal intent, but execution remains key. A coherent strategy involving private investment, state backing, and global partnerships can ensure India does not just consume green technology, it creates it. The success of this mission will determine whether India emerges as a leader in the global clean energy race or remains dependent on others for its green dreams.

PYQ Relevance

[UPSC 2022] Do you think India will meet 50 percent of its energy needs from renewable energy by 2030? Justify your answer. How will the shift of subsidies from fossil fuels to renewables help achieve the above objective?

Linkage: India’s ability to meet 50% of its energy needs from renewables by 2030 hinges on securing critical minerals like lithium and REEs that power solar, wind, and EV technologies. A shift of subsidies from fossil fuels to renewables will accelerate domestic mining, recycling, and innovation—building the self-reliant green infrastructure essential for achieving this target.

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