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Subject: Economics

  • NITI Aayog completes 10 years

    Why in the News?

    NITI Aayog, the premier policy think tank of the Government of India, celebrates a significant milestone as it completes 10 years since its establishment.

    What are the roles and functions of NITI Aayog?

    NITI Aayog, established in 2015, serves as the premier policy think tank of the Government of India. Its primary roles and functions include:

    • Policy Formulation: NITI Aayog is responsible for formulating strategic and long-term policies aimed at promoting sustainable development across various sectors.
    • Coordination: It coordinates the efforts of central ministries, state governments, and other stakeholders to ensure effective implementation of government schemes and initiatives.
    • Monitoring and Evaluation: The organization monitors the progress of various developmental programs and evaluates their effectiveness, particularly in relation to the Sustainable Development Goals (SDGs).
    • Data Collection and Analysis: NITI Aayog collects and analyzes data to inform policy decisions, including the development of the SDG India Index which tracks progress across states.

    What are the key differences between the Planning Commission and NITI Aayog?

    Feature Planning Commission NITI Aayog
    Formation Established in 1950 Established in 2015
    Mandate Centralized planning and allocation of funds Policy advisory and coordination
    Approach Top-down approach Bottom-up approach
    Funds Allocation Had the power to allocate funds to states No fund allocation powers
    Federalism Limited state participation Emphasis on cooperative federalism
    Focus Five-year plans Dynamic and flexible strategy formulation
    Structure Static, hierarchical Dynamic, with active participation from stakeholders

    Why did the Government replace the Planning Commission with NITI Aayog?

    • Need for a Modern Approach: The Planning Commission’s top-down, centralized model was considered outdated in the context of India’s diverse and evolving socio-economic landscape.
      • NITI Aayog was established to adopt a more flexible, bottom-up approach that encourages participation from states and local governments, reflecting the need for tailored solutions to regional challenges.
    • Cooperative Federalism: NITI Aayog aims to foster cooperative federalism by promoting collaboration between the central and state governments.
      • This contrasts with the Planning Commission, where states had limited input and were often treated as passive participants in the planning process.
    • Focus on Strategic Input: NITI Aayog is designed to serve as a think tank that provides strategic guidance and policy recommendations rather than merely allocating resources. This shift allows for a more dynamic response to economic needs and aspirations of the populace.
    • Enhanced Stakeholder Engagement: The establishment of NITI Aayog followed extensive consultations with various stakeholders, including state governments, domain experts, and the public. This inclusive approach is intended to ensure that policies are relevant and effective.
    • Relevance in a Globalized Economy: With India’s integration into the global economy, there was a recognized need for an institution that could adapt to changing economic conditions and promote competitive federalism rather than a one-size-fits-all planning model.

    What is the 2030 and 2035 NITI Aayog roadmap?

    NITI Aayog has outlined a comprehensive roadmap aimed at achieving sustainable development goals by 2030 and establishing a long-term vision for 2035. This roadmap encompasses various sectors, including energy, health, and technology. 

    Goals for 2030

    • Energy Transition: NITI Aayog aims to ensure that India meets 50% of its energy requirements from renewable sources by 2030. This includes achieving a non-fossil energy capacity of 500 GW and reducing carbon emissions by one billion tonnes during the same period.
    • Public Health Enhancement: The focus is on strengthening public health surveillance systems to be more inclusive, covering non-communicable diseases and environmental conditions.
    • Sustainable Development Goals (SDGs): NITI Aayog is committed to aligning national policies with the SDGs, ensuring that developmental strategies are integrated with global sustainability targets, particularly in areas such as poverty alleviation, education, and gender equality.

    Vision for 2035

    • Long-term Economic Growth: The Vision Document for 2035 emphasizes creating a roadmap that focuses on economic growth while ensuring social equity and environmental sustainability. This involves leveraging technology and innovation to drive inclusive growth across various sectors.
    • Energy Security: The 2035 vision includes comprehensive strategies for energy access, affordability, reliability, and security, addressing both current challenges and future needs in the energy sector.
    • Artificial Intelligence (AI) Integration: NITI Aayog plans to harness AI technologies across sectors such as healthcare, agriculture, education, and urban infrastructure to improve efficiency and service delivery.

    What are the challenges? 

    • Data Management: Effective implementation of the roadmap requires robust data collection and management systems to monitor progress accurately and inform policy decisions.
    • Inter-State Disparities: Addressing inequalities among states in terms of resource allocation and development outcomes is crucial for achieving national goals.
    • Funding and Resources: Securing adequate funding for ambitious projects aimed at renewable energy expansion, public health improvements, and technological advancements poses a significant challenge.
    • Capacity Building: Developing the necessary skills and expertise within the workforce to implement new technologies and strategies effectively is essential for success.

    Way forward: 

    • Strengthen Institutional Capacity: Enhance data infrastructure, governance frameworks, and inter-state coordination to address disparities and improve policy implementation.
    • Foster Public-Private Collaboration: Leverage partnerships with the private sector to secure funding, drive innovation, and scale renewable energy, public health, and technology initiatives.

    Mains PYQ:

    Q How are the principles followed by NITI Aayog different from those followed by the erstwhile planning commission in India? (UPSC IAS/2018)

  • India’s Coffee Export surpasses USD 1 Billion for first time

    Why in the News?

    India’s coffee exports in the 2024 calendar year witnessed a significant growth of 45% in dollar terms, reaching an all-time high of $1.684 billion, compared to $1.160 billion in 2023.

    Coffee Production in India

    • Coffee was introduced to India in 1600s by Baba Budan, who planted seven seeds in Chikmagalur, Karnataka.
    • Karnataka is the largest producer, contributing 70% of the total, followed by Kerala and Tamil Nadu.
    • Over 70% of India’s coffee production is exported, making India the 8th largest coffee exporter globally.
    • Coffee thrives in tropical to semi-tropical climates with temperatures of 16°–28°C and annual rainfall of 150–250 cm.
    • The plant grows best on well-drained slopes with laterite soils, especially in Karnataka.
    • Major varieties cultivated include Arabica, Robusta, and Liberica. Arabica has a higher market value due to its mild aromatic flavor.
    • The Coffee Board of India plays a crucial role in promoting the Indian coffee industry by focusing on export promotion, domestic market development, and improving production and quality standards.

    Note:

    • The Coffee Board of India was established in 1942 under the Ministry of Commerce and Industry.
    • It is headquartered in Bangalore and consists of 33 members, including a Chairman appointed by the Government of India.
    • Initially, it managed the pooled supply and marketing of coffee until 1995. After economic liberalization, coffee marketing became a private-sector activity.

    Reasons for growth

    • Coffee prices reached record highs in 2024 due to poor weather conditions in major coffee-producing nations like Brazil and Vietnam, leading to increased global demand for Indian coffee.
    • The anticipated rollout of European Union Deforestation Regulation (EUDR) norms prompted advance purchases by European buyers, including roasters and traders, boosting demand for Indian coffee exports.
    • A 37% increase in unit value per tonne enhanced the overall export revenue, driven by higher global prices and better quality of Indian coffee.
    • Efforts to strengthen relationships with traditional buyers (e.g., Italy, Germany) while expanding to emerging markets (e.g., UAE) helped diversify export destinations and increase overall volumes.

    PYQ:

    [2010] Though coffee and tea both are cultivated on hill slopes, there is some difference between them regarding their cultivation. In this context, consider the following statements:

    1. Coffee plant requires a hot and humid climate of tropical areas whereas tea can be cultivated in both tropical and subtropical areas.
    2. Coffee is propagated by seeds but tea is propagated by stem cuttings only.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

  • FAO Statistical Yearbook, 2024

    Why in the News?

    The Food and Agriculture Organization (FAO) of the United Nations has released its 2024 Statistical Yearbook, providing a comprehensive analysis of global agrifood systems.

    Key Highlights from the Yearbook

    • Economic Dimensions of Agriculture:
      • Global agricultural value increased by 89% in real terms between 2000 and 2022, reaching $3.8 trillion.
      • The proportion of the global workforce employed in agriculture dropped from 40% in 2000 to 26% in 2022, reflecting economic diversification.
    • Food Security and Nutrition:
      • In 2023, between 713 and 757 million people were undernourished, with a midpoint estimate of 733 million, marking an increase of 152 million since 2019.
      • Obesity rates are rising, with over 25% of adults in the Americas, Europe, and Oceania classified as obese.
    • Crop and Meat Production:
      • Primary crop production grew by 56% from 2000 to 2022, reaching 9.6 billion tonnes, with staples like sugarcane, maize, wheat, and rice accounting for nearly half.
      • Meat production rose by 55%, with chicken surpassing pork as the most produced meat globally in 2022.
    • Agricultural Inputs:
      • Pesticide use increased by 70% from 2000 to 2022, with the Americas accounting for half of global usage.
      • Inorganic fertilizers reached 185 million tonnes in 2022, a 37% increase since 2000.
    • Environmental Pressures:
      • Greenhouse gas emissions from agrifood systems grew by 10% from 2000 to 2022, with livestock contributing 54% of farm-gate emissions.
      • Water scarcity is a critical issue in regions like the Near East and North Africa, with countries withdrawing up to 40 times their renewable freshwater resources annually.

    About Food and Agriculture Organization (FAO)

    • The FAO is a specialized agency of the United Nations focused on eradicating hunger, improving nutrition, and ensuring food security worldwide.
    • Established in 1945, the FAO is headquartered in Rome, Italy, and works in collaboration with member states, organizations, and communities.
    • Mandate and Goals:
      • Hunger Eradication: Reduce global hunger and malnutrition through sustainable agricultural practices.
      • Agrifood System Development: Support member states in developing resilient and sustainable food systems.
      • Data and Analysis: Provide accurate, timely, and high-quality statistical data for policymaking and monitoring.
    • Key Functions:
      • Research and Policy Recommendations: Conducts research to address pressing issues in agriculture and food systems.
      • Capacity Building: Supports countries with training and resources for sustainable agriculture.
      • Monitoring Global Trends: Publishes annual reports and statistical yearbooks to track trends and challenges in agrifood systems.

     

    PYQ:

    [2017] Consider the following statements:

    1. The Standard Mark of Bureau of Indian Standards (BIS) is mandatory for automotive tyres and tubes.

    2. AGMARK is a quality Certification Mark issued by the Food and Agriculture Organization (FAO).

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

  • [pib] UJALA: 10 Years of Energy-Efficient Lighting

    Why in the News?

    The UJALA (Unnat Jyoti by Affordable LEDs for All) scheme, launched on January 5, 2015 has completed a decade of remarkable success.

    About UJALA Scheme:

    Launch Details
    • Launched on 5th January 2015 by PM Narendra Modi.
    • Originally called the Domestic Efficient Lighting Programme (DELP).
    • Aims to promote energy-efficient LED appliances in households.
    • Recognized as the world’s largest zero-subsidy domestic lighting initiative.
    Structural Mandate and Implementation
    • Implemented by Energy Efficiency Services Limited (EESL) under the Ministry of Power.
    • Competitive bidding ensures reduced prices for LED appliances.
    • LED appliances distributed via DISCOMs and designated centers.
    • Real-time e-procurement and transparency audits ensure accountability.
    Significant Features
    • Affordability: LED prices significantly lower than market rates (e.g., ₹70 per bulb, ₹220 per tube light).
    • Energy Efficiency: LEDs consume 90% less energy than incandescent lamps (ICLs) and 50% less than CFLs.
    • Cost Savings: Reduced electricity bills and lower annual ownership costs.
    • Market Transformation: Sale of over 407 crore LED bulbs in India.
    • Environmental Impact: Reduction in carbon emissions, aligning with India’s climate goals.

     

    PYQ:

    [2021] With reference to street lighting, how do sodium lamps differ from LED lamps?

    1. Sodium lamps produce light in 360 degrees but it is not so in the case of LED lamps.
    2. As street lights, sodium lamps have a longer lifespan than LED lamps.
    3. The spectrum of visible light from sodium lamps is almost monochromatic while LED lamps offer significant colour advantages in street lighting.

    Select the correct answer using the code given below.

    (a) 3 only

    (b) 2 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

  • LEADS 2024’ Report Released

    Why in the News?

    The Logistics Ease Across Different States (LEADS) 2024 report, released by the Union Minister, outlines key objectives and performance metrics aimed at enhancing India’s logistics sector.

    What are the Aims and Objectives of  Logistics Ease Across Different States (LEADS)?

    • The primary aim is to improve logistics efficiency across states and union territories (UTs), thereby facilitating trade and reducing transaction costs essential for economic growth.
    •  States are encouraged to collaborate with the private sector to develop action plans that attract investments in logistics.
    • Emphasis is placed on promoting green logistics and adopting sustainable practices in logistics operations.
    • The report advocates for the integration of advanced technologies such as Artificial Intelligence (AI), Machine Learning (ML), and Data Analytics to enhance operational efficiency.
    • There is a focus on workforce inclusivity and skill development to boost the logistics sector’s capabilities.
    LEADS 2024 evaluates logistics performance based on four key pillars:

    • Logistics Infrastructure: Assessment of physical infrastructure supporting logistics activities.
    • Logistics Services: Evaluation of the quality and efficiency of logistics services available.
    • Operating and Regulatory Environment: Analysis of the regulatory framework affecting logistics operations.
    • Sustainable Logistics: Newly introduced pillar focusing on environmental sustainability within the logistics sector.

    Key Performance Highlights of 2024

    • Achievers by Group:
      • Coastal Group Achievers: Gujarat, Karnataka, Maharashtra, Odisha, Tamil Nadu.
      • Landlocked Group Achievers: Haryana, Telangana, Uttar Pradesh, Uttarakhand.
      • North-Eastern Group Achievers: Assam, Arunachal Pradesh.
      • Union Territories Achievers: Chandigarh, Delhi.
    • Fast Movers and Aspirers:
      • Fast Movers include states like Andhra Pradesh, Goa (Coastal); Bihar, Himachal Pradesh (Landlocked); Meghalaya, Mizoram (North-Eastern).
      • Aspirers include Kerala, West Bengal (Coastal); Chhattisgarh, Jharkhand (Landlocked); Manipur (North-Eastern).

    What is the role of Public-Private Partnerships (PPPs) and skill development in transforming India’s logistics sector as per the recommendations in the LEADS 2024 report?

    Role of Public-Private Partnerships (PPPs)

    • Enhancing Infrastructure and Efficiency: The report advocates for leveraging PPPs to improve logistics infrastructure and services. By collaborating with private entities, states can enhance operational efficiency, reduce costs, and attract investments essential for developing robust logistics frameworks.
    • Facilitating Multi-Modal Hubs: PPPs are encouraged to establish multi-modal logistics hubs, which can streamline operations and improve last-mile connectivity. This approach aims to create an integrated logistics network that enhances trade facilitation across regions.
    • Promoting Transparency and Accountability: The involvement of private partners in logistics projects is expected to promote transparency through competitive bidding processes, thereby ensuring better governance and accountability in project execution.

    Role of Skill Development

    • Workforce Inclusivity: The report highlights the importance of skill development initiatives aimed at fostering inclusivity within the workforce. By enhancing the skills of workers, particularly women, the logistics sector can benefit from a more diverse talent pool.
    • Adoption of New Technologies: Skill development programs are crucial for equipping the workforce with knowledge about advanced technologies such as Artificial Intelligence (AI) and Data Analytics. This technological proficiency is essential for improving operational efficiencies and adapting to evolving industry demands.
    • Boosting Sector Competitiveness: By focusing on skill enhancement, the logistics sector can increase its competitiveness on a global scale. A well-trained workforce can lead to improved service delivery, innovation, and overall productivity within the sector.

    Way forward: 

    • Strengthen Public-Private Partnerships (PPPs): Foster collaboration between states and the private sector to develop multimodal logistics hubs, enhance last-mile connectivity, and improve infrastructure transparency through competitive bidding processes.
    • Promote Sustainability and Skill Development: Integrate green logistics practices, adopt advanced technologies (AI, ML), and implement comprehensive skill development programs to create an inclusive and efficient logistics ecosystem.

    Mains PYQ:

    Q What is the significance of Industrial Corridors in India? Identifying industrial corridors, explain their main characteristics. (UPSC IAS/2018)

  • Why is rupee weakening against dollar?

    Why in the News?

    In the last week of December 2024, the rupee dropped below 85 against the U.S. dollar, hitting a new low of 85.81. The rupee fell by about 3% in 2024, continuing its long-term decline against the dollar.

    What has caused the currency to depreciate? 

    • Exit of Foreign Investors: A significant driver of the rupee’s depreciation has been the exit of foreign portfolio investors (FPIs) from Indian markets. In 2024, FPIs pulled out substantial amounts from equities, leading to increased selling pressure on the rupee.
    • Widening Trade Deficit: India’s trade deficit has widened due to high imports, particularly of crude oil and gold, compared to its exports. This increased demand for foreign currencies (like the U.S. dollar) to pay for these imports has contributed to the rupee’s weakening.
    • Monetary Policy Differences: The Reserve Bank of India’s relatively looser monetary policy compared to the U.S. Federal Reserve has resulted in higher inflation rates in India. This inflation differential makes Indian assets less attractive to foreign investors, further reducing demand for the rupee.
    • Global Economic Factors: Geopolitical tensions, such as the Russia-Ukraine war and rising global crude oil prices, have created volatility in the markets, leading to capital outflows from emerging markets like India.
      • The other reason is that the strengthening U.S. dollar amid higher U.S. bond yields has made investments in the U.S. more attractive compared to India.

    What could be the impact of Rupee depreciation?

    • Increased Import Costs: A weaker rupee raises the cost of imports, particularly for essential goods such as crude oil, fertilizers, and edible oils. This increase in import bills can lead to a higher overall trade deficit, which reached an all-time high of $37.8 billion in November 2024, exacerbating economic vulnerabilities.
    • Inflationary Pressures: The rising costs of imported goods contribute to inflation, making everyday goods more expensive for consumers. This can lead to higher living costs and reduced purchasing power, as seen with the increased prices of food and fuel due to higher import expenses.
    • Impact on Economic Growth: The combination of rising inflation and increased costs can dampen economic growth. Higher import bills can create upward pressure on interest rates, making borrowing more expensive and potentially slowing down investment and consumption.

    Why made the central bank to intervene?

    • Stabilizing Currency Value: The Reserve Bank of India (RBI) intervened in the forex market to stabilize the rupee and prevent excessive volatility that could disrupt economic stability. By selling dollars from its reserves, the RBI aimed to support the rupee’s value against the dollar.
    • Preventing Inflationary Pressures: A depreciating rupee increases the cost of imports, particularly essential commodities like crude oil, which can exacerbate inflation domestically. The RBI’s intervention seeks to mitigate these inflationary pressures by maintaining a more stable exchange rate.
    • Maintaining Investor Confidence: By actively managing the currency’s value, the RBI aims to instill confidence among investors regarding India’s economic stability and attractiveness as an investment destination. This is crucial for sustaining foreign investment inflows and supporting economic growth.

    Way forward: 

    • Diversify Export Markets and Reduce Dependence on Imports: India should focus on enhancing its exports to non-traditional markets while exploring alternatives to reduce dependence on high-cost imports, especially crude oil and gold.
    • Monetary Policy Coordination and Strengthening Fundamentals: The RBI should work towards aligning its monetary policy with global trends while ensuring domestic inflation remains under control.

    Mains PYQ:

    Q How would the recent phenomena of protectionism and currency manipulations in world trade affect macroeconomic stability of India?  (UPSC IAS/2018)

  • India Secures 14.3% of Global Remittances in 2024: World Bank

    Why in the News?

    In 2024, India received a record $129.1 billion in remittances which marked the highest share for any country since 2000 as per the World Bank.

    What are the Trends in Remittances flow?

    • Record Inflows: In 2024, India received an estimated $129.1 billion in remittances, marking the highest amount ever recorded for any country in a single year.
    • Global Share: India accounted for 14.3% of global remittances, the highest share since the turn of the millennium.
    • Growth Rate: The growth rate of remittances in 2024 was approximately 5.8%, a significant increase from 1.2% in 2023.
    • Top Recipients: Following India, Mexico and China received the largest remittances, with Mexico at $68 billion and China at $48 billion.

    What are the Factors Responsible for High Remittances in India?

    • Large Diaspora: India has one of the largest diaspora populations globally, with over 18 million Indians living abroad, contributing significantly to remittance inflows.
    • Shift to High-Income Countries: There has been a trend of Indian migrants moving to high-income economies such as the United States, United Kingdom, and Australia, where job opportunities are more abundant.
    • Diverse Skill Levels: Indian migrants include highly skilled professionals (in sectors like IT and healthcare) as well as semi-skilled and unskilled labourers, broadening the scope for remittance generation.
    • Recovery of Job Markets: The recovery of job markets in high-income countries post-pandemic has driven an increase in remittance flows as employment opportunities have improved.

    What is the significance of high Remittances?

    • Economic Support for Households: Remittances serve as a crucial source of income for many families in India, supporting their daily needs and contributing to overall household welfare.
    • Impact on National Economy: In 2024, remittances constituted approximately 3.3% of India’s GDP, highlighting their role in bolstering the economy.
    • Comparison with Other Financial Flows: Remittances have outpaced other forms of external financial flows, such as Foreign Direct Investment (FDI) and Official Development Assistance (ODA), indicating their importance for funding current account deficits and fiscal shortfalls in low- and middle-income countries.
    • Long-Term Growth Trends: Over the past decade, remittances to low-and-middle-income countries have increased by 57%, underscoring their growing significance as a stable source of income compared to declining FDI.

    What are the negative impacts of brain drain?

    Even though remittances are good for the country, they have negative signals for any country like brain drain. 

    • Loss of Skilled Labor: Brain drain leads to a significant depletion of skilled professionals in the home country, resulting in shortages in critical sectors such as healthcare, education, and technology.
      • This loss hampers the country’s ability to innovate and develop, as there are fewer qualified individuals to drive progress and maintain essential services.
    • Economic Consequences: The exodus of skilled workers results in decreased tax revenues for the home country, which can limit public spending on infrastructure and social programs. This financial shortfall can stunt economic growth and development, exacerbating existing challenges within the economy.
    • Impeded National Development: Countries experiencing brain drain may face slower overall development due to the loss of human capital. This can create a cycle of underdevelopment, where the lack of skilled labour leads to reduced investment opportunities and further emigration, perpetuating the cycle of talent loss and economic stagnation.

    Way forward: 

    • Enhance Domestic Opportunities: Strengthen education, healthcare, and innovation ecosystems to retain skilled professionals by providing competitive salaries, career growth, and improved living standards.
    • Engage Diaspora Strategically: Leverage the Indian diaspora for knowledge transfer, investments, and partnerships, creating pathways for their contribution to national development while maintaining ties with homegrown talent.

  • India, cross-border insolvency and legal reform

    Why in the News?

    The current state of cross-border insolvency laws is poor, with rules that cannot be enforced and slow progress in making necessary changes. This situation needs to be fixed.

    How did the evolution of the cross-border insolvency framework in India?

    • Post-Independence Legal Framework: After Independence, India’s insolvency laws focused on domestic cases and did not address cross-border insolvency, leaving a significant gap in the legal framework.
    • Committee Recommendations and IBC Drafting: In the 2000s, committees like the Eradi, Mitra, and Irani Committees recommended adopting the UNCITRAL Model Law, leading to the drafting of the Insolvency and Bankruptcy Code (IBC) in 2015, which initially focused on domestic insolvencies.
    • Incorporation of Cross-Border Provisions: Sections 234 and 235 were introduced in 2016 to facilitate cross-border insolvency, allowing reciprocal agreements and assistance from foreign courts, though their effectiveness was limited by the lack of implementation and reciprocal arrangements.

    What are the key challenges in adopting a cross-border insolvency framework in India?

    • Outdated Framework: Current legal provisions, such as Sections 234 and 235 of the Insolvency and Bankruptcy Code (IBC), remain non-notified and unenforceable, rendering them ineffective. Reliance on ad hoc protocols like in the Jet Airways case increases judicial burden, delays resolutions, and reduces asset value.
    • Jurisdictional Issues: Section 60(5) of the IBC limits the jurisdiction of civil courts over insolvency matters, leaving the National Company Law Tribunal (NCLT) as the sole authority. However, the NCLT lacks the power to recognize or enforce foreign judgments.
    • Lack of Reciprocal Arrangements: The absence of reciprocal agreements between India and other nations for cross-border insolvency resolution creates barriers to effective cooperation.
    • Inefficient Court Communication: Outdated communication methods between Indian and foreign courts hinder transparency and efficiency in handling cross-border insolvency matters.
    • Legislative Gaps: The delay in adopting structured frameworks, such as the UNCITRAL Model Law, highlights a critical regulatory gap in managing cross-border insolvencies.

    How does India’s proposed legislation align with international standards, such as the UNCITRAL Model Law?

    • India’s proposed amendments to the IBC aim to incorporate elements of the UNCITRAL Model Law on Cross-Border Insolvency, which provides a structured framework for international cooperation and coordination in insolvency matters.
      • By adopting this model, India seeks to enhance its legal framework to better manage cross-border insolvencies and align with global best practices.
    • The recommendations from various expert committees, including the Insolvency Law Committee and the Parliamentary Standing Committee, emphasize the need for a comprehensive approach that includes provisions for recognizing foreign insolvency proceedings and facilitating smoother communication between jurisdictions.

    What implications do these reforms have for foreign investment and economic growth in India?

    • Attracting Foreign Investment: A robust cross-border insolvency framework will enhance investor confidence by ensuring that their rights are protected in case of insolvency. This predictability is crucial for attracting foreign direct investment (FDI) into India, as investors seek assurance that their interests will be managed effectively across borders.
    • Facilitating Corporate Restructuring: Improved legal mechanisms for cross-border insolvency will enable Indian companies operating internationally to restructure more efficiently when faced with financial difficulties. This can lead to better asset recovery and preservation of business value, ultimately contributing to economic stability and growth.
    • Strengthening Economic Ties: By aligning its insolvency laws with international standards, India can foster stronger economic relationships with other nations, facilitating smoother trade and investment flows. This alignment is essential as India’s economic integration with global markets continues to grow.

    Way forward: 

    • Adopt UNCITRAL Model Law: Expedite the implementation of the UNCITRAL Model Law on Cross-Border Insolvency to establish a predictable, structured framework for managing international insolvency cases, fostering investor confidence and global integration.
    • Enhance NCLT Capacity: Strengthen the National Company Law Tribunal (NCLT) with expanded jurisdiction and training to effectively handle cross-border insolvency cases, alongside modernizing judicial coordination mechanisms through international guidelines like JIN.

  • Banana Cultivation in India

    Why in the News?

    India has seen a 10x increase in banana exports over the past decade and now targets $1 billion in exports within the next five years. In the fiscal year 2022-23, India’s banana production was estimated at around 34.9 million metric tons.

    Do you know?

    • Banana is the second most important fruit crop in India after Mango, contributing 33% to total fruit production.
    • India is the largest producer of bananas globally, contributing 26.5% to the world’s total banana production (FAO, 2021).
    • Andhra Pradesh is the leading state with 56.84 lakh tonnes (16.5% of national production) followed by Maharashtra and Tamil Nadu.

    Banana Cultivation in India

    • Bananas thrive in tropical and subtropical climates with temperatures between 15°C and 35°C and high humidity.
    • Common varieties: Dwarf Cavendish, Robusta, Grand Naine, Nendran, Rasthali, Poovan, Red Banana, Monthan, Safed Velchi, Lal Velchi, Ardhapuri, Karpuravalli, Elakki Bale, Basrai, Amrit Sagar, Champa, Chinia, Malbhog, Rajapuri, and Yelakki.
    • The crop requires well–drained, loamy soil with a pH of 6.5–7.5 and 1,800–2,000 mm of water annually, often supported by drip irrigation.
    • Fusarium Wilt is the most common disease affecting Bananas.
    • Seasons for Planting:
      • Maharashtra: Kharif (June–July) and Rabi (October–November).
      • Tamil Nadu: February–April and November–December.
      • Kerala: Rainfed crop (April–May) and irrigated crop (August–September).

    PYQ:

    [2011] Recently, our scientists have discovered a new and distinct species of banana plant which attains a height of about 11 metres and has orange coloured fruit pulp. In which part of India has it been discovered?

    (a) Andaman Islands

    (b) Anaimalai Forests

    (c) Maikala Hills

    (d) Tropical rain forests of northeast

  • Union Cabinet approved the continuation of PMFBY and RWBCIS until 2025-26

    Why in the News?

    The government extended two crop insurance schemes, Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather Based Crop Insurance Scheme (RWBCIS), for another year until 2025-26. It also set aside ₹824.77 crore to improve these schemes using advanced technology.

    What are the provisions and key features of PMFBY?

    • Comprehensive Risk Coverage: PMFBY provides coverage against all non-preventable natural risks from pre-sowing to post-harvest stages, including droughts, floods, and pests.
    • Subsidised Premium Rates: Farmers pay a fixed premium of 1.5% for rabi crops, 2% for kharif crops, and 5% for cash crops. The remaining premium is shared between the central and state governments.
    • Financial Support: It offers financial assistance to farmers suffering from crop loss due to unforeseen events, aiming to stabilise their income and encourage modern agricultural practices.
    • Technology Integration: The scheme incorporates technological initiatives like YES-TECH for yield estimation and WINDS for weather data collection, enhancing efficiency in claim settlement.

    Why was RWBCIS introduced?

    • Financial Protection Against Weather Risks: RWBCIS was introduced to safeguard farmers from financial losses caused by adverse weather conditions such as rainfall, temperature fluctuations, wind, and humidity, which can severely impact crop yields and farmer income.
    • Comprehensive Coverage for Various Crops: The scheme aims to provide insurance protection for a wide range of crops, including food crops, oilseeds, and commercial or horticultural crops, thereby mitigating the impact of natural calamities like droughts and floods on farmers’ livelihoods.

    What is the difference between PMFBY and RWBCIS?

    PMFBY (Pradhan Mantri Fasal Bima Yojana) RWBCIS (Restructured Weather-Based Crop Insurance Scheme)
    Launch Launched in 2016 (replacing NAIS and MNAIS). Introduced in 2016 to safeguard farmers against adverse weather conditions.
    Primary Focus Protects against crop failure due to natural calamities, pests, diseases. Provides insurance based on weather parameters (e.g., rainfall, temperature, wind) to mitigate financial losses from weather extremes.
    Risk Assessment Method – Area-based approach with crop-cutting experiments, remote sensing, etc.
    – Yield vs. threshold yield determines compensation.    		 – Weather-based triggers using data from weather stations.
    – Predefined thresholds (e.g., rainfall levels) activate payouts automatically.
    Premium Structure – Uniform, capped rates for farmers: 2% for Kharif, 1.5% for Rabi, 5% for horticulture/commercial crops.
    – No upper limit on government subsidy.    		 – Varies based on weather risks and policy design.
    – Similar subsidy approach, but rates are dependent on specific weather-based insurance products.
    Coverage – All notified crops in a defined area.
    – Includes food crops, oilseeds, and commercial/horticultural crops.    		 – Covers food crops, oilseeds, and commercial/horticultural crops for weather-induced losses (e.g., drought, flood, cyclone, hailstorm).
    Enrollment – Initially compulsory for farmers with crop loans (KCC).
    – Made voluntary for all farmers from Kharif 2020.    		 – All farmers, including sharecroppers and tenant farmers, are eligible if they grow notified crops in notified areas.
    Key Objectives – Provide financial support and stabilize income in the event of crop failure.
    – Encourage innovative and modern farming practices.    		 – Protect farmers from weather aberrations, ensuring swift compensation when weather thresholds are met or breached.
    Unique Features – “One Nation, One Scheme” concept.
    – Loss-based compensation linked to actual yield shortfall.    		 – Trigger-based system; payouts depend on deviation from normal weather parameters (no extensive damage assessment).

    What is the role of FIAT in crop insurance schemes?

    The Fund for Innovation and Technology (FIAT) has been established with a corpus of ₹824.77 crore to enhance the implementation of PMFBY and RWBCIS. There are various key roles:

    • Technological Advancement: Funding technological initiatives aimed at improving the assessment of crop damage and expediting claim settlements.
    • Research Support: Facilitating research and development studies that enhance the effectiveness of crop insurance schemes through innovative practices.
    • Improving Accessibility: Aiding in the use of digital technologies for easier enrollment processes and expanding coverage among farmers.

    Way forward: 

    • Strengthening Awareness and Accessibility: Increase farmer outreach through targeted awareness campaigns and simplify enrollment processes using digital platforms to ensure maximum participation in crop insurance schemes.
    • Enhanced Technology Integration: Expand the deployment of advanced tools like remote sensing and automated weather monitoring to improve accuracy in loss assessment, and claim settlements, and minimize disputes.

    Mains PYQ:

    Q How do subsidies affect the cropping pattern, crop diversity and economy of farmers? What is the significance of crop insurance, minimum support price and food processing for small and marginal farmers? (UPSC IAS/2017)