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Subject: Economics

  • Cabinet approves Mechanism for procurement of ethanol by Public Sector Oil Marketing Companies (OMCs) under EBP Programme

    Why in the News?

    The Cabinet Committee on Economic Affairs (CCEA) has approved a revision in the ethanol procurement price for Public Sector Oil Marketing Companies (OMCs) for the Ethanol Supply Year (ESY) 2024-25.

    What is the significance of the Price Revision?

    The recent revision of the ethanol procurement price for Public Sector Oil Marketing Companies (OMCs) is significant for several reasons:

    • Price Stability and Remuneration: The increase from ₹56.58 to ₹57.97 per litre ensures price stability and provides a more remunerative rate for ethanol suppliers, which is crucial for maintaining a steady supply of ethanol.
    • Support for Sugarcane Farmers: The separate payment of Goods and Services Tax (GST) and transportation charges will benefit sugarcane farmers, enhancing their income and encouraging production.
    • Meeting Blending Targets: The 3% increase in the price is aimed at ensuring adequate availability of ethanol to meet the ambitious blending target of 20% by 2025-26, advancing from the original target of 2030.
    • Reducing Crude Oil Dependency: This initiative is part of a broader strategy to reduce India’s dependency on crude oil imports, leading to substantial foreign exchange savings and environmental benefits.

    What is Ethanol Blended Petrol (EBP)?

    The Ethanol Blended Petrol (EBP) Programme is a government initiative aimed at promoting the blending of ethanol with petrol to create a more sustainable and environmentally friendly fuel option.

    • OMCs are currently blending up to 20% ethanol with petrol, which helps reduce reliance on imported crude oil and lowers carbon emissions.
    • Ethanol blending has dramatically increased from 38 crore litres in the Ethanol Supply Year (ESY) 2013-14 to 707 crore litres in ESY 2023-24, achieving an average blending rate of 14.60%.
    • The programme has resulted in estimated savings of over ₹1,13,007 crore in foreign exchange and has substituted approximately 193 lakh metric tonnes of crude oil over the past decade.

    What are other initiatives taken to promote biofuels?

    • National Policy on Biofuels (2018): This policy aims to reduce dependency on fossil fuels and promote sustainable development by encouraging the production and use of biofuels from various feedstocks such as sugarcane, broken rice, and maise.
    • Pradhan Mantri JI-VAN Yojana: This initiative focuses on accelerating the development of second-generation (2G) ethanol capacity in India, providing viability gap funding to support the establishment of 2G ethanol projects.
    • Global Biofuels Alliance (GBA): Launched in September 2023, this alliance aims to accelerate the global adoption of cleaner fuels and support decarbonization goals. It involves collaboration with multiple countries to enhance biofuel deployment.
    • Repurpose Used Cooking Oil (RUCO) Initiative: Launched by the Food Safety and Standards Authority of India (FSSAI) in 2018, this initiative aims to convert used cooking oil into biofuel, thereby preventing its reuse in food preparation and promoting sustainability.
    • Biodiesel Production Targets: India has set a biodiesel blending target of 5% by 2030. The government is mobilizing production through policies that support feedstock availability, including used cooking oil and non-edible industrial oils.
    • Sustainable Aviation Fuel (SAF) Initiatives: The National Biofuel Coordination Committee has established targets for blending SAF in domestic flights, aiming for 1% by 2025 and 5% by 2030.
    • Ethanol Blending Advancements: The target for ethanol blending has been advanced from 2030 to 2025, with plans to achieve 20% blending. This includes signing long-term off-take agreements with dedicated ethanol plants to ensure a steady supply.

    Way forward: 

    • Strengthen Feedstock Supply Chain: Enhance agricultural productivity and diversify feedstock sources including maize and non-food biomass, to ensure a stable and sustainable ethanol supply.
    • Expand Infrastructure and Investments: Develop ethanol storage, blending, and distribution networks while encouraging private sector participation through financial incentives and policy support.

    Prelims PYQ:

    [2013] With reference to the usefulness of the by-products of the sugar industry, which of the following statements is/are correct?

    1. Bagasse can be used as biomass fuel for the generation of energy.
    2. Molasses can be used as one of the feedstocks for the production of synthetic chemical fertilizers.
    3. Molasses can be used for the production of ethanol.

    Select the correct answer using the codes given below.

    (a) 1 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

  • India approves Mutual Credit Guarantee Scheme for MSME manufacturers

    Why in the News?

    The government approved a Mutual Credit Guarantee Scheme  (MCGS)  for micro, small, and medium enterprises (MSMEs).

    What is MCGS-MSME?

    • The Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) is a government initiative aimed at enhancing financial accessibility for micro, small, and medium enterprises in India.

    What are the Provisions and Salient Features of MCGS-MSME?

    • Eligibility and Loan Coverage: The MCGS-MSME is available to MSMEs with a valid Udyam Registration Number, providing loan guarantees of up to Rs 100 crore for purchasing equipment and machinery.
    • Guarantee Coverage: The scheme offers 60% guarantee coverage by the National Credit Guarantee Trustee Company Limited (NCGTC) for loans sanctioned to Member Lending Institutions (MLIs).
    • Project Cost Requirements: While the guaranteed loan amount is capped at Rs 100 crore, the total project cost can exceed this amount, provided that at least 75% of the project cost is allocated for equipment or machinery.
    • Repayment Terms: Loans up to Rs 50 crore have a repayment period of up to 8 years, including a moratorium of up to 2 years on principal repayments. For loans above Rs 50 crore, longer repayment schedules may be considered.
    • Scheme Duration and Fees: The MCGS-MSME will be in effect for four years from the issuance of operational guidelines or until cumulative guarantees of Rs 7 lakh crore are issued. The initial guarantee fee is waived for the first year, followed by a fee of 1.5% per annum for the next three years, and then reduced to 1% per annum thereafter.

    What are the other steps taken to ease access to Credit for MSMEs?

    In addition to the MCGS-MSME, several other measures have been implemented to facilitate easier access to credit for MSMEs:

    • Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE): This scheme provides collateral-free loans up to Rs 2 crore, offering up to 85% guarantee coverage, thereby reducing lender risk.
    • Raising and Accelerating MSME Performance (RAMP) Program: This initiative involves an investment of Rs 6,000 crore over five years, aimed at enhancing MSME growth and performance.
    • Trade Receivables Discounting System (TReDS): An online platform that enables MSMEs to receive faster payments from larger companies, improving cash flow and liquidity.
    • Emergency Credit Line Guarantee Scheme (ECLGS): Introduced during COVID-19, this scheme provided a Rs 3 lakh crore relief package, offering a 100% government-backed guarantee for loans.
    • Priority Sector Lending (PSL) Norms: These regulations require banks to allocate a portion of their loans specifically for MSMEs, ensuring that they receive necessary financial support.

    What are the challenges faced by MSMEs in accessing finance?

    • Access to Finance: One of the most significant challenges faced by MSMEs is obtaining timely and affordable financing. For example, The Bank of Baroda reported that over 50% of MSMEs in India could not access formal credit.
    • Lack of Financial Knowledge: Many MSMEs lack awareness of available financial schemes and products, which restricts their ability to access funding. For example, Many business owners remain unaware of the Shishu, Kishor, and Tarun loan schemes.

    Way forward: 

    • Enhanced Financial Literacy and Awareness Campaigns: There is a need for targeted outreach programs to educate MSMEs about available financial schemes, including loan products and government initiatives like Shishu, Kishor, and Tarun schemes, to ensure they are aware and can leverage them effectively.
    • Streamlined Loan Processes and Collateral-Free Options: Simplifying the loan application process and expanding collateral-free loan schemes like CGTMSE, along with improving credit rating systems, will ensure quicker and easier access to funds, especially for smaller MSMEs.

    Mains PYQ:

    Q  Can the strategy of regional-resource-based manufacturing help in promoting employment in India? (UPSC IAS/2019)

  • How can the Budget arrest growth decline?

    Why in the News?

    The growth rate is lower than what the government had expected. Looking at past trends, the 2004-2011 period had high growth and poverty reduction, supported by welfare programs and government interventions.

    Context: 

    • The World Bank forecasts India’s GDP growth to soften to 6.5% for the fiscal year 2024-25, down from previous expectations of 7%. This reflects a slowdown in investment and weak manufacturing growth.
    • The International Monetary Fund (IMF) has also revised its growth forecast for India to 7% for FY24 and 6.5% for FY25, citing robust domestic demand but acknowledging challenges ahead

    How did the period from 2004 to 2011 have a consistently high growth rate?

    • State Intervention and Welfare Programs: This period saw a revival of state interventions through rights-based legislation and welfare schemes, which contributed to economic growth and reduced absolute poverty.
      • Notably, programs like the National Rural Employment Guarantee Act (NREGA) provided jobs and set higher wage floors, benefiting the rural poor.
    • Rising Consumption Among Lower Income Groups: Despite increasing income inequality, the consumption share of the bottom 80% of the population grew faster than that of the richest 20%. This was facilitated by targeted fiscal policies that favoured lower-income groups, enhancing their consumption capacity.

    • Increased Fiscal Expenditure on Social Services: There was a significant rise in social services and developmental expenditures during this time, which directly impacted consumption patterns positively across various commodity categories for lower-income groups.

    Does the nature of fiscal expenditure also matter when it comes to private consumption? 

    • Capital Expenditure vs. Revenue Expenditure:
      • Capital Expenditure (Capex) (e.g., infrastructure projects) primarily benefits high-income groups and corporations, with a lower short-term impact on consumption.
      • Revenue Expenditure (e.g., social welfare, wages, and pensions) immediately boosts demand by increasing disposable income among lower-income groups.
    • Leakages in Capex: Large-scale projects often involve imports (e.g., heavy machinery), leading to capital outflows instead of stimulating the domestic economy.
    • Higher Consumption Propensity of Lower-Income Groups: Money spent on welfare programs reaches people with a higher tendency to spend, leading to a larger multiplier effect on domestic demand.

    How would an increase in revenue expenditure, particularly in the social sector, help? (Way forward)

    • Higher Incomes for Workers: By providing better wages and job opportunities through social programs, disposable income among lower-income populations would rise, thereby boosting overall consumption levels.
    • Stimulating Private Investment: Enhanced consumer demand can create a conducive environment for businesses to invest. As workers have more income to spend, businesses may respond by increasing production capacity, leading to a cycle of investment and growth.
    • Reversing Economic Slowdown: A strategic shift towards increasing revenue expenditure can help combat the current economic slowdown by fostering a more inclusive growth model that benefits a broader segment of society.

    Mains PYQ:

    Q “Industrial growth rate has lagged behind in the overall growth of Gross-Domestic-Product (GDP) in the post-reform period” Give reasons. How far the recent changes in Industrial Policy are capable of increasing the industrial growth rate? (UPSC IAS/2015)

  • Only a radical policy shift can lift farmers from widespread distress

    Why in the News?

    Agriculture has been given little attention, even though the National Crime Records Bureau (NCRB) data shows that 1,00,474 farmers and agricultural workers took their own lives between 2015 and 2022.

    What are the root causes of the current agrarian distress faced by farmers in India?

    • Unmet Minimum Support Price (MSP) Promise: Despite repeated promises, the government has failed to implement the MSP at the rate of C2+50% (one-and-a-half times the comprehensive cost of production) as recommended by the M.S. Swaminathan Commission.
    • Rising Input Costs and Economic Burden: The cost of agricultural inputs such as fertilizers, seeds, insecticides, diesel, water, and electricity has been steadily rising.
    • Inadequate Government Support and Infrastructure: Government allocations to agriculture and allied sectors have been declining, from 5.44% of the total budget in 2019 to just 3.15% in 2024.
      • At the same time, public investment in irrigation and power infrastructure has decreased, leading to water scarcity and unreliable electricity supply.

    How can policy reforms effectively address the challenges faced by farmers?

    • Implementation of MSP: Establishing a statutory MSP at C2+50% is essential to ensure that farmers receive fair compensation for their produce. This reform would help alleviate financial distress and reduce the incidence of farm suicides.
    • Subsidy Increases and Cost Controls: The government should raise subsidies for agricultural inputs and impose strict controls on prices charged by private corporations for fertilizers and seeds. Supporting public sector production can help stabilize prices and ensure availability.
    • Comprehensive Loan Waiver: A one-time loan waiver for farmers can provide immediate relief from debt burdens. This measure should be coupled with long-term strategies to prevent future indebtedness through better financial management and support systems.

    What role do government support and institutional frameworks play in alleviating farmer distress?

    • Financial Assistance and Subsidies: Government support through subsidies for fertilizers, seeds, and irrigation systems helps reduce the financial burden on farmers. For example, the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) provides direct income support to farmers, aiding those facing economic hardship.
    • Crop Insurance and Risk Mitigation: Institutional frameworks such as the Pradhan Mantri Fasal Bima Yojana (PMFBY) offer insurance schemes to protect farmers against crop losses due to natural disasters, thereby reducing the risk of distress when unforeseen events occur.
    • Market Access and Price Support: The government ensures fair prices and stable markets through Minimum Support Price (MSP) and procurement schemes. The Food Corporation of India (FCI) buys surplus crops like wheat and rice from farmers at MSP, offering a safety net during market fluctuations.
    • Agricultural Credit and Loans: Institutional frameworks like the NABARD (National Bank for Agriculture and Rural Development) and other banks offer affordable loans to farmers, allowing them to invest in better farming techniques or recover from losses, thus mitigating financial stress.
      • For example, Kisan Credit Cards (KCC) provide short-term credit to meet the farmers’ needs for inputs and daily expenses.

    Way forward: 

    • Strengthen Infrastructure and Support Systems: Invest in reliable irrigation, power supply, and crop insurance schemes, ensuring farmers have access to resources that help them cope with climate-related challenges and reduce dependency on private traders.
    • Enhance Financial Accessibility and Risk Management: Expand access to affordable credit, implement statutory MSP at C2+50%, and provide better financial literacy programs to help farmers manage debts and reduce vulnerability to market fluctuations.

    Mains PYQ:

    Q Explain various types of revolutions, took place in Agriculture after Independence in India. How these revolutions have helped in poverty alleviation and food security in India? (UPSC IAS/2017) 

  • [pib] DGFT launches enhanced eCoO 2.0 System

    Why in the News?

    The Directorate General of Foreign Trade (DGFT) has launched the enhanced Certificate of Origin (eCoO) 2.0 system, a major upgrade aimed at simplifying export certification and improving trade efficiency.

    What is eCoO 2.0 System?

    • The eCoO 2.0 system is a digital platform launched by the Directorate General of Foreign Trade (DGFT) to simplify and streamline the issuance of Non-Preferential Certificates of Origin (CoO).
    • Effective January 1, 2025, exporters must electronically file CoO applications through this platform.
    • It aligns with India’s Ease of Doing Business initiative by improving trade facilitation, digital authentication, and document processing.

    Key Features of the eCoO 2.0 System

    • Exporters must submit Non-Preferential Certificates of Origin (CoO) online.
    • Allows exporters to authorize multiple users under a single Importer Exporter Code (IEC).
    • Aadhaar-based e-Signing provides an alternative to Digital Signature Tokens, enhancing security and ease of use.
    • Offers real-time access to eCoO services, Free Trade Agreement (FTA) details, trade events, and notifications.
    • Exporters can request In-lieu CoO for rectifications on previously issued CoOs.
    • The system handles 7,000+ eCoOs daily, integrating 125 issuing agencies, 110 chambers of commerce, and 650+ issuing officers.

    Significance of the eCoO 2.0 System

    • Reduces manual paperwork and speeds up export documentation.
    • Digitally signed CoOs prevent fraudulent certifications and ensure traceability.
    • Facilitates smoother re-exports, trans-shipments, and intermediary trade, boosting India’s position in global supply chains.
    • Faster approvals help exporters comply with international trade agreements, enhancing competitiveness.
    • Aligns with India’s push for paperless trade, reinforcing DGFT’s trade facilitation efforts.

    PYQ:

    [2011]  A “closed economy” is an economy in which:

    (a) the money supply is fully controlled

    (b) deficit financing takes place

    (c) only exports take place

    (d) neither exports or imports take place

  • Rythu Bharosa Scheme

    Why in the News?

    The Telangana government has started distributing funds under the Rythu Bharosa Scheme, also known as the Farmer’s Investment Support Scheme (FISS).

    About the Rythu Bharosa Scheme:

    • The Rythu Bharosa Scheme, also known as the Farmer’s Investment Support Scheme (FISS), was launched by the Telangana government in 2018 to provide direct financial assistance to farmers.
    • It is the first direct investment support scheme in India, where cash is transferred directly to farmers before each crop season to help them with agricultural expenses.
    • Objective: To reduce financial burden, improve agricultural productivity, and prevent farmers from falling into debt traps due to high input costs.
    • Provisions:
      • Under the scheme, every farmer receives ₹5,000 per acre per crop season, ensuring ₹10,000 per acre annually for two crop seasons.
      • The financial assistance is provided before the sowing season, allowing farmers to plan their investments efficiently.
      • There is no limit on the size of landholdings, meaning both small and large farmers can benefit.
    • Criteria:
      • The scheme is available only to resident farmers of Telangana who own agricultural land in the state.
      • Scheduled Tribe (ST) farmers cultivating land with Record of Forest Rights (ROFR) documents are eligible for assistance.
      • Tenant farmers, commercial farmers, and those farming under contractual agreements are not eligible to receive benefits under this scheme.
      • The funds are disbursed through bank bearer cheques under the supervision of Agriculture Extension Officers to ensure transparent distribution.

    PYQ:

    [2020] Under the Kisan Credit Card scheme, short-term credit support is given to farmers for which of the following purposes?

    1. Working capital for maintenance of farm assets
    2. Purchase of combine harvesters, tractors and mini trucks
    3. Consumption requirements of farm households
    4. Post-harvest expenses
    5. Construction of family house and setting up of village cold storage facility

    Select the correct answer using the code given below:

    (a) 1, 2 and 5 only
    (b) 1, 3 and 4 only
    (c) 2, 3, 4 and 5 only
    (d) 1, 2, 3, 4 and 5

  • SEBI proposes sachetization of mutual funds to boost financial inclusion

    Why in the News?

    SEBI is collaborating with the mutual fund industry to find ways to make monthly SIPs of just Rs 250 possible, aiming to encourage more people from lower-income groups to invest in mutual funds.

    What is Sachetisation?

    • Sachetisation refers to offering products in small, affordable units, making them accessible to a broader consumer base, especially those in price-sensitive segments.
    • The term originated from the FMCG (Fast Moving Consumer Goods) sector, where products like shampoos were made available in small sachets at low prices to cater to low-income consumers.
    • SEBI is now proposing a similar approach for mutual funds, allowing small-ticket investments through SIPs (Systematic Investment Plans) with low monthly amounts (such as Rs 250).

    What are the significances of Sachetisation?

    • Affordable Financial Products: Just as small sachets of consumer goods made them accessible to lower-income groups, small-ticket SIPs in mutual funds can make investment opportunities available to a larger section of the population, particularly those who may not have the financial capacity to invest larger amounts.
    • Promoting Financial Empowerment: By lowering the entry barrier for mutual fund investments, sachetisation can help empower underserved communities and individuals by enabling them to participate in the growing financial markets and benefit from the potential returns.
    • Expanding Reach: This approach would encourage mutual fund companies to expand their reach to remote locations, helping them penetrate rural and low-income markets, and promote a wider culture of saving and investing.
    • Financial Inclusion for the Bottom of the Pyramid: The primary target of sachetisation in mutual funds is low-income groups that have limited access to traditional investment products. By offering small, regular investments, SEBI aims to promote financial inclusion at the grassroots level.

    How does it work?

    • SEBI has proposed introducing small ticket SIPs at Rs 250 per month, which would allow new investors from low-income groups to participate in mutual funds without the burden of higher minimum investment requirements. This contrasts with existing schemes that often require a minimum SIP of Rs 500 or more.
    • Investors can commit to a small ticket SIP for a duration of five years (60 installments), although they have the flexibility to withdraw or stop their investments without restrictions if needed. This structure encourages consistent investment while providing an exit option for investors.
    • To facilitate the success of small ticket SIPs, SEBI plans to implement discounted rates for intermediaries and reimburse certain costs from the Investor Education and Awareness Fund. This will help asset management companies (AMCs) break even more quickly on their investments in these small ticket offerings.
    • The sachetised SIPs will be available under specific mutual fund schemes, excluding high-risk options like small-cap and mid-cap equity schemes, which are deemed unsuitable for new investors from lower-income backgrounds. This targeted approach aims to safeguard these investors while still encouraging their entry into the market.
    • To further promote financial inclusion, SEBI proposes incentives for distributors who successfully guide investors through 24 instalments of the small ticket SIP, thereby enhancing participation and support for new investors in mutual funds.

    Conclusion: The strategy could result in a significant increase in domestic investor participation, contributing to the resilience of India’s equity market and fostering long-term financial stability.

    Mains PYQ:

    Q Comment on the important changes introduced in respect of the Long term Capital Gains Tax (LCGT) and Dividend Distribution Tax (DDT) in the Union Budget for 2018-2019. (UPSC IAS/2018)

  • IWAI sets up new Regional Office at Varanasi

    Why in the News?

    The Inland Waterways Authority of India (IWAI), under the Union Ministry of Ports, Shipping, and Waterways, upgraded its sub-office in Varanasi to a full-fledged Regional Office. This move aims to strengthen the implementation of Inland Water Transport (IWT) activities in National Waterway-1 (NW-1), covering the Ganga River, and other waterways in Uttar Pradesh.

    IWAI’s Regional Expansion:

    • Varanasi becomes IWAI’s 6th regional office, joining those in Guwahati, Patna, Kochi, Bhubaneswar, and Kolkata.
    • Capacity augmentation is also underway for NW-2 (Brahmaputra River), NW-3 (West Coast Canal), and NW-16 (Barak River).

    Important Projects by IWAI: 

    • Jal Marg Vikas Project (JMVP): A World Bank-supported initiative aimed at capacity augmentation of NW-1 through:
    • River conservancy works like bandalling and maintenance dredging.
    • Construction of key infrastructure, including:
      • Multi-Modal Terminals (MMTs): Varanasi, Sahibganj, and Haldia.
      • Inter-Modal Terminal: Kalughat.
      • Navigational Lock: Farakka, West Bengal.
    • Development of 60 community jetties across Uttar Pradesh, Bihar, Jharkhand, and West Bengal to support local communities like farmers, artisans, and fishermen.

    About Inland Waterways Authority of India

    • Established in 1986 under the Inland Waterways Authority of India Act, 1985.
    • Headquarters: Noida, Uttar Pradesh.
    • Objective: To reduce the underutilization of India’s 14,500 kilometers of navigable waterways, which account for just 2% of the transportation mix.
    • Structural Mandate:
      • Responsible for regulating and developing inland waterways for shipping and navigation.
      • Develops and maintains Inland Water Transport (IWT) infrastructure on national waterways with grants from the Ministry of Shipping.
      • Ensures safe and efficient navigation to integrate waterways into the national transport system.
    • Powers and Functions:
      • Planning and Execution: Implements and maintains navigation and shipping infrastructure projects.
      • National Waterways Management: Oversees 111 national waterways under the National Waterways Act, 2016.
      • Infrastructure Development: Focuses on dredging, terminal construction, and maintaining year-round navigability for vessels.

    PYQ:

    [2016] Enumerate the problems and prospects of inland water transport in India.

  • NITI Aayog releases Fiscal Health Index, 2025

    Why in the News?

    The NITI Aayog has launched the Fiscal Health Index (FHI), 2025 to provide a comprehensive assessment of the fiscal performance of 18 major states in India.

    What is the Fiscal Health Index (FHI)?

    • The FHI is an initiative by NITI Aayog to analyze the fiscal health of states and guide reforms for sustainable economic growth.
    • It evaluates states using a composite index derived from five key sub-indices:
    1. Quality of Expenditure
    2. Revenue Mobilization
    3. Fiscal Prudence
    4. Debt Index
    5. Debt Sustainability
    • The report uses data from the Comptroller and Auditor General of India (CAG) for the fiscal year 2022-23, supplemented by trends from 2014-15 to 2021-22.
    • FHI covers states contributing significantly to India’s GDP, demographics, public expenditure, and revenues.

    Key Highlights:

    • Top Performers:
      • Odisha: Ranked first (67.8), excelling in debt management and sustainability.
      • Chhattisgarh: Secured second position (55.2), showcasing strong fiscal prudence.
      • Goa: Achieved third place (53.6), reflecting balanced fiscal practices.
    • Underperformers:
      • Kerala: (29.7), struggling with poor debt sustainability and expenditure quality.
      • Punjab: (28.4), grappling with low revenue mobilization and high deficits.
      • West Bengal: (27.8), facing challenges in debt index and fiscal management.
      • Andhra Pradesh: (26.9), hindered by high fiscal deficits.
    • Regional Insights:
      • Southern States: Telangana leads (47.5), while Tamil Nadu (30.2), Kerala (29.7), and Andhra Pradesh (26.9) lag.
      • Developmental Expenditure: Top states allocate up to 73% of total expenditure to growth-focused activities.

    Significance

    • Promotes fiscal discipline through data-driven insights.
    • Guides state-specific reforms to address disparities.
    • Encourages healthy competition among states.
    • Supports cooperative federalism, aligning with “Viksit Bharat @2047”.
    • Tracks fiscal health annually to ensure continuous improvement.

    PYQ:

    [2015] The Government of India has established NITI Aayog to replace the (2015)

    (a) Human Rights Commission

    (b) Finance Commission

    (c) Law Commission

    (d) Planning Commission

  • India becomes largest importer of Tea from Kenya

    Why in the News?

    India, the world’s second-largest tea producer after China, has become the largest importer of tea from Kenya, signaling a shift in global tea trade dynamics.

    Key Highlights of Tea Trade

    • Imports surged from 3.53 million kg in 2023 to 13.71 million kg in 2024, reflecting a significant 288% increase.
    • The average price of Kenyan tea imported to India was ₹156.73 per kg, significantly lower than ₹252.83 per kg fetched by Assam tea at auctions up to October 2024.
    • India’s tea exports increased by 13%, rising from 184.46 million kg in 2023 to 209.14 million kg in 2024.
    • Assam and West Bengal were major contributors to exports, accounting for the bulk of the tea exported.

    About Tea Board of India

    • The Tea Board of India was established in 1954 under the Tea Act, 1953, succeeding the Central Tea Board and Indian Tea Licensing Committee.
    • It was originally formed under the Indian Tea Cess Bill (1903) to promote Indian tea domestically and internationally.
    • It is headquartered in Kolkata, with 23 offices across India, including zonal, regional, and sub-regional offices.
    • It functions as a statutory body under the Ministry of Commerce and Industry, with 31 members, including representatives from Parliament, tea producers, traders, and trade unions.
    • Provides financial and technical assistance for tea cultivation, manufacturing, and marketing, supports R&D to improve tea quality, and monitors pesticide residue compliance.

    Tea Crop in India

    • Under the Treaty of Yandabo (1826), the East India Company gained control of Assam, laying the foundation for India’s commercial tea industry.
    • The British finally introduced tea to India in the 19th century to compete with China’s monopoly, establishing the first commercial tea garden in Chabua, Assam, in 1837.
    • Tea requires 20°C–30°C temperatures and 150–300 cm annual rainfall with slightly acidic, well-drained soil for optimal growth.
    • India is the second-largest tea producer globally and the largest consumer, accounting for 30% of global tea consumption, with major production in Assam, West Bengal, Tamil Nadu, and Kerala.

     

    PYQ:

    [2022] With reference to the “Tea Board” in India, consider the following statements:

    1. The Tea Board is a statutory body.
    2. It is a regulatory body attached to the Ministry of Agriculture and Farmers Welfare.
    3. The Tea Board’s Head Office is situated in Bengaluru.
    4. The Board has overseas offices at Dubai and Moscow.

    Which of the statements given above are correct?

    (a) 1 and 3

    (b) 2 and 4

    (c) 3 and 4

    (d) 1 and 4