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Subject: Economics

  • What is Digital Agriculture Mission?

    Why in the News?

    The Union Cabinet has approved the “Digital Agriculture Mission” with a budget of ₹2,817 Crore, including ₹1,940 Crore as the central share.

    About Digital Agriculture Mission

    Category Details
    Historical Context Originally planned for the financial year 2021-22 but delayed due to the Covid-19 pandemic.

    Announced in the Union Budgets of 2023-24 and 2024-25.
    Funding Breakdown Total outlay: Rs 2,817 crore

    • Rs 1,940 crore from the Centre
    • Remaining amount from states and Union Territories (UTs)
    Objective To create Digital Public Infrastructure (DPI) in the agriculture sector, similar to other e-governance initiatives like Aadhaar, DigiLocker, eSign, UPI, and electronic health records.
    Major Components of DPI 1. AgriStack:
    – A comprehensive digital platform integrating various agricultural services.
    – Facilitates access to information, services, and benefits related to farming and agricultural practices.
    – Centralizes agricultural data to improve accessibility and efficiency.
    2. Krishi Decision Support System (DSS):
    – Provides data-driven insights and recommendations for farmers.
    – Assists in decision-making related to crop management, pest control, and resource optimization based on real-time data.
    – Utilizes advanced analytics to enhance productivity and mitigate risks.
    3. Soil Profile Maps:
    – Detailed digital maps on a 1:10,000 scale covering approximately 142 million hectares.
    – Provides comprehensive information about soil characteristics and health.
    – Supports precision agriculture by offering targeted soil data for optimal crop planning.
    Additional Component Digital General Crop Estimation Survey (DGCES):
    – A tech-based system to provide accurate estimates of agricultural production.
    – Aims to offer reliable data for policy decisions, agricultural planning, and resource allocation.
    Impact on Farmers The mission will enable farmers to access a range of digital services, improve decision-making through data analysis, enhance productivity with detailed soil information, and provide accurate crop estimations to better manage agricultural practices.
    Timeline Rolled out across the country over the next two years (until 2025-26).

     

    PYQ:

    [2020] In India, the term “Public Key Infrastructure” is used in the context of:

    (a) Digital security infrastructure

    (b) Food security infrastructure

    (c) Health care and education infrastructure

    (d) Telecommunication and transportation infrastructure

  • Cabinet approves BioE3 Policy for Fostering High-Performance Biomanufacturing  

    Why in the News?

    The Union Cabinet has approved the ‘BioE3 (Biotechnology for Economy, Environment, and Employment) Policy’ proposed by the Department of Biotechnology to promote advanced biomanufacturing.

    What is the BioE3 Policy?

    The BioE3 (Biotechnology for Economy, Environment and Employment) Policy is a strategic initiative approved by the Indian Cabinet to foster high-performance biomanufacturing. 

    Aims and Objectives of the Policy:

    • Innovation Support: The policy promotes research and development (R&D) and entrepreneurship in various thematic sectors, facilitating technological advancement and commercialization.
    • Biomanufacturing Hubs: It proposes the establishment of Biomanufacturing & Bio-AI hubs and Biofoundries to enhance India’s bioeconomy.
    • Focus Areas: The policy targets several strategic sectors, including high-value bio-based chemicals, biopolymers, smart proteins, precision biotherapeutics, climate-resilient agriculture, carbon capture, and marine and space research.

    Significance of the Policy

    • Economic Growth: It is expected to catalyze a “bio revolution” similar to the IT revolution, generating substantial job opportunities in biotechnology and biosciences.
    • Sustainability Goals: The policy aligns with government initiatives for achieving a ‘Net Zero’ carbon economy and promotes sustainable lifestyles, thereby steering India towards accelerated green growth and a circular bio-economy.
    • Job Creation: By expanding the skilled workforce in biotechnology, the policy aims to create various kinds of employment opportunities, addressing critical societal issues such as climate change, food security, and human health.

    Present Status of Indian Bio-economy

    • Growing Potential: The biotechnology sector is seen as a key player in addressing challenges in health, agriculture, environment, and energy. India has a large pool of young, skilled workers, with 47% of its population under the age of 25.
    • Investment in R&D: Despite its potential, India spends less than 1% of its GDP on research, compared to countries like Israel and South Korea, which invest over 4%.
    • Existing Infrastructure: The government has established 9 biotech parks and 60 bio-incubators, which support the growth of the biotechnology sector.

    Challenges Ahead

    • Educational Gaps: The current educational curriculum does not adequately prepare students for industry demands, creating a skills mismatch.
    • Funding Issues: There is a lack of venture capital funding due to information asymmetry regarding the biotech industry, which hampers innovation and growth.
    • Clinical Trials: India conducts a low percentage of clinical trials compared to global standards, which is a concern for the development of biopharmaceuticals.
    • Research Investment: The government currently covers over 60% of total R&D spending, which is very different from countries where the private sector contributes a large portion.

    Way forward: 

    • Enhance Industry-Academia Collaboration: Encourage partnerships between educational institutions and biotech companies to align curricula with industry needs, thereby reducing the skills mismatch and preparing students for emerging job markets.
    • Increase Private Sector Investment: Implement policies and incentives to attract more private sector investment in R&D, such as tax benefits, public-private partnerships, and improved access to venture capital, to stimulate innovation and reduce reliance on government funding.

  • Expansion of Agricultural Infrastructure Fund (AIF) Scheme

    Why in the News?

    • The Union Cabinet has approved the expansion of the Agricultural Infrastructure Fund (AIF) scheme.
      • It will now include financial support for Farmers’ Producers Organizations (FPOs) to enhance their financial security and creditworthiness.

    About Agriculture Infrastructure Fund (AIF) Scheme:

    Details
    Launch  July 2020, Central Sector Scheme
    Nodal Ministry Ministry of Agriculture and Farmers Welfare, Government of India
    Fund Allocation Rs. 1 lakh crore, with disbursements planned until 2025-26; interest subvention and credit guarantee assistance extended till 2032-33.
    Aim To mobilize medium to long-term debt financing for investment in viable projects relating to post-harvest management infrastructure and community farming assets, to enhance agricultural infrastructure in India.
    Key Features – Interest Subvention: 3% on loans up to Rs. 2 crore, with additional rate reductions for NABARD loans for PACS.
    – Credit Guarantees: Under the CGTMSE scheme for loans up to Rs. 2 crore.
    – Fund Usage: Supports up to 25 projects per beneficiary across different locations.
    Target Beneficiaries Farmers, Farmer Producer Organizations (FPOs), Primary Agricultural Credit Societies (PACS), entrepreneurs, startups, Self Help Groups, Agricultural Produce Market Committees, and federations.
    Management Managed through an online MIS platform with national, state, and district level monitoring committees for real-time monitoring and feedback.
    Lending Institutions Includes 24 commercial banks, 40 cooperative banks, and NABARD among others.
    Hassle-Free Process Supported by a user-friendly online portal to facilitate speedy loan sanctions.

     

    Key changes introduced: 

    Description
    Support for FPOs Includes financial support for Farmers’ Producers Organizations (FPOs) to improve financial security and creditworthiness.
    Broader Eligible Projects Expand the scope to cover more types of agricultural infrastructure projects.
    Community Farming Assets Allows the creation of community farming assets to enhance productivity and sustainability.
    Integrated Processing Projects Adds integrated primary and secondary processing projects as eligible activities; standalone secondary projects remain under MoFPI schemes.
    Alignment with PM-KUSUM Converges AIF with PM-KUSUM Component-A for joint development of agricultural infrastructure and clean energy solutions.
    Extended Credit Guarantee Extends credit guarantee coverage to FPOs through NABSanrakshan, in addition to CGTMSE, to boost investment confidence.

     

    PYQ:

    [2015] With reference to ‘National Investment and Infrastructure Fund’, which of the following statements is/are correct?

    1. It is an organ of NITI Aayog.

    2. It has a corpus of 4,00,000 crore at present.

    Select the correct answer using the codes given below:

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

  •  An either-or approach won’t help quell food inflation 

    Why in the News?

    The recently released Consumer Price Index-Combined (CPI-C) data reveals that food inflation, particularly from pulses, vegetables, and cereals, is rising faster than the overall CPI inflation.

    • The Consumer Price Index-Combined (CPI-C) is the index used to calculate headline inflation in India. It is calculated and published monthly by the Bureau of Labor Statistics.

    Key Highlights of the CPI-C Data:

    • On Current Inflation Rates: The general CPI inflation stands at 3.54%, while food inflation is notably higher at 5.06%, driven by increases in prices of pulses, vegetables, and cereals.
    • On Inflation Dynamics in the Past: Over the past decade, food inflation has contributed to the overall volatility of prices. In 52 of the 124 months analyzed, food inflation exceeded the general CPI rate, indicating a significant and fluctuating impact on overall inflation.
    • Expectations by the report: The RBI has highlighted that food inflation significantly influences inflationary expectations, which remain unanchored, often exceeding actual inflation rates.

    (*Note: These data don’t include income taxes or investment items like stocks, bonds, and life insurance.)

    Recently impact of good Monsoon on Food Production and Inflation: 

    • Increased Sowing Due to Robust Monsoon: India has reported a significant increase in the sowing of paddy and pulses, with paddy sowing up by 16% to 39 million hectares and pulses by 7% to 12 million hectares as of August 23, 2024, driven by a strong monsoon.
    • Potential Impact on Food Inflation: Despite concerns over rising food inflation, the expanded cultivation area for staple crops like rice and pulses could positively impact the agriculture sector and support government efforts to enhance farm productivity.

    Present Situation of Inflation in the Agri-Food Sector

    • Volatility in Food Prices: Food inflation has been volatile, with instances of both high and low inflation. For example, food inflation was above 6% in 52 out of 124 months, while it was below 2% in 20 months, including periods of negative inflation.
    • Supply-Side Factors: The disparities between food and retail inflation can be attributed to supply-side issues such as monsoon variability, crop failures, and government policies like minimum support prices (MSPs). Excess demand for specific food categories, such as oils and fats, has also contributed to higher inflation.
    • Regional Disparities: Rural CPI inflation is higher (5.43%) compared to urban CPI (4.11%), reflecting the impact of agricultural conditions and market dynamics on rural households.

    How Can the Gap Between Farmer and Consumer Be Reduced?

    • Market-Driven Pricing: The government should reconsider its intervention in agricultural markets through MSPs, allowing market forces to determine food prices. This could help reduce production distortions and improve price signals for farmers.
    • Enhancing Agricultural Productivity: Government expenditure should focus on increasing agricultural productivity through better technology and irrigation practices, which can lead to more stable food supplies and prices.
    • Reducing Middlemen: Implementing measures to eliminate middlemen in the supply chain can help narrow the gap between what farmers receive and what consumers pay.
    • Infrastructure Development: Improving infrastructure for storage and transportation can help reduce food wastage and ensure that food products reach consumers efficiently, further stabilizing prices.

    Conclusion: Need to encourage the adoption of advanced agricultural technologies and sustainable farming practices to boost productivity and reduce the impact of supply-side disruptions, ensuring more consistent food supplies and stable prices.

    Mains PYQ:

    Q Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? Give reasons in support of your arguments.  (UPSC IAS/2017)

  • MUDRA 2.0 Loans

    Why in the News?

    The Union Budget 2024 has sought to increase the loan limit under the MUDRA scheme signifying the potential launch of MUDRA 2.0.

    What is MUDRA 1.0?

    Details
    Launch
    • Pradhan Mantri Mudra Yojana (PMMY)
    • Launched in 2015.
    Purpose To extend affordable credit to micro and small enterprises, bringing them into the formal financial system and funding the unfunded.
    Loan Providers Public Sector Banks (PSU Banks), Regional Rural Banks, Cooperative Banks, Private Sector Banks, Foreign Banks, Micro Finance Institutions (MFI), and Non-Banking Finance Companies (NBFC).
    Eligibility Indian citizens with a business plan for non-farm sector income-generating activities in manufacturing, processing, trading, or services, requiring less than ₹10 lakh.
    Types of Loans • Shishu: Loans up to ₹50,000.
    • Kishor: Loans above ₹50,000 and up to ₹5 lakh.
    • Tarun: Loans above ₹5 lakh and up to ₹10 lakh.
    Subsidy
    • No direct subsidy;
    • Loans linked to Government schemes providing capital subsidies are eligible under PMMY.

    Achievements of MUDRA 1.0

    • Financial Inclusion: Disbursed over Rs 27.75 lakh crore to 47 crore small entrepreneurs, improving access to formal credit.
    • Support for Marginalized Groups: 69% of loans went to women, and 51% to SC/ST and OBC entrepreneurs, enhancing social equity and gender equality.
    • Job Creation: Helped create jobs and encouraged self-employment, especially in rural and semi-urban areas.
    • Reduction in NPAs: Reduced non-performing assets (NPAs) from 3.61% in FY21 to 2.1% in FY24, showing better loan management.

    Challenges Faced by MUDRA 1.0

    • Unequal Loan Distribution: In 2021-22, the top 10 districts received Rs 26,000 crore, about the same as the bottom 318 districts, showing uneven credit distribution.
    • High NPAs in Early Categories: The Shishu (loans up to Rs 50,000) and Kishore (loans between Rs 50,001 and Rs 5 lakh) categories had NPAs above 4% from FY20 to FY22 due to a lack of business skills among early-stage entrepreneurs.
    • Low Financial Literacy: Only 27% of the population is financially literate, leading to poor loan management and higher defaults.
    • Monitoring and Credit Appraisal Issues: Increased lending led to challenges in maintaining quality credit appraisal processes and monitoring, resulting in some misuse of funds.

    What is MUDRA 2.0?

    • MUDRA 2.0 is the proposed next phase of the scheme, aiming to expand and enhance support for micro-entrepreneurs, especially in underserved regions.
    • Features of MUDRA 2.0:
      • Expanded Outreach: Establish new centers in rural and semi-urban areas to provide financial literacy, mentorship, and business support.
      • Enhanced Financial Literacy: Launch nationwide programs covering budgeting, savings, credit management, and digital literacy to help entrepreneurs manage their finances better.
      • Improved Credit Support: Introduce the Enhanced Credit Guarantee Scheme (ECGS) to reduce risks for banks and encourage more lending to small enterprises.
      • Stronger Monitoring: Implement a robust monitoring framework using data analytics to track loan disbursements, usage, and repayments in real-time, ensuring transparency and reducing misuse.

    PYQ:

    [2016] Pradhan Mantri MUDRA Yojana is aimed at:

    (a) Bringing the small entrepreneurs into formal financial system.

    (b) Providing loans to poor farmers for cultivating particular crops.

    (c) Providing pension to old and destitute persons.

    (d) Funding the voluntary organizations involved in the promotion of skill development and employment generation.

  • Tackling the frictions in cross-border payments  

    Why in the News?

    Despite being worth $181.9 trillion in 2022, cross-border payments still have inefficiencies prompting the G-20 to focus on improving them for economic growth.

    Present Status of the Global Cross-Border Payments Market

    • The cross-border payments market was valued at approximately $181.9 trillion in 2022 and is projected to reach $356.5 trillion by 2032, reflecting a compound annual growth rate (CAGR) of 7.3% from 2023 to 2032.
    • The growth is driven by increasing globalization, the rise of e-commerce, and technological innovations in the financial sector. The demand for faster, more secure, and transparent payment solutions is compelling banks and fintech companies to enhance their offerings.
    • The market includes various channels such as bank transfers, money transfer operators, and card payments, with a significant share coming from business-to-business (B2B) transactions.

    Difference Between Old and New Systems

     

    Cross-Border Payment 

    		 Features Challenges
    Old System Cross-border payments relied on manual processes involving letters of credit, checks, and extensive documentation. It faced challenges such as high transaction costs, slow processing times, and limited access due to regulatory burdens.
    New System Incorporates technological advancements such as blockchain, digital wallets, and instant payment systems.

    Example:  peer-to-peer transactions and interlinked payment infrastructures

    		 challenges around scalability, security, regulation and standardization.

    Challenges to Cross-Border Payments

    • High Costs: Transaction fees remain a significant barrier, with various financial institutions imposing different charges that complicate cost-effectiveness.
    • Low Speed: Processing times can vary greatly, often taking several days due to intermediary banks and regulatory checks, which can frustrate users seeking rapid transactions.
    • Limited Access: Many individuals and businesses still face obstacles in accessing cross-border payment services, particularly in underbanked regions.
    • Insufficient Transparency: Users often lack clarity regarding fees, processing times, and the overall transaction process, leading to mistrust and reluctance to engage in cross-border transactions.
    • Regulatory Compliance: Navigating diverse legal frameworks across jurisdictions complicates transactions, with anti-money laundering (AML) and counter-terrorist financing (CFT) regulations adding layers of complexity.

    Way forward: 

    • Adoption of Emerging Technologies: Leveraging blockchain, digital currencies, and AI can streamline processes, reduce transaction costs, and enhance transparency, making cross-border payments faster and more accessible.
    • Regulatory Harmonization and Collaboration: Promoting global regulatory alignment and fostering collaboration between financial institutions and governments can simplify compliance, improve transaction efficiency, and broaden access to underbanked regions.

  •  Time to reset the GST system   

    Why in the News?

    Most states appear to be opposed to altering the current five primary GST rate slabs: 0%, 5%, 12%, 18%, and 28%.

    About Goods and Service Tax (GST):

    • The Goods and Services Tax (GST) in India was introduced by the Constitutional (One Hundred and First Amendment) Act of 2017. It is a unified tax system that replaced multiple indirect taxes levied by both the Central and State Governments.
    • Under GST, the Central (CGST) and state government (SGST) share the authority to levy and collect taxes on goods and services. In the case of Inter-state transactions, Integrated GST (IGST) is applicable.

    Essential Features of GST

    • Multiple Tax Levels: India’s GST system has multiple tax rates, with four primary tax rates (5%, 12%, 18%, and 28%). Additionally, there is a “zero rate” for certain essential goods and services (e.g. exports).
    • One Nation, One Tax: GST is based on the principles of value-added tax and applies to the supply of goods and services across the nation. It brings uniformity in the tax structure across India, eliminating the cascading effect of taxes.
    • Destination-Based Tax: This means that the revenue generated from GST is collected by the state where the goods or services are consumed, rather than where they are produced.
    • Eliminating Cascading Effect: Under the Indian GST system, businesses can claim input tax credit for the GST they paid on their purchases. This ensures that taxes are levied only on the value added at each stage of the supply chain.
    • Sector-specific Exemptions: Certain sectors, such as healthcare, education, and basic necessities like food grains, are either exempted from GST or have reduced tax rates to ensure affordability and accessibility.
    • Threshold Exemption: Small businesses with a turnover below a specified threshold (currently, it is 20 lakhs: supplier of both goods & services and 40 lakhs: for supplier of goods (Intra–State) in India) are exempt from GST.

    Present Challenges in GST Rates

    • Complexity and Confusion: The existence of multiple GST slabs creates confusion for businesses and consumers alike. Different rates for similar items lead to complications in compliance and classification, resulting in litigation and disputes.
      • For instance, the GST on cement is 28%, while essential items like milk are exempt, yet products derived from milk, such as skimmed milk powder, are taxed at 5%.
    • Anomalies in Taxation: There are notable inconsistencies in the application of GST rates. For example, the taxation of medical and life insurance premiums at 18% is seen as burdensome for individuals seeking financial protection against uncertainties.

    Need to simplify the current GST Slabs

    • Rationalization Proposal: There is a growing consensus among industry experts and some government officials that the GST structure should be simplified to a maximum of three slabs. 
      • This would not only streamline compliance but also reduce the administrative burden on businesses and the government alike.
    • Economic Stimulus: Simplifying GST rates could potentially stimulate economic activity by lowering indirect tax burdens, encouraging consumption, and ultimately leading to higher tax revenues.

    Why are states resisting?

    • Fear of Revenue Loss: Many states are apprehensive about the implications of changing the GST structure, fearing that it might lead to a decrease in their revenue streams.
    • Political Considerations: The political landscape also plays a role in the resistance to change. With upcoming elections and the need to maintain fiscal health, state governments may prioritize short-term revenue stability over long-term structural reforms.

    Way forward: 

    • Phased Implementation: Start by introducing pilot programs in select states or sectors to test the impact of GST simplification. This approach can help address specific concerns and refine the model before a nationwide rollout.
    • Revenue Protection Schemes: Develop robust mechanisms to compensate states for any potential revenue losses during the transition. This could involve a formula-based compensation fund or a temporary revenue guarantee.

    Mains PYQ: 

    Q Explain the rationale behind the Goods and Services Tax (Compensation to States) Act of 2017. How has COVID-19 impacted the GST compensation fund and created new federal tensions? (2020)

  • The road to 2047 for Indian agriculture   

    Why in the News?

    India’s 100th independence anniversary in 2047 is approaching, and the goal to become ‘a developed nation’ has a significant focus.

    Goals of Indian Agriculture by Vision 2047:

    • Comprehensive Goal: India’s centennial year of independence requires a six-fold increase in per capita Gross National Income (GNI), emphasizing the need for comprehensive development, especially in agriculture.
    • Trade Goal: India’s agricultural and processed food exports have gone up to more than USD 50 billion in 2022-23.
      • The Vision 2047 aims to improve the availability of nutritious foods by enhancing the processing of fruits and vegetables, and augment the proportion of value-added products in India’s export portfolio.
    • Sustainable Goal: Transforming Indian agriculture will hinge on adopting sustainable practices such as precision farming, genetically modified crops, and advanced irrigation techniques (e.g., drip and sprinkler systems).

    Present starking Imbalance in the Indian Economy

    • Workforce vs. GDP Contribution: Despite agriculture engaging nearly 46% of the workforce, it contributes only about 18% to the GDP, revealing a significant imbalance.
    • Growth Disparity: While the overall GDP has grown at 6.1% annually since 1991-92, agricultural GDP has lagged at 3.3%. In the last decade (2013- 2023), overall GDP growth was 5.9%, with agriculture growing at 3.6%, which is insufficient for the sector’s socio-economic importance.
    • Future Projections: By 2047, agriculture’s share in GDP might shrink to 7%-8%, but it could still employ over 30% of the workforce, necessitating significant structural changes to avoid exacerbating the disparity.

    Government Initiatives:

    • For Water Management: The Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) has promoted water-use efficiency through micro-irrigation, covering 78 lakh hectares with a ₹93,068 crore allocation for 2021-26.
    • For Risk Management: The Pradhan Mantri Fasal Bima Yojana (PMFBY) offers financial assistance for crop losses, with 49.5 crore farmers enrolled and claims totalling over ₹1.45 lakh crore.
    • For Market Access: The Electronic National Agriculture Market (eNAM) integrates existing markets through an electronic platform, benefiting 1.76 million farmers and recording trade worth ₹2.88 lakh crore by September 2023.
    • For better Farmer Support: The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme, disbursing ₹6,000 annually to farmers, has benefited over 11.8 crore farmers.
    • For enhanced Soil Health: The Soil Health Card (SHC) scheme aims to optimize soil nutrient use, enhancing productivity, with over 23 crore SHCs distributed.

    Need for Strategic Planning

    • Population Growth: India’s population is projected to reach 1.5 billion by 2030 and 1.59 billion by 2040, increasing the demand for food by approximately 2.85% annually.
    • Future Demand: By 2047-48, food grain demand is projected to range from 402 million tonnes to 437 million tonnes, requiring sustainable production exceeding demand by 10%-13% under the Business-As-Usual scenario.

    Way Forward: 

    • Investment in R&D: To meet future demands sustainably, significant investments in agricultural research, infrastructure, and policy support are necessary.
    • Budget Allocation: The Budget for 2024-25 includes ₹20 lakh crore for targeted agricultural credit and the launch of the Agriculture Accelerator Fund, highlighting a proactive approach to fostering agricultural innovation and growth.
    • Enhance Digital Infrastructure: Support and expand digital platforms like eNAM to improve market access, provide real-time data, and facilitate better price realization for farmers.

    Mains PYQ: 

    Q Give the vulnerability of inidan agriculture to vagaries of nature, discuss the need for crop insurance and bring out the salient features of the Pradhan Mantri Fasal Bima Yojana (PMFBY). (2016)

  • Global Finance Central Banker Report Cards, 2024

    Why in the News?

    The Reserve Bank of India (RBI) Governor has been awarded an “A+” rating for the second consecutive year in the Global Finance Central Banker Report Cards 2024.

    About the Global Finance Central Banker Report Cards

    • The Central Banker Report Cards are published annually by Global Finance, a magazine that has been grading central bank governors since 1994.
    • The report grades the central bank governors of nearly 100 countries, territories, and districts, including major institutions like the European Union, the Eastern Caribbean Central Bank, the Bank of Central African States, and the Central Bank of West African States.
    • Grading Scale:
      • The ratings range from “A+” for excellent performance to “F” for outright failure.
      • The grades assess success in key areas such as inflation control, economic growth, currency stability, and interest rate management.

    Significance 

    • This recognition highlights his exceptional performance in managing India’s monetary policy, particularly in areas such as inflation control, economic growth, currency stability, and interest rate management.

    PYQ:

    [2016] ‘Global Financial Stability Report’ is released by which organisation?

    (a) European Central Bank

    (b) International Monetary Fund

    (c) International Bank for Reconstruction and Development

    (d) Organisation for Economic Co-operation and Development

  • A ground plan for sustainable mass employment 

    Why in the News?

    The ambitious ₹2 lakh crore employment package aims to create 4.1 crore jobs, but evidence shows low wages and short-term skill programs hinder long-term sustainability.

    Low wages and short-term skill programs hinder long-term sustainability:

    • Low Wages Lead to Economic Insecurity: Low wages create economic insecurity for workers, making it difficult for them to meet basic needs. For instance, in the garment industry, there is a 48.5% gap between minimum wages and living wages in major garment-producing countries.
    • Short-Term Skill Programs Fail to Enhance Employability: Many short-term skill programs do not provide the depth of training needed for long-term employability. In India, for example, 75% of technical graduates and 90% of other graduates are considered unemployable, primarily due to a lack of practical skills and experience that employers seek.
    • Stagnation of Workforce Productivity: When workers are paid low wages, there is little incentive for them to enhance their skills or productivity. This stagnation is detrimental to both individual career growth and overall economic development.
    • Lack of Investment in Long-Term Skill Development: Low wages often correlate with limited investment in employee training and development.This is evident in the fact that only 15% of those trained under the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) found jobs, indicating that short-term training initiatives are not effectively translating into sustainable employment outcomes.
    • Perpetuation of Poverty and Inequality: The combination of low wages and inadequate skill development contributes to the perpetuation of poverty and inequality. With 42% of the global workforce in vulnerable employment.

    12-point policy initiatives for sustainable mass employment:

    • Identify the skill need: Begin from below through decentralized community action to identify skilling needs. Create a register of those wanting employment/self-employment and a plan for every youth in partnership with professionals at the cluster level.
    • Initiative at the local level: Converge initiatives for education, health, skills, nutrition, livelihoods, and employment at the local government level with women’s collectives to ensure community accountability and effective outcomes.
    • Vocational programmes: Introduce need-based vocational courses/certificate programmes alongside undergraduate programmes in every college to improve employability.
    • Healthcare at international benchmark: Standardize nursing and allied health-care professional courses according to international benchmarks to meet the demand for skilled professionals.
    • Women security: Create community cadres of caregivers to run crèches universally so that women can work without fear.
    • Invest in skill development: Invest in ITIs, and polytechnics as hubs in skill development for feeder schools with a focus on States/districts with the least institutional structure for vocational education.
    • Startup skills in high school: Introduce enterprise and start-up skills through professionals in high schools to impart finishing skills to students.
    • Apprenticeship program in Industry: Have a co-sharing model of apprenticeships (combine practical training in a job with study) with the industry on scale to ensure the industry has a stake in the apprenticeship program.
    • Absorption of youth at the workplace: Apprenticeships on the scale can facilitate the absorption of youth in the workplace, with the government’s condition for employer subsidies being wages of dignity on successful completion of the apprenticeship.
    • Capital oan for women: Streamline working capital loans for women-led enterprises/first-generation enterprises to enable them to go to scale.
    • Skill accreditation programme: Start a universal skill accreditation programme for skill-providing institutions, with candidates co-sponsored by the state and employers.
    • Majority of fund in water scares block: Use 70% funds under MGNREGA in 2,500 water-scarce blocks and blocks with high deprivation, with a thrust on the poorest 20 families and a focus on skills for higher productivity.

    Way forward: 

    • Strengthen Industry-Academia Linkages: Enhance collaboration between educational institutions, industry, and vocational training centers to align curricula with industry needs, ensuring employability through internships, apprenticeships, and job placements.
    • Focus on Inclusive Skill Development: Prioritize investment in underdeveloped regions and marginalized groups by expanding access to quality education, vocational training, and entrepreneurship opportunities, especially for women and youth, to bridge the skill gap and promote economic inclusion.