💥Join UPSC 2027,2028 Mentorship (August Batch) + XFactor Notes & Microthemes PDF
Talk to Mentor

Civilsdaily

Login

Subject: Economics

  • Real Time Train Information System (RTIS) Project

    train

    The article discusses the partnership between Indian Railways and ISRO for real-time train tracking.

    Real Time Train Information System (RTIS) Project

    • Indian Railways has signed a MoU with the Indian Space Research Organization (ISRO) to use satellite-based technology for real-time train tracking.
    • The technology will be used to provide real-time information on the exact location and movement of trains across the country.

    How does it work?

    • The system will use ISRO’s satellite-based GPS technology, called the Indian Regional Navigation Satellite System (IRNSS), to track the location of trains.
    • The system will also use other advanced technologies, such as satellite imagery and geo-fencing, to provide real-time information on train movements.

    Applications of RTIS

    • RTIS gives mid-section updates with a periodicity of 30 seconds.
    • The Train Control can now track the location and speed of RTIS-enabled locomotives/train more closely, without any manual intervention.
    • It allows passengers to get the real-time location or train running status of a train on their smartphone.

    Benefits offered

    • The system will help to improve the efficiency and safety of train operations in India.
    • It will provide accurate and real-time information on train movements, which will help to reduce delays and improve scheduling.
    • The system will also help to enhance the overall passenger experience by providing real-time information on train status and location.

    Future plans

    • Indian Railways plans to use the technology for other applications, such as monitoring the health of trains and their components.
    • The partnership with ISRO is part of Indian Railways’ larger digital transformation initiative, which aims to leverage technology to improve the efficiency and safety of train operations.

     

  • India close to Hindu Rate of Growth: Raghuram Rajan

    hindu

    Central idea: Former RBI Governor Raghuram Rajan has warned that India is “dangerously close to the Hindu rate of growth”.

    What is Hindu Rate of Growth?

    • The “Hindu Rate of Growth” is a term used to describe the slow growth rate of the Indian economy between the 1950s and the 1980s.
    • It was coined by the Indian economist Raj Krishna in the 1970s.
    • During this period, the Indian economy grew at an average rate of around 3.5% per year, which was much lower than other developing countries like South Korea, Taiwan, and Hong Kong.
    • The term is considered controversial as it suggests that the slow growth rate was a result of cultural or religious factors rather than economic policies and structural issues.
    • However, the term is still used in academic and policy discussions to refer to the slow growth of the Indian economy during this period.

    Features of Hindu Rate of Growth

    The then features which led to the coining of this term were-

    • Low GDP growth rate: The term refers to the period from the 1950s to the 1980s when India’s economy grew at an average rate of around 3.5% per year, which was much lower than other developing countries.
    • Slow Industrialization: The industrial sector was dominated by a few public sector companies, and the private sector was heavily regulated.
    • Stagnant Agriculture: There was little investment in agriculture, and the sector was not given much priority in government policies.
    • License Raj: India had a socialist economic model with heavy government regulation. The License Raj system required permits and licenses for businesses, creating a bureaucratic and corrupt system that hindered innovation and entrepreneurship.
    • Import Substitution: India followed a policy of import substitution, where the government tried to develop domestic industries by protecting them from foreign competition. This led to a lack of competition, low quality of products, and high prices.
    • Inefficient Public Sector: The public sector dominated the economy, but it was inefficient, unproductive, and plagued by corruption. Public sector companies were often overstaffed and poorly managed, resulting in low productivity.
    • Lack of Foreign Investment: India was not attractive to foreign investors during this period, and there was little foreign investment in the economy. The government imposed strict controls on foreign investment, and the regulatory environment was not conducive to foreign investment.

    Concerns flagged by Rajan

    Rajan noted that India’s economic growth rate had been declining even before the COVID-19 pandemic hit the country.

    (a) Decline in GDP growth rate

    • India’s economic growth rate had fallen to 4.5% in the September quarter of 2019, before the pandemic hit in early 2020.
    • During the pandemic, the Indian economy contracted sharply, with GDP falling by 7.7% in the 2020-21 fiscal year.
    • The economy has rebounded somewhat, with the IMF forecasting GDP growth of 9.5% for the current fiscal year.

    (b) Lower growth potential than hyped

    • However, Rajan noted that India’s potential growth rate is likely to be lower than in the past, due to factors such as an aging population, a decline in the working-age population, and sluggish investment.
    • He also cited the country’s poor performance on human development indicators, such as education and health, as a constraint on growth.

    Key suggestions

    • Rajan called for measures to address the structural factors that are holding back growth, such as investment in infrastructure and education, and improving the ease of doing business in India.
    • He also emphasized the importance of macroeconomic stability and maintaining fiscal discipline, to avoid inflation and currency depreciation.
    • He also called for measures to address inequality, such as better targeting of subsidies to those who need them most.

    Conclusion

    • Overall, Rajan’s remarks suggest that India faces significant challenges in maintaining high levels of economic growth, and that structural reforms will be needed to address these challenges.

     

    Are you an IAS Worthy Aspirant? Get a reality check with the All India Smash UPSC Scholarship Test

    Get upto 100% Scholarship | 900 Registration till now | Only 100 Slots Left

  • Doubling Farmers’ Income: An Assessment

    Doubling

    Central Idea

    • Recently, Prime Minister shared his dream of doubling farmers’ incomes in the year when India completes 75 years of Independence and enters Amrit Kaal. Now that we have entered Amrit Kaal, it is a good time to revisit that dream and see if it has been fulfilled, and if not, how best it can be done. It was a noble dream because unless the incomes of farmers go up, we cannot have sustained high growth of overall GDP.

    What is Doubling Farmers Income scheme?

    • Doubling farmers’ income is a target set by the government of India in February 2016 to be achieved by 2022-23.
    • To promote farmers’ welfare, reduce agrarian distress and bring parity between income of farmers and those working in non-agricultural professions.
    • Doubling Farmers Income can directly have a positive effect on the future of agriculture.

    Doubling

    Doubling Farmers Income: A Noble Vision

    • Improved Farm Machinery and Advanced Technologies: If the income earned by the farmer is doubled, they will have access to better farm machinery and advanced technologies, leading to increased productivity, better quality of seeds, and improved farming techniques.
    • Increased Agricultural Productivity: Doubling farmers’ income means increasing agricultural productivity, which is essential for meeting the growing demand for food in the country.
    • Improved Quality of Crops: Increasing the income of farmers will not only increase agricultural production but also improve the quality of crops, which is crucial for ensuring food security and meeting quality standards for exports.
    • Growth of Indian Economy: Doubling farmers’ income will contribute to the growth of the Indian economy by increasing rural demand for goods and services, creating employment opportunities, and boosting overall economic growth.
    • Reduced Incidents of Farmer Suicides: Financial stress is one of the leading causes of farmer suicides in India. Doubling farmers’ income will provide them with financial security, which will reduce the incidents of farmer suicides and improve their overall well-being.

    Government efforts in this direction

    • Fertilizer subsidy: Fertilizer subsidy budget crosses Rs 2 lakh crore. Even when global prices of urea crossed $1,000/metric tonne, the Indian price of urea remained flat at around $70/tonne. This is perhaps the lowest price in the world.
    • PM-Kisan: The government has allocated Rs 60,000 crore to its flagship PM Kisan Samman Nidhi Yojana for the financial year 2023-24.
    • PM Garib Kalyan Anna Yojana: Further, many small and marginal farmers also get free ration of at least 5 kg/person/month through the PM Garib Kalyan Anna Yojana.
    • Subsidies and crop insurance: There are also subsidies for crop insurance, credit and irrigation (drip). States also dole out power subsidies in abundance, especially on irrigation. Even farm machinery for custom hiring centres is being subsidised by many states.

    Evaluation: Impact of all these policies on farmers’ incomes and on environment

    • Impact of Input Subsidies and Output Trade Policies on Farmers’ Income: While Input subsidies help raise farmers’ incomes by reducing the cost of inputs such as seeds, fertilizers, and irrigation. Output trade and marketing policies adopted by the government, such as the ban on exports of wheat or the 20% export tax on rice, can suppress farmers’ incomes.
    • Pro-Consumer Approach: The current policy approach is pro-consumer rather than pro-farmer, which is a fundamental problem with our policy framework.
    • Environmental Damage Caused by Subsidized Inputs and Uncontrolled Procurement Policies: The excessive subsidization of inputs like fertilizers and power, coupled with uncontrolled procurement of paddy and wheat in certain states, is causing severe environmental damage. There is a growing need to rationalize these policies.

    Doubling

    Way ahead

    • It is crucial to assess the net impact of input subsidies and output trade policies on farmers’ income to understand where they stand.
    • Realign the support policies keeping in mind environmental outcomes.
    • Millets, pulses, oilseeds, and much of horticulture could perhaps be given carbon credits to incentivise their cultivation. They consume less water and fertilisers. We need to make subsidies/support crop-neutral.
    • It is crucial to adopt policies that are pro-farmer and promote their interests, support income growth, and enhance overall economic growth.
    • Agriculture today needs innovations in technologies, products, institutions and policies for more diversified high-value agriculture that is also planet friendly.

    Notes for Good marks

    Agriculture: Crucial sector of the Indian Economy

    • Employment: Agriculture engages the largest share of the workforce (45.5 per cent in 2021-22 as per PLFS). Agriculture provides direct employment to around 50% of the Indian population, and it indirectly supports the livelihoods of millions more in allied industries such as agro-processing, transportation, and marketing.
    • Food and nutritional security: Agriculture is essential for meeting the food requirements of the country. India is one of the largest producers of rice, wheat, and other cereals, and it is also a significant producer of fruits, vegetables, and spices.
    • Contribution to GDP: Agriculture is a significant contributor to India’s Gross Domestic Product (GDP), accounting for around 17% of the country’s total GDP.
    • Foreign exchange earnings: India is a leading exporter of agricultural products such as Basmati rice, spices, tea, and cotton. The export of these products earns valuable foreign exchange for the country.
    • Rural development: Agriculture plays a vital role in the development of rural areas by providing employment and income opportunities, promoting entrepreneurship, and improving the standard of living in these areas.
    • Environmental sustainability: Agriculture is closely linked to the environment, and sustainable agricultural practices can help conserve natural resources, reduce carbon emissions, and promote ecological balance.

    Doubling

    Conclusion

    • On the question of doubling farmers’ income, we must realize it is going to take time. It can be done by increasing productivity through better seeds and better irrigation. It will have to be combined with unhindered access to the markets for their produce. Further, diversifying to high-value crops, and even putting solar panels on farmers’ fields as a third crop will be needed. It is only with such a concerted and sustained effort we can double farmers’ incomes.

    Mains Question

    Q. What do you understand by Doubling famers income? Enumerate the efforts taken by the government and what needs to be done to achieve the target?

    Are you an IAS Worthy Aspirant? Get a reality check with the All India Smash UPSC Scholarship Test

    Get upto 100% Scholarship | 900 Registration till now | Only 100 Slots Left

     

  • Agriculture: India Needs Green Revolution 2.0

    Green Revolution

    Central Idea

    • The statement made by the then viceroy, George Curzon in the early 20th century, that the Indian economy, particularly agriculture, is a gamble on the monsoon, may need to be rephrased in modern times. More than the monsoon, it is temperatures that are emerging as a greater source of uncertainty for farmers. Today, what India needs is Green Revolution 2.0.

    The fact today: Rising Temperatures Threaten Winter-Spring Harvest in India

    • Irrigation Prevents Winter-Spring Drought: The country now produces more foodgrains during the winter-spring season than in the post-monsoon season shows how irrigation has helped to prevent drought.
    • Rising Temperatures Threaten Winter-Spring Harvest: However, the rising temperatures in February and March pose a threat to the winter-spring harvest, which was previously considered safe from rainfall-related problems.
    • Shorter Winters, Earlier Summers Increase Crop Risks: Although thunderstorms and hail have always been a risk for winter-spring crops, they are now overshadowed by the risks from shorter winters and earlier summers.

    Heat Waves and wheat yield at present

    • Surge in temperature last year: The impact of temperature surge was seen in March 2022, when the wheat crop had just entered its final grain formation and filling stage. The heat stress led to early grain ripening and reduced yields.
    • Record-high temperatures in February this year: In February of this year, the maximum temperatures recorded were the highest ever seen. This is attributed to the absence of active western disturbances that bring rain and snowfall over the Himalayas, whose cooling effect percolates into the plains.
    • Rising Temperatures in Wheat-Growing Areas: Currently, minimum and maximum temperatures in most wheat-growing areas are ruling 3-5 degrees Celsius above normal. The next couple of weeks or more are going to be crucial. As long as the maximum remains within 35 degrees, there should be no danger of March 2022 repeating itself.

    Green Revolution

    Green Revolution in India

    • In India, the Green Revolution was mainly led by M.S. Swaminathan.
    • In 1961, M.S. Swaminathan invited Norman who suggested a revolution like what has happened in Mexico, Japan, etc in Indian agriculture.
    • Green Revolution was introduced with the Intensive Agriculture District Program (IADP) on an experimental basis in 7 districtin India.
    • In 1965-66 the HYV program was started which is the starting point of the Green Revolution in India.
    • The Green Revolution, spreading over the period from 1967-68 to 1977-78, changed India’s status from a food-deficient country to one of the world’s leading agricultural nations.
    • The Green Revolution resulted in a great increase in production of food grains (especially wheat and rice) due to the introduction into developing countries of new, high-yielding variety seeds, beginning in the mid-20th century.

    Green Revolution

    Why India Need another Green Revolution?

    • Climate change and food insecurity: Climate change poses a significant risk to Indian agriculture. The changing weather patterns, extreme temperatures, and rainfall variations are causing unpredictability in crop production, leading to food insecurity and farmer distress.
    • Declining Soil Fertility: Soil degradation and depletion of nutrients have affected the productivity of the land. It is necessary to develop crops that require less water and fertilizers and are disease-resistant.
    • For example: The development of genetically modified (GM) cotton has led to higher yields, less pesticide use, and improved soil health.
    • Price volatility: In addition to climate change, Indian farmers are also struggling with price volatility, as seen in the recent crash of onion and potato prices. This dual risk of climate and prices requires urgent attention from policymakers, farmers, and scientists to develop resilient crop varieties and effective crop planning and management.
    • Sustainable crop varieties: The need of the hour is to develop crop varieties that can withstand extreme temperature and rainfall variations while yielding more with less water and nutrients.
    • For instance: The use of precision agriculture techniques can help farmers manage their crops efficiently and minimize losses due to climate and price fluctuations.
    • Coordinated efforts: Improving market intelligence and access to markets is also crucial to ensure that farmers receive fair prices for their produce. This will require a coordinated effort from both the government and private sector to create efficient supply chains and distribution networks.
    • Success of the First Green revolution: The success of the first Green Revolution in India was built on scientific research, policy support, and effective implementation. Similarly, addressing the current challenges facing Indian agriculture will require a comprehensive approach that involves research, policy, and implementation at all levels of government and society.

    Prelims Shot: All you need to know about “Wheat”

    • Climate: It is a crop of temperate climate. It can be grown in the drier areas with the help of irrigation.
    • Temperature: 15°-20°C
    • Rainfall: 25-75 cms.
    • Soil: Well drained loamy and clayey soils are ideal.
    • Cultivation: On about 14% of the total arable area of the country.
    • Two important wheat producing zones in the country: The Ganga-Satluj plains in the north-west and the black soil region in the Deccan.
    • In north India: wheat is sown in October –November and harvested in March – April.
    • In south India: It is sown in September-October and harvested in December – January.
    • Uttar Pradesh (highest producer), Punjab (highest yield per hectare), Madhya Pradesh, Haryana, Rajasthan, Bihar, Gujarat, Maharashtra, West Bengal, Uttarakhand.
    • Important varieties: Sonalika, Kalyan, Sona, Sabarmati, Lerma, Roso, Heera, Shera, Sonara-64.
    • “Wheat takes lesser time in ripening in south India than that in the north because of hotter climatic conditions in the south.”

    Green Revolution

    Conclusion

    • India needs a new agricultural transformation to overcome the challenges it faces. Green Revolution 2.0 can help develop crops that are climate-resilient, require less water and fertilizers, and are disease-resistant. By investing in research and development of new technologies, India can achieve a more sustainable and profitable agriculture sector. Farmers must know what to plant, how to manage their crop at various stages under different stress scenarios, and when to sell. Agriculture for today and tomorrow cannot be the same as it was yesterday.

    Mains Question

    Q. Indian agriculture is under stress due to rising temperatures and climate change. In this light discuss why India need green revolution 2.0?

    Are you an IAS Worthy Aspirant? Get a reality check with the All India Smash UPSC Scholarship Test

    Get upto 100% Scholarship | 900 Registration till now | Only 100 Slots Left

     

  • SWAMIH investment fund and its affordable housing push

    swami

    The Special Window for Affordable and Mid-Income Housing (SWAMIH) Investment Fund I has raised Rs 15,530 crore so far.

    What is the SWAMIH investment fund?

    • The SWAMIH Investment Fund I is a social impact fund specifically formed for completing stressed and stalled residential projects.
    • The Fund is sponsored by the Ministry of Finance and is managed by SBICAP Ventures Ltd., a State Bank Group company.
    • The Fund is considered as the lender of last resort for distressed projects.

    Who are eligible for this fund?

    It considers-

    • First-time developers,
    • Established developers with troubled projects,
    • Developers with a poor track record of stalled projects,
    • Customer complaints and NPA accounts, and even
    • Projects where there are litigation issues.

    Significance of the funds

    • The Fund’s presence in a project often acts as a catalyst for better collections and sales primarily in projects that were delayed for years.
    • According to the Finance Ministry, SWAMIH Fund has one of the largest domestic real estate private equity teams focused only on funding and monitoring the completion of stressed housing projects.

    How many projects so far have been financed by the Fund?

    • SWAMIH has so far provided final approval to about 130 projects with sanctions worth over Rs 12,000 crore.
    • The Fund has completed 20,557 homes and aims to complete over 81,000 homes in the next three years across 30 tier 1 and 2 cities.
    • The Fund has been able to complete construction in 26 projects and generate returns for its investors.
    • It has also played a critical role in the growth of many ancillary industries in real estate and infrastructure sector having successfully unlocked liquidity of more than Rs. 35,000 crore.
    Are you an IAS Worthy Aspirant? Get a reality check with the All India Smash UPSC Scholarship Test

    Get upto 100% Scholarship | 900 Registration till now | Only 100 Slots Left

     

  • Capital Expenditure (CAPEX): Crucial Role Of The States

    Expenditure

    Central Idea

    • The budget’s clear thrust towards capital expenditure is evident in the 33% increase in its allocation. The primary goal of this allocation is to bolster aggregate demand in the short term and enhance the economy’s productive capacity in the long term. This strategy is widely regarded as beneficial, especially considering the crucial role that infrastructure plays in the growth and development of any economy.

    Get your Rs 10,000 worth of UPSC Strategic Package for FREE | PDFs, Zoom session, Tests, & Mentorship.

    Capital Expenditure of the states

    • Capex of the states exceed than the central govt: The combined spending of Indian states on capital expenditure now exceeds that of the central government.
    • For example: In 2021-22, this figure combined for states and Union territories, according to budget estimates, was ₹10.5 trillion. The Centre’s effective capital expenditure that year was ₹8.4 trillion, including ₹2.5 trillion as grant for creation of assets.

    What is Capital Expenditure (CAPEX)?

    • Capital expenditure refers to investments in upgrading existing or building new physical assets by the government or private businesses.
    • As businesses expand, capex has a multiplier effect on the economy, creating demand and unleashing animal spirits.

    Main types of Capex

    • Infrastructure development: This includes building and upgrading public infrastructure such as roads, highways, railways, ports, airports, power plants, and water supply systems.
    • Defence and security: This involve the acquisition and maintenance of defence equipment, weapons systems, and other security-related investments.
    • Social sector spending: This includes investment in areas such as education, healthcare, and social welfare programs to improve the quality of life of the citizens.
    • Rural development: This includes spending on agricultural and rural infrastructure such as irrigation systems, rural electrification, and rural housing.
    • Capital investments in public sector enterprises: The government may also invest capital in public sector enterprises to improve their efficiency and profitability

    Key reasons why the Indian government emphasizes Capex?

    • Promoting economic growth: Capital expenditure is critical for promoting economic growth by creating demand for goods and services, boosting private sector investment, and increasing employment opportunities. By investing in infrastructure, the government can provide the necessary framework for businesses to grow and thrive.
    • Improving public services: Capital expenditure is required to build and upgrade public facilities such as hospitals, schools, and water supply systems, and provide necessary equipment and supplies. This investment in public services is crucial for improving the quality of life of citizens and promoting social and economic development.
    • Infrastructure development: It is critical for promoting trade, commerce, and investment, and improving the country’s overall competitiveness. By investing in infrastructure, the government can create new economic opportunities, support the growth of existing industries, and attract foreign investment.
    • Creating employment opportunities: Capital expenditure creates employment opportunities in the short term through the construction of infrastructure projects and in the long term by supporting economic growth and promoting private sector investment.
    • Attracting private sector investment: The government’s emphasis on Capex can also help attract private sector investment by providing the necessary infrastructure and a favourable business environment.

    What are the concern over State capex?

    • Uneven capacity CAPEX: One general macro-economic challenge is to address this uneven inclination of states or capacity for capital expenditure, which adds uncertainty to the impact of an expansionary fiscal policy led by capex, thus weakening its potential benefits.
    • The ultimate aim of all CAPEX is to enhance the productive capacity of the economy: The nature of state capital expenditure drawn in is also vitally important. Ideally, the nature of state capital expenditure drawn in by central capital expenditure should be such that it dovetails with the latter to optimize long-term enhancements of economic capacity.
    • States have tendency to postpone capex: The Union budget for 2023-24 encourages states to make reforms in urban local bodies to become creditworthy for municipal bond issuance. However, states have a tendency to postpone capital expenditure until revenue streams firm up.

    Way ahead

    • States need to improve their execution capacity and establish an enabling regulatory environment to ensure quality and speed of expenditure.
    • The planning and budgeting cycle of states should also be aligned with fund releases to fully utilize resources within the available time.
    • States play a crucial role in capital expenditure and must not only budget more but also spend fully and uniformly throughout the year.

    Conclusion

    • States need to prioritize timely and efficient execution of capital expenditure and fully utilizing budgeted capital amounts uniformly throughout the year. The RBI report, while acknowledging that Indian states made higher capital outlays in 2022-23, notes that states would do well to mainstream capital planning rather than treating them as residuals and first stops for cutbacks in order to meet budgetary targets.

    Mains Question

    Q. What do you understand by Capital Expenditure (CAPEX)? Highlight the concerns over capex by the states and suggest a way ahead.

    Attempt UPSC 2024 Smash Scholarship Test | FLAT* 100% OFF on UPSC Foundation & Mentorship programs

  • Distributed Renewable Energy (DRE) Transforming Rural Women’s Life

    DRE

    Central Idea

    • Women from rural India are adopting clean energy-based livelihood technologies to catalyse their businesses. From solar refrigerators to silk-reeling machines and biomass-based cold storage to bulk milk chillers, distributed renewable energy (DRE) is transforming women’s livelihoods at the grassroots.

    What is Distributed Renewable Energy (DRE)?

    • DRE refers to the generation and distribution of electricity from renewable energy sources, such as solar, wind, hydro, geothermal, and biomass, through small-scale, decentralized systems.
    • These systems are often installed in remote or rural areas where it is difficult or expensive to connect to a centralized power grid.
    • DRE systems can range from individual rooftop solar panels to small-scale wind turbines, mini-hydro systems, and biomass generators.
    • They are typically designed to serve a single household or community, rather than a large urban or industrial center.
    • DRE systems are also known as off-grid or mini-grid systems, and they can be standalone or connected to a larger power grid.

    Recent Statistics

    • More than 80% are women: A recent Council on Energy, Environment and Water (CEEW) study has shown that out of the 13,000 early adopters of clean tech livelihood appliances, more than 80% are women.
    • Future projection: By 2030, India is expected to see 30 million women-owned micro, small and medium enterprises (MSMEs) employing around 150 million people. DRE livelihood technologies a $50 billion market opportunity in India alone have the potential to transform rural livelihoods, with women at the core of this transition.

    DRE

    Advantages of DRE systems

    • Several advantages: They are more resilient to natural disasters and grid failures, they can reduce energy costs for communities and households, and they can increase energy access in areas that are not served by the main power grid.
    • Reduce carbon emissions: Additionally, DRE systems can reduce carbon emissions and help to mitigate the impacts of climate change.
    • DRE advantages for women: DRE-powered technologies provide an additional advantage to women farmers and microentrepreneurs by enhancing income opportunities through mechanization. They also free women from several gender-assigned manual activities that are laborious.

    DRE

    Steps to scale up this impact

    • Leverage the experience of early women adopters: The technology providers must leverage early users to share their experiences with potential customers, becoming demo champions/sales agents to market these products, based on their first-hand product experience and local credibility.
    • For example: Kissan Dharmbir, an energy-efficient food processor manufacturer, engaged Neetu Tandan, an Agra-based micro-entrepreneur using the processor to produce fruit squashes and jams, as a demo champion. Her demonstrations are generating sales leads.
    • Organise hyperlocal events and demos: These events also create spaces for women to network, become aware of the product and connect with people who can help them procure, finance and use these machines.
    • For example: At an event in Hamirpur, Uttar Pradesh, more than 200 women booked seven appliances on the spot, including solar sewing machines and multi-purpose food processors.
    • Enable easy finance to purchase products: Limited avenues to avail financing for these clean technology products remain a bottleneck. Financiers supporting women farmers and microentrepreneurs should consider the technologies themselves as collaterals while easing the loan application process.
    • For example: Samunnati Finance, a financier in the agri-value chain, availed an 80% first-loan default guarantee to support six women-led FPOs in Andhra Pradesh that purchased 100-kg solar dryers.
    • Support backwards and forward market linkages: Only technology provision is not enough in all cases. Many rural products have larger market potential. Thus, finding and connecting producers to consumption hubs in urban areas are equally important to generate higher incomes.
    • Ensure adequate after-sales services buy backs: Technology manufacturers and promoters should also ensure adequate after-sales services and buy-backs. To build financiers’ confidence, evidence on the economic viability of these technologies should be shared and promoters must offer partial default guarantees.
    • Enable policy convergence: No private sector entity has the kind of reach and scale government institutions have, so leveraging their reach is imperative to exponentially scale up. Multiple Ministries are working towards promoting livelihoods for women from State rural livelihood missions, horticulture and agriculture departments, Ministry of Micro, Small and Medium Enterprises, to the Ministry of Textiles. They should embrace clean energy solutions to further their respective programmes and outcomes.

    What are the challenges that women face?

    • Perception of high risk: The high starting price and newness of DRE appliances can create a perception of high risk, particularly for women users who may have a lower risk appetite due to socio-economic factors.
    • Low belief: Due to historical limitations on women’s access to new information, people tend to want to physically touch and see high-tech, high-priced DRE products before believing in their ability and promised benefits.
    • Limited network: Women often struggle with established market linkages because of their limited mobility and networks outside their villages.

    DRE

    Conclusion

    • Much like it takes a village to raise a child, scaling the impact of clean energy solutions on women’s livelihoods needs a village of policymakers, investors, financiers, technology promoters and other ecosystem enablers. Only then can we truly unlock the potential of rural women and clean technologies simultaneously.

    Mains question

    Q. What do you understand by Distributed Renewable Energy (DRE)? What is to be done scale up this impact from thousands of women to millions of them?

    Attempt UPSC 2024 Smash Scholarship Test | FLAT* 100% OFF on UPSC Foundation & Mentorship programs

  • PMI suggests Services activity hit 12-year high

    services

    The Purchasing Managers Index (PMI) for the services sector in India rose to 55.3 in February. This marks the highest level of the PMI in the services sector in 12 years, driven by an increase in new business orders and employment.

    Service Sector

    The service sector, also known as the tertiary sector, includes a wide range of economic activities that are focused on providing intangible goods and services to customers.

    Some examples of activities that fall under the service sector include:

    1. Hospitality and tourism: This includes activities such as hotels, restaurants, travel agencies, and tour operators.
    2. Retail and wholesale trade: This includes businesses that buy and sell goods, such as supermarkets, department stores, and online retailers.
    3. Financial services: This includes banks, insurance companies, and investment firms.
    4. Professional and business services: This includes activities such as legal services, accounting, consulting, and advertising.
    5. Information and communication technology: This includes activities such as software development, telecommunications, and data processing.
    6. Healthcare and social assistance: This includes activities such as hospitals, clinics, nursing homes, and social services.
    7. Education and training: This includes activities such as schools, colleges, universities, and vocational training.
    8. Transportation and logistics: This includes activities such as shipping, warehousing, and distribution.

    Purchasing Managers’ Index

    • PMI is an indicator of business activity — both in the manufacturing and services sectors.
    • The S&P Global India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies.
    • It is a survey-based measure that asks the respondents about changes in their perception of some key business variables from the month before.
    • It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.

    How is the PMI derived?

    • The PMI is derived from a series of qualitative questions.
    • Executives from a reasonably big sample, running into hundreds of firms, are asked whether key indicators such as output, new orders, business expectations and employment were stronger than the month before and are asked to rate them.

    How does one read the PMI?

    • A figure above 50 denotes expansion in business activity. Anything below 50 denotes contraction.
    • Higher the difference from this mid-point greater the expansion or contraction. The rate of expansion can also be judged by comparing the PMI with that of the previous month data.
    • If the figure is higher than the previous month’s then the economy is expanding at a faster rate. If it is lower than the previous month then it is growing at a lower rate.

    Recent trends in Services PMI

    • For the 19th straight month, the headline figure was above the neutral 50 mark, denoting expansion.
    • There was substantial moderation in cost pressures as input prices increased at the slowest pace in almost two-and-a-half years and output charge inflation softened to a 12-month low.
    • Still, capacity pressures remained mild and jobs rose only marginally.

     

    Attempt UPSC 2024 Smash Scholarship Test | FLAT* 100% OFF on UPSC Foundation & Mentorship programs

    Get your Rs 10,000 worth of UPSC Strategic Package for FREE | PDFs, Zoom session, Tests, & Mentorship

  • South Asia Need to Invest In Human Capital

    South Asia

    Central Idea

    • The last few years have ushered in a harsh new reality where crises are the norm rather than the exception. Pandemics, economic slumps and extreme weather events were once tail-end risks, but all three have hit South Asia in rapid succession since 2020.  To strengthen resilience and protect the well-being of future generations, governments across South Asia need to take urgent policy action and invest in human capital.

    Get your Rs 10,000 worth of UPSC Strategic Package for FREE | PDFs, Zoom session, Tests, & Mentorship.

    South Asia Overview

    • Countries: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.
    • Population: The region has a total population of over 1.8 billion people, making it the most populous region in the world.
    • Geography: South Asia has a diverse geography, with mountain ranges such as the Himalayas and Hindu Kush, major rivers like the Ganges, Indus, and Brahmaputra, and coastal areas along the Arabian Sea, Bay of Bengal, and Indian Ocean.
    • Economy: India is the largest economy in the region, accounting for more than 70% of the region’s total GDP. Agriculture is a major employer in most countries, with rice and wheat being staple crops. The manufacturing sector is also a significant contributor to the region’s economy, with textiles, garments, and leather products being major exports
    • Climate: The climate of South Asia is varied, with the monsoon season bringing heavy rainfall to much of the region and causing flooding in some areas. The region’s geography and size also result in varying climate patterns. In general, the region experiences hot and humid summers and mild winters.
    • Climate Change Risks: Climate change poses significant risks to the region, with some areas, such as the Maldives, at risk of sea level rise. Other risks include increased frequency and severity of extreme weather events, such as floods and droughts. The region is also vulnerable to the impacts of climate change on health, including increased incidence of heat-related illness and infectious diseases.
    • Biodiversity and Environmental Threats:
    • South Asia is home to several biodiversity hotspots, such as the Western Ghats in India and the Eastern Himalayas.
    • However, the region faces significant environmental threats, such as deforestation, air and water pollution, and climate change.
    • Deforestation is a major problem in the region, with logging and land use change leading to habitat destruction and loss of biodiversity.

    South Asia

    An underutilized asset of South Asia: Analysis

    • South Asia’s people are its biggest asset but remain wastefully underutilized:
    • With nearly half its population under the age of 24 and over one million young people set to enter the labour force every month until 2030, the region could reap an enviably high demographic dividend.
    • Stunting one of the significant challenges: South Asia is also home to over one third of the world’s stunted children. And a child born in the region today can, by the age of 18, expect to attain only 48% of their full productive potential.
    • Governments spending on Health and education: South Asian governments on average spend just 1% of GDP on health and 2.5% on education. In comparison, the global average is 5.9% on health and 3.7% on education.
    • COVID-19 pandemic, a blow to regions human capital: The COVID-19 pandemic, which pushed an additional 35 million people across South Asia into extreme poverty, dealt an unprecedented blow to the region’s human capital. Among its most woeful impacts is a rise in learning poverty, or the inability to read and understand a simple text by age 10. Ineffective remote instruction, during the pandemic increased South Asia’s learning poverty from 60% to 78%.
    • The poorest and most vulnerable people fell further behind: For example, in Bangladesh, the poorest students lost 50% more in terms of learning than the richest students. Several countries still show little to no signs of recovery, and South Asia’s students could lose up to 14.4% of their future earnings.

    Interventions that can make a difference

    • Affordable education: Recent evidence suggests that even simple and low-cost education programmes can lead to sizable gains in skills.
    • For instance:
    • In Bangladesh attending a year of additional pre-school through two-hour sessions significantly improved literacy, numeracy, and social-development scores.
    • In Tamil Nadu, six months of extra remedial classes after school helped students catch up on about two-thirds of lost learning linked to 18 months of school closures.
    • In Nepal, government teachers ran a phone tutoring programme that helped increase students’ foundational numeracy by 30%.
    • Robust systems for crisis management: The need for countries to have robust systems in place to support individuals and families during times of crisis. Such systems, which can include social safety nets, health care, and education programs, can help to mitigate the impact of crises like the pandemic, protect vulnerable populations, and promote resilience. By investing in these systems before a crisis strikes, countries can better prepare themselves to respond to the challenges that may arise.
    • Use data and technology: Effective systems are needed to respond to crises quickly and maintain vital services like healthcare and education. Coordination across sectors is important. Data and technology play a crucial role in the delivery of services, human development systems should ensure they are effectively used.

    South Asia

    World Bank study: Interdependence of health, education and skills for human development

    • A new World Bank study, Collapse and Recovery: how COVID eroded human capital and what to do about it, analyses the pandemic’s impacts on young people, stresses the multi-dimensional and complementary nature of human development.
    • The health, education, and skills people acquire at various stages of their lives, build and depend on each other.
    • To be effective, human development systems must recognise and exploit these overlapping connections. In other words, they should be agile, resilient and adaptive.

    Conclusion

    • The road ahead for South Asia is rocky. The next crisis may be just around the corner. A robust human development system would not only mitigate the damage but also help ensure lives and livelihoods are protected. It could provide the resilience South Asia needs to prosper in an increasingly volatile world. While the outlook is grim, it is important to remember that well-designed and implemented interventions can make a difference if governments act fast.

    Mains question

    Q. South Asia possesses remarkable human capital, but it remains underutilized and has been further impacted by the COVID-19 pandemic. Discuss and suggest what can be done to address the issues?

    Attempt UPSC 2024 Smash Scholarship Test | FLAT* 100% OFF on UPSC Foundation & Mentorship programs

  • What is the Expected Credit Loss (ECL) regime?

    The Reserve Bank of India is moving closer towards ring-fencing the banking system from credit losses as it proposes to move to provision on the principles of ‘expected losses’ from ‘incurred losses. ‘

    What is a Loan-Loss Provision?

    • The RBI defines a loan loss provision as an expense that banks set aside for defaulted loans.
    • Banks set aside a portion of the expected loan repayments from all loans in their portfolio to cover the losses either completely or partially.
    • In the event of a loss, instead of taking a loss in its cash flows, the bank can use its loan loss reserves to cover the loss.
    • The level of loan loss provision is determined based on the level expected to protect the safety and soundness of the bank.

    What is Expected Credit Loss (ECL) regime?

    • The Expected Credit Loss (ECL) regime is a new accounting standard that was introduced by the International Financial Reporting Standards (IFRS) in response to the global financial crisis of 2008.
    • The ECL regime requires banks and other financial institutions to estimate and report the expected losses from their loan portfolios over the lifetime of the loans.
    • Under the ECL regime, financial institutions must assess the credit risk associated with each loan and estimate the expected losses that will result from default or other credit events.
    • These expected losses must be recognized in the financial institution’s accounts and reported to investors and other stakeholders.
    • Under this practice, a bank is required to estimate expected credit losses based on forward-looking estimations rather than wait for credit losses to be actually incurred before making corresponding loss provisions.

    Benefits of the ECL regime

    • ECL will result in excess provisions as compared to a shortfall in provisions, as seen in the incurred loss approach.
    • It will further enhance the resilience of the banking system in line with globally accepted norms.

    Issues with this regime

    • It requires banks to provide for losses that have already occurred or been incurred.
    • The delay in recognizing loan losses resulted in banks having to make higher levels of provisions which affected the bank’s capital.
    • This affected banks’ resilience and posed systemic risks.
    • The delays in recognizing loan losses overstated the income generated by the banks, which, coupled with dividend payouts, impacted their capital base.

     

    Attempt UPSC 2024 Smash Scholarship Test | FLAT* 100% OFF on UPSC Foundation & Mentorship programs

    Get your Rs 10,000 worth of UPSC Strategic Package for FREE | PDFs, Zoom session, Tests, & Mentorship