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Subject: Economics

  • New GDP Series to Better Capture Economy

    Why in the News

    The Ministry of Statistics and Programme Implementation will release a new GDP series on February 27, 2026, updating the base year to 2022-23 and introducing major data and methodological improvements.

    Key Changes

    1. Base Year Updated

    • From 2011-12 to 2022-23
    • Reflects current economic structure including digitalisation and formalisation

    2. Better Corporate & Government Data

    • Sector-wise allocation based on actual activity share
    • Inclusion of government housing services
    • Expanded coverage of autonomous and local bodies

    3. Stronger Household & Informal Sector Estimates

    • Annual use of ASUSE and PLFS data
    • More granular measurement of private consumption

    4. New Data Sources

    • Wider use of GST data for output estimation
    • Banking data from Reserve Bank of India
    • Actual NBFC data instead of proxy estimates

    5. Technical Upgrade

    • Use of double deflator method for better real GDP estimation

    Prelims Takeaway

    • GDP and GVA series now aligned to 2022-23 base year
    • GST integrated more deeply in estimation
    • Informal and unincorporated sector measurement improved
    • Double deflation enhances accuracy of real growth calculation
    [2013] The national income of a country for a given period is equal to the (a) total value of goods and services produced by the nationals 

    (b) sum of total consumption and investment expenditure 

    (c) sum of personal income of all individuals 

    (d) money value of final goods and services produced

  • DGCA Revises Airfare Refund and Cancellation Rules

    Why in the News

    The Directorate General of Civil Aviation has revised airfare refund and cancellation rules to address rising passenger grievances. The new rules will come into effect from March 26, 2026.

    Why the Changes Were Introduced

    • DGCA stated that refund related complaints have become a major source of grievance, including:
      • Delayed refunds
      • Airlines adjusting refunds against future travel
      • Disputes over refund value

    Key Changes in the New Rules

    1. Faster Refunds for Agent Bookings

    • Earlier: 30 working days
    • Now: 14 working days
    • Applies to tickets booked through travel agents and online portals.

    2. Extended “Look-In” Period

    • The “look-in” period allows cancellation or amendment without charge.
    • Earlier: 24 hours
    • Now: 48 hours
    • However, conditions changed:
    • Must be booked at least:
      • 7 days before departure for domestic flights
      • 15 days before departure for international flights
    • Applies only to tickets booked directly via airline websites.
    • Not automatically applicable for bookings via agents or portals.

    3. Name Correction Window

    • Free correction allowed within 24 hours.
    • Now applies only if ticket is booked directly through airline website.
    • Bookings via agents may attract charges even within 24 hours.

    4. New Medical Emergency Clause

    • Refund or credit shell allowed in case of:
      • Hospitalisation of passenger
      • Hospitalisation of family member on same PNR
    • For other medical cases:
      • Refund subject to medical fitness certification from an airline aerospace medicine specialist or DGCA empanelled expert.

    What Remains Unchanged

    • Most other refund provisions remain the same.
    • Government maintains non interference in airline commercial pricing.
    • Benchmarks fixed to protect consumer interest.

    Prelims Pointers

    • DGCA functions under Ministry of Civil Aviation.
    • It regulates safety, licensing and consumer standards in aviation.
    • “Look-in” period allows free cancellation within a limited time after booking.
    • Refund timelines are now 14 working days for agent bookings.
    • Medical emergency clause newly introduced in 2026 revision.
    [2025] With reference to the Government of India, consider the following information: Organization : Some of its functions : It works under I. Directorate of Enforcement : Enforcement of the Fugitive Economic Offenders Act, 2018 : Internal Security Division–I, Ministry of Home Affairs 

    II. Directorate of Revenue Intelligence : Enforces the provisions of the Customs Act, 1962 : Department of Revenue, Ministry of Finance 

    III. Directorate General of Systems and Data Management : Carrying out big data analytics to assist tax officers for better policy and nabbing tax evaders : Department of Revenue, Ministry of Finance 

    In how many of the above rows is the information correctly matched?

    (a) Only one (b) Only two (c) All three (d) None

  • New GDP Series Will Not Use UPI Data

    Why in the News

    The Ministry of Statistics and Programme Implementation has decided not to use Unified Payments Interface transaction data in India’s new GDP series with base year 2022 to 23, citing instability and classification limitations.

    Why Was UPI Data Considered?

    • UPI transaction data from the National Payments Corporation of India provides:
    • Value of transactions in rupees
    • Volume of transactions
    • Merchant category codes
    • It was proposed as a non traditional indicator to estimate Private Final Consumption Expenditure (PFCE), a key component of GDP from the expenditure side.

    Why Was It Rejected?

    • Overlapping Merchant Categories: Merchant codes such as 5411 for supermarkets cover multiple product types, making it difficult to classify transactions under specific PFCE consumption heads.
    • Non Consumption Transactions Included: Certain categories like debt collection agencies do not represent household consumption but account for notable transaction value.
    • Unstable and Incomplete Data Coverage: Continued reliance on cash and ongoing digital transition mean UPI trends do not yet fully capture overall consumption patterns. The Advisory Committee suggested reconsideration once data stabilises.

    About GDP Estimation in India

    • India calculates GDP using:
      • Production or Income Approach
      • Expenditure Approach
      • PFCE forms more than half of India’s GDP.
    • Under the new series:
      • Base year updated from 2011 to 12 to 2022 to 23
      • PFCE items expanded from 46 to 128
      • Published data will cover 49 items across 13 categories

    Alternative Data Sources Being Used

    • Goods and Services Tax data
    • Vahan vehicle registration data
    • Sector specific indicators
    [2013] The national income of a country for a given period is equal to the (a) total value of goods and services produced by the nationals 

    (b) sum of total consumption and investment expenditure 

    (c) sum of personal income of all individuals 

    (d) money value of final goods and services produced

  • [24th february 2026] The Hindu OpED: India’s energy shift through the green ammonia route

    PYQ Relevance

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

    Linkage: Green ammonia auctions operationalise renewable energy targets through industrial decarbonisation. The subsidy shift logic mirrors SIGHT incentives and viability gap funding for green hydrogen.

    Mentor’s Comment

    India’s green hydrogen strategy has entered an implementation phase through competitive green ammonia auctions. The Solar Energy Corporation of India (SECI) has operationalised aggregated demand under the National Green Hydrogen Mission, securing long-term offtake contracts at prices nearly 40-50% lower than earlier global benchmarks. The development signals a structural shift from policy intent to market creation and positions India as a price-setter in emerging clean fuel markets.

    Why in the News?

    At India Energy Week 2026, the government operationalised its clean energy vision through SECI’s large-scale green ammonia auctions under the SIGHT programme, offering 10-year fixed-price contracts. 

    What is Green Ammonia?

      1. Green ammonia is a 100% renewable, carbon-free fertilizer and energy carrier produced by combining nitrogen from the air with green hydrogen (generated via water electrolysis using solar or wind energy). 
      2. Unlike traditional “grey” ammonia that uses fossil fuels, green ammonia emits zero, offering a sustainable solution for agriculture, energy storage, and marine fuel.
    • Production: Water is split into hydrogen and oxygen using renewable electricity. This green hydrogen is then combined with nitrogen using the Haber-Bosch process to produce ammonia.

    What is the SECI Green Ammonia Auction Model?

    The SECI Green Ammonia Auction Model, under the National Green Hydrogen Mission’s SIGHT Scheme (Mode 2A), is a competitive, cost-based e-reverse auction for procuring green ammonia. It is designed to bridge the price gap with conventional ammonia. It features a 10-year, fixed-price contract, with SECI acting as an intermediary to facilitate demand, resulting in record-low prices around ₹55.75/kg as of mid-2025. 

    Key Features of the SECI Green Ammonia Model:

    1. SIGHT Scheme Mode 2A: The auction is part of the Strategic Interventions for Green Hydrogen Transition (SIGHT) scheme, which provides financial incentives for producing and supplying green ammonia, implemented by SECI.
    2. Intermediary Procurement Model: SECI acts as an intermediary, bidding for and procuring green ammonia from producers and supplying it to fertilizer companies, addressing the “chicken-and-egg” demand-supply challenge.
    3. Competitive Bidding & Reverse Auction: The process involves e-bidding followed by an e-reverse auction to ensure the most competitive, market-driven pricing.
    4. Long-Term Contracts: Green Ammonia Purchase Agreements (GAPA) are signed for a period of 10 years, providing certainty to developers and investors.
    5. Payment Security Mechanism: A robust, built-in payment security mechanism ensures the financial viability of projects and reassures stakeholders.
    6. Aggregated Demand: The model aggregates demand for green ammonia, with planned auctions covering a cumulative capacity of over 7 lakh MT per annum, promoting economies of scale.
    7. Record-Low Pricing: The first auction in 2025 achieved a significant breakthrough, with prices dropping to roughly ₹55.75/kg, making green ammonia increasingly competitive with traditional, gray ammonia.

    How Does the Green Ammonia Auction Model Reflect a Governance Shift from Subsidy to Market Creation?

    1. Aggregated Demand Mechanism: SECI pooled demand of up to 7,24,000 tonnes annually across 13 fertiliser plants, reducing fragmented procurement and enhancing scale efficiency.

    2. Long-term Offtake Contracts: Provides 10-year fixed-price agreements, ensuring revenue certainty and reducing investor risk.
    3. Competitive Bidding Framework: Attracted 15 bidders, with 7 successful awardees, strengthening transparency and price discovery.
    4. Production Subsidy Support: Includes viability gap support of ₹8.82/kg, ₹7.06/kg, and ₹5.3/kg over three years under SIGHT.
    5. Outcome: Establishes a cost-competitive domestic green ammonia market.

    How Does India’s Price Discovery Compare with Global Benchmarks and What Does it Indicate?

    1. Price Range Achieved: ₹49.75-₹64.74/kg ($572-$744/tonne).
    2. Global Benchmark Comparison: Nearly 40-50% lower than H2Global auction prices.
    3. Grey Ammonia Benchmark: Grey ammonia prices reach $515/tonne, narrowing cost gap significantly.
    4. Cost Gap Reduction: Long-term contracts and subsidies reduce transition risks.
    5. Outcome: Positions India as a potential global price influencer in green fuels.

    How Does the Policy Strengthen Energy Security and Reduce Import Vulnerability?

    1. Import Substitution: Contracted volume equals nearly 30% of India’s ammonia imports.
    2. Price Predictability: Fixed-price contracts reduce exposure to global volatility, currency risks, and geopolitical disruptions.
    3. Domestic Value Chain Creation: Integrates renewable energy, storage, hydrogen electrolysis, and ammonia synthesis.
    4. Energy Independence Objective: Aligns with India’s shift from energy security to energy independence.
    5. Outcome: Enhances strategic autonomy in fertiliser and energy sectors.

    What Institutional and Regulatory Innovations Support Market Viability?

    1. Pre-identified Delivery Points: Located near coastal fertiliser plants, enabling maritime logistics and reducing transportation bottlenecks.
    2. Banking and Grid Regulations: Requires harmonised regulations for renewable integration.
    3. Certification Alignment: Necessitates globally accepted green hydrogen certification frameworks.
    4. Risk Mitigation Mechanisms: Long-tenor blended finance and extended offtake agreements enhance bankability.
    5. Outcome: Strengthens institutional accountability and reduces implementation risks.

    How Does Green Ammonia Contribute to India’s Decarbonisation Commitments?

    1. Industrial Decarbonisation: Supports fertiliser sector transition from grey to green ammonia.
    2. Hard-to-Abate Sectors: Enables decarbonisation in shipping, power generation, and heavy industry.
    3. Renewable Integration: Utilises low-cost renewable energy at scale.
    4. National Green Hydrogen Mission Alignment: Operationalises Mission targets through market instruments.
    5. Outcome: Advances India’s Nationally Determined Contributions (NDCs).

    What Implementation Risks Could Affect Long-Term Sustainability?

    1. Financial Risk: High capital intensity of electrolysers and renewable infrastructure.
    2. Technology Risk: Need for hybrid renewable-storage integration.
    3. Regulatory Uncertainty: Grid access, incentives, and safety standards require stability.
    4. Global Competition: Emerging green ammonia producers may affect export competitiveness.
    5. Outcome: Sustained coordination between policymakers, developers, and financiers remains essential.

  • ₹14,601 Crore Undisclosed Offshore Investments Brought to Tax

    Why in the News

    The Central Board of Direct Taxes disclosed through an RTI reply that ₹14,601 crore worth of undisclosed offshore investments, revealed in the Panama, Paradise and Pandora Papers investigations, have been “brought to tax” by the Income Tax Department.

    Background: Global Offshore Investigations

    The investigations were conducted by The Indian Express in collaboration with the International Consortium of Investigative Journalists and global media partners.

    1. Panama Papers

    • Published in 2016
    • ₹13,800 crore brought to tax

    2. Paradise Papers

    • Published in 2017
    • ₹115 crore brought to tax

    3. Pandora Papers

    • Published in 2021
    • ₹686 crore brought to tax
    • Total: ₹14,601 crore

    What Does “Brought to Tax” Mean?

    • In taxation terminology, “brought to tax” means that income, assets, or investments that were previously undisclosed or underreported have been formally assessed by tax authorities and subjected to tax liability under the law.
    • It does not automatically mean that the tax has already been collected.

    Enforcement Action Taken

    • 1,255 tax cases filed in total
      • 426 Panama
      • 494 Paradise
      • 335 Pandora
    • Multi Agency Group formed after Pandora Papers revelations
    • Financial Intelligence Unit India sent requests to foreign jurisdictions regarding 482 persons
    • Seven meetings of the Multi Agency Group held

    Legal and Institutional Framework

    • Income Tax Act, 1961
    • Black Money Undisclosed Foreign Income and Assets Act, 2015
    • Information exchange under international tax treaties
    • Global cooperation to tackle tax havens
    [2021] Which one of the following effects of the creation of black money in India has been the main cause of worry to the Government of India? (a) Diversion of resources to the purchase of real estate and investment in luxury housing 

    (b) Investment in unproductive activities and purchase of precious stones, jewelry, gold, etc. 

    (c) Large donations to political parties and the growth of regionalism 

    (d) Loss of revenue to the State Exchequer due to tax evasion

  • Textile Mills Closure in Tamil Nadu 

    Why in the news? 

    As per the Annual Survey of Industries data released by the Union Ministry of Textiles, over 300 textile mills in Tamil Nadu went out of operation between 2021 to 22 and 2023 to 24.

    Key Data

    • 2021 to 22
      • Total mills: 2,773
      • Operational: 2,121
    • 2023 to 24
      • Total mills: 2,455
      • Operational: 1,672
    • Nearly 2 lakh powerlooms reportedly shut in the last few years.
    • Majority units fall under MSME segment.

    Major Reasons for Closures

    • High Power Cost

      • Electricity tariff around ₹9.25 per unit
      • Higher than competing States
      • Units with wind and solar investments survived relatively better

    • Raw Material Issues

      • Cotton, polyester, viscose sourced largely from northern India
      • High transportation cost
      • Earlier import duty on cotton impacted mills
      • Quality Control Orders created compliance burden

    • Environmental Compliance

      • Mandatory Zero Liquid Discharge norms for processing units
      • Higher compliance cost compared to States permitting marine discharge

    • Financial Stress

      • Higher bank interest rates
      • Limited subsidy coverage
      • MSMEs more vulnerable
    [2010] Tamil Nadu is a leading producer of mill-made cotton yarn in the country. What could be the reason? 1. Black cotton soil is the predominant type of soil in the State. 

    2. Rich pool of skilled labour is available. 

    Which of the above is/are the correct reasons? 

    (a) 1 only  (b) 2 only  (c) Both 1 and 2  (d) Neither 1 nor 2

  • [19th February 2026] The Hindu OpED: India’s moment to restoring balance to copyright

    PYQ Relevance

    [UPSC 2024] What is the present world scenario of intellectual property rights with respect to life materials? Although India is second in the world to file patents, still only a few have been commercialised. Explain the reasons behind this less commercialization.

    Linkage: This question links with the AI-copyright debate as both concern intellectual property rights, innovation, and the balance between protection and public use of knowledge. It helps analyse how rigid IPR frameworks can limit technological development and commercialization, similar to challenges faced in AI data and copyright regulation.

    Mentor’s Comment

    The editorial discusses India’s copyright challenge in the age of Artificial Intelligence (AI). It explains that old copyright laws, designed for the print era, are conflicting with AI, data mining, and digital access to knowledge. The article examines historical trends, policy gaps, global comparisons, and governance choices to understand how India can balance creator rights with innovation, accessibility, and public interest.

    Why in the News?

    The rise of Artificial Intelligence has triggered a major debate on copyright laws because AI systems require large-scale data for training, while existing copyright rules remain restrictive and outdated. India is now at a policy crossroads where balancing creator rights with innovation and public access has become urgent, making the issue highly relevant for governance and digital regulation today.

    Introduction

    Copyright law historically aimed to reward creators while ensuring eventual public access to knowledge. Over time, however, protections expanded in duration and scope, producing a system described as “copyright maximalism.” The emergence of AI disrupts this balance because machine learning requires extensive data scraping and analysis, challenging traditional definitions of copying, authorship, and creative ownership.

    How has copyright law evolved from incentive to over-expansion?

    1. Historical Purpose: Ensures limited monopoly rights for creators to incentivize publishing and dissemination of knowledge; early laws allowed controlled duplication mainly for printing and libraries.
    2. Expansion of Duration: Extends protection for the author’s lifetime plus long posthumous periods, reducing entry into the public domain and restricting reuse.
    3. Shift Toward Maximalism: Expands copyright beyond publication to automatic ownership of every created work, including minor or functional outputs.
    4. Outcome: Restricts free circulation of knowledge despite original intent of encouraging creativity.

    Why does AI challenge traditional copyright assumptions?

    1. Data Dependency: Requires large volumes of digital text, images, and media for training; machine learning models process patterns rather than reproduce works directly.
    2. Functional Use vs Creative Use: Treats data as statistical input rather than expressive content, questioning whether it constitutes infringement.
    3. Scale Problem: AI systems must crawl massive portions of the internet, making individual licensing impractical.
    4. Governance Gap: Creates uncertainty for developers, researchers, and innovation ecosystems in absence of clear legal exemptions.

    What does global evidence reveal about text and data mining policies?

    1. Comparative Study Findings: Survey across multiple countries showed most jurisdictions lack clear exceptions permitting large-scale AI data mining.
    2. Legal Restriction: Countries such as the Philippines and Sri Lanka largely prohibit unrestricted copying for analysis.
    3. Progressive Models: Japan and Singapore allow broader text and data mining exceptions, enabling technological experimentation.
    4. Policy Implication: Flexible copyright frameworks correlate with stronger AI innovation environments.

    Why is India’s current approach seen as a regulatory risk?

    1. Absence of Explicit Exception: Indian copyright law does not clearly permit AI-oriented data mining.
    2. Innovation Uncertainty: Creates legal ambiguity for startups, research labs, and academic institutions.
    3. Comparative Disadvantage: Countries providing explicit exemptions attract advanced AI research and investment.
    4. Governance Concern: Raises institutional accountability questions on balancing creator rights and technological advancement.

    How does copyright intersect with accessibility and public interest?

    1. Access to Knowledge: Restrictive copyright historically limited access for visually impaired persons until exceptions were introduced via the Marrakesh framework.
    2. Policy Lesson: Demonstrates that flexible copyright exceptions can advance inclusion without undermining creativity.
    3. Public Interest Principle: Supports constitutional goals of equality and knowledge dissemination.
    4. Institutional Responsibility: Requires regulators to ensure copyright does not hinder socially beneficial technological use.

    Should copyright protect jobs or creativity in the AI era?

    1. Technological Transition: Historical innovations eliminated certain roles but created new industries and employment forms.
    2. Policy Perspective: Copyright aims to encourage creativity, not permanently preserve existing occupations.
    3. Institutional Role: Governments may support displaced workers through taxation and social policy instead of restricting innovation.
    4. Outcome: Supports balanced governance between innovation and welfare measures.

    What should copyright law protect in an AI-driven future?

    1. Human Contribution: Protects genuine creative expression rather than data patterns or computational processes.
    2. Openness Principle: Encourages collaborative innovation and derivative creativity.
    3. Regulatory Reform: Requires modern exceptions for AI training, research use, and data mining.
    4. Strategic Objective: Aligns copyright with digital economy goals while maintaining creator incentives.

    Conclusion

    India’s copyright framework stands at a policy crossroads where rigid protection models confront AI-led innovation. A balanced approach that safeguards genuine creativity while enabling data-driven technological development is necessary. Clear legal exceptions, institutional foresight, and alignment with constitutional values of access and innovation can help restore equilibrium between creators, technology, and public interest.

  • India’s First Private Helicopter Assembly Line at Vemagal

    Why in the News?

    India’s first private sector helicopter Final Assembly Line was inaugurated at Vemagal, Kolar district, Karnataka to manufacture Airbus H125 helicopters through a partnership between Tata Advanced Systems and Airbus.

    Key Entities Involved

    • Tata Advanced Systems Limited
    • Airbus
    • France
    • Hindustan Aeronautics Limited

    About the Facility

    • Location: Vemagal, Kolar district, Karnataka
    • Type: Private sector Final Assembly Line
    • Product: Airbus H125 single engine helicopter
    • Initial annual capacity: 10 helicopters
    • First delivery expected: Early 2027
    • Will serve Indian and South Asian markets

    This becomes the fourth global production site for the H125 after France, USA and Brazil.

    About H125 Helicopter

    • One of the world’s best selling single engine helicopters
    • Over 4,300 units flying globally
    • Certified under European Union Aviation Safety Agency standards
    • Designed for high altitude and rugged terrain operations

    Military Variant

    • H125M version proposed
    • Seen as a successor to Cheetah and Chetak helicopters
    • Suitable for:
      • Tactical reconnaissance
      • High altitude logistics
      • Search and rescue
      • Medical evacuation
    [2024] Consider the following aircraft: 

    1. Rafael 

    2. MiG-29 

    3. Tejas MK-1 

    How many of the above are considered fifth generation fighter aircraft? 

    (a) Only one (b) Only two (c) All three (d) None

  • The cost of controls on the fertiliser industry

    Why in the News?

    The Uttar Pradesh government has prohibited urea manufacturers and suppliers from selling “gair-anudaanit” (non-subsidised) fertilisers in the state. The order affects cooperative, public, and private firms.

    The action follows allegations of “tagging,” wherein farmers were allegedly compelled to purchase non-subsidised products along with subsidised fertilisers. However, the non-subsidised segment constitutes only 0.4 million tonnes annually, compared to India’s 67 million tonnes total fertiliser market, making the regulatory response appear disproportionate in scale.

    What is the Structure of the Fertiliser Industry in India

    1. High Regulatory Intensity: One of the most regulated industries in India.
    2. Core Products: Urea, Di-Ammonium Phosphate (DAP), Muriate of Potash (MOP), NPK complexes.
    3. Statutory Framework: Governed under Fertiliser Control Order (FCO), 1985.
    4. Administered Pricing: Urea MRP fixed at same level since November 2012.
    5. Subsidy Regime: P&K fertilisers operate under Nutrient-Based Subsidy (NBS) with capped retail pricing.
    6. Decontrol Paradox: Though labelled “decontrolled,” effective price and profit oversight continues through subsidy-linked conditions.

    How has fertiliser consumption and import dependence evolved?

    1. Rising Consumption: Total consumption increased significantly over recent years, reaching 67 million tonnes (2024-25).
    2. Urea Dominance: Urea consumption significantly exceeds P&K usage due to lower administered prices.
    3. Import Dependence: High import reliance for phosphatic and potassic fertilisers increases vulnerability to global price volatility.
    4. Price Differential: DAP priced at ₹27/kg and MOP at ₹19.40/kg under subsidy regime; non-subsidised variants priced substantially higher.
    5. Nutrient Imbalance: Excessive nitrogen usage distorts soil health due to price asymmetry.

    How does the fertiliser price control regime operate under the Fertiliser Control Order (FCO), 1985?

    1. Statutory Control: Operates under the Fertiliser Control Order, 1985 issued under the Essential Commodities Act framework.
    2. Administered Pricing: Fixes Maximum Retail Price (MRP) of urea at ₹266.5 per 45 kg bag.
    3. Subsidy Mechanism: Compensates manufacturers for cost-production gap through Direct Benefit Transfer (DBT) to companies.
    4. Input Regulation: Controls MRP of urea; phosphatic and potassic (P&K) fertilisers operate under Nutrient-Based Subsidy (NBS) scheme.
    5. Movement Control: Allocates fertiliser supply across states based on assessed demand.

    Is the fertiliser sector truly decontrolled, or does effective government control persist?

    The fertilizer sector operates under the Fertiliser Control Order, 1985 issued under the Essential Commodities Act framework.

    1. Profit Oversight: Department of Fertilisers can recover subsidy if “unreasonable profit” is detected.
    2. Conditional Decontrol: Companies cannot freely price products without risking subsidy clawback.
    3. Operational Dependence: Business viability tied to state reimbursement mechanisms.

    How does state control extend beyond pricing into movement and distribution?

    1. Agreed Supply Plan: Department of Fertilisers prepares state-wise, season-wise, month-wise allocation.
    2. Railway Rake Planning: Dispatches governed by official rail and road movement schedules.
    3. District Allocation: Agriculture officers allocate fertiliser dealer-wise upon arrival.
    4. FOR Basis Delivery: Companies must supply on freight-on-road basis.
    5. Limited Commercial Autonomy: Private firms cannot independently determine timing, quantity, or geography of sales.

    Does price control ensure equity or generate inefficiency in fertiliser distribution?

    1. Affordability Objective: Ensures low input costs for farmers, supporting food security.
    2. Fiscal Burden: Expands fertiliser subsidy bill significantly; recurrent pressure on Union Budget.
    3. Inefficient Usage: Encourages overuse of subsidised urea due to artificially low prices.
    4. Leakages and Diversion: Facilitates diversion for industrial use or cross-border smuggling.
    5. Soil Degradation: Skews NPK ratio, affecting long-term soil productivity.

    What economic role do non-subsidised fertilisers play in the industry’s survival model?

    1. Cross-Subsidisation Mechanism: Higher margins from speciality nutrients offset thin margins from urea.
    2. Capital Recovery: Supports working capital cycles in a subsidy-dependent system.
    3. Innovation Incentive: Enables R&D in micronutrients and water-soluble fertilisers.
    4. Market Size Contrast: 0.4 million tonnes speciality vs 67 million tonnes total market.
    5. Profitability Cushion: Provides financial flexibility under price-capped regime.

    What governance concerns arise from restrictions on non-subsidised fertiliser sales?

    1. Market Distortion: Restricting non-subsidised fertiliser sales limits firms’ ability to offset losses from controlled urea pricing.
    2. Investment Sentiment: Reduces profitability of a ₹13,000 crore segment, affecting private sector participation.
    3. Regulatory Overreach: State-level intervention in areas traditionally governed by central FCO raises federal coordination concerns.
    4. Cross-subsidisation Constraint: Prevents companies from leveraging higher-margin non-subsidised products.
    5. Policy Uncertainty: Sudden bans create unpredictability in regulatory environment.

    Does price asymmetry distort nutrient usage and environmental sustainability?

    1. Price Signal Distortion: Urea at ₹5.9/kg incentivises excessive nitrogen application.
    2. Nutrient Imbalance: Skews N:P:K ratio in Indian soils.
    3. Soil Health Impact: Degrades soil productivity over time.
    4. High-Value Crop Use: Speciality fertilisers critical for fruits, vegetables, sugarcane.
    5. Environmental Externalities: Overuse contributes to groundwater contamination and emissions.

    What are the governance and federalism implications of the UP ban?

    1. Concurrent Jurisdiction: Fertilisers fall under Entry 33, Concurrent List.
    2. Centre-State Overlap: FCO issued by Centre; implementation often state-driven.
    3. Regulatory Fragmentation: State-specific bans risk policy inconsistency.
    4. Investor Sentiment Impact: Capital-intensive industry requires regulatory predictability.
    5. Unintended Consequence Risk: May enable unorganised low-quality suppliers to fill supply gap.

    Does heavy subsidy dependence raise fiscal sustainability concerns?

    1. Large Subsidy Outlay: Fertiliser subsidy remains a major budgetary commitment.
    2. Fiscal Trade-offs: Crowds out productive expenditure.
    3. Import Dependence: Raw materials such as phosphate rock and potash largely imported.
    4. Global Price Exposure: Vulnerable to external commodity shocks.
    5. Reform Stagnation: Urea decontrol proposals repeatedly deferred.

    Conclusion

    India’s fertiliser sector demonstrates the limits of excessive state control in a market critical to food security. While administered pricing and subsidies ensure affordability, layered controls over pricing, movement, and profitability risk distorting nutrient use, weakening industry viability, and discouraging investment. A calibrated approach that rationalises subsidies, restores balanced price signals, and ensures regulatory predictability is essential to align farmer welfare with long-term agricultural sustainability.

    PYQ Relevance

    [UPSC 2023] What are the direct and indirect subsidies provided to farm sector in India? Discuss the issues raised by the World Trade Organization (WTO) in relation to agricultural subsidies.

    Linkage: This question directly links to India’s fertiliser subsidy regime, price controls, and DBT architecture. It also connects to debates on subsidy distortion, fiscal burden, and compliance with the WTO’s Agreement on Agriculture (AoA), especially concerning input subsidies and trade distortion limits.

  • R&D Roadmap for CCUS Launched to Achieve Net Zero by 2070

    Why in the News?

    The R&D Roadmap to Enable India’s Net Zero Targets through Carbon Capture, Utilization and Storage CCUS was launched on 2 December 2025 by the Department of Science and Technology and unveiled by the Principal Scientific Adviser to the Government of India.

    Context

    • India has committed to achieving Net Zero emissions by 2070.
    • Hard to abate sectors such as Power, Cement and Steel require technological solutions beyond renewables.
    • CCUS is identified as a critical pillar for deep decarbonisation.

    What is CCUS?

    Carbon Capture, Utilization and Storage is a technology that:

    1. Captures carbon dioxide emissions from industrial sources.
    2. Utilizes captured CO₂ for industrial purposes such as chemicals or fuels.
    3. Stores CO₂ underground in geological formations to prevent atmospheric release.

    Key Features of the Roadmap

    1. Strategic guidance on thematic R&D priorities.
    2. Focus on moving technologies from lab scale to commercial readiness.
    3. Support for breakthrough next generation carbon management technologies.
    4. Emphasis on regulatory standards, safety norms and skilled manpower.
    5. Promotion of early shared infrastructure and public private partnerships.

    Institutional Framework

    • Prepared by DST based on nearly seven years of CCUS research support.
    • Guided by a High Level Task Force.
    • Establishment of three National Centres of Excellence in CCUS.
    • Linked with ₹1 lakh crore Research Development and Innovation Scheme to promote private sector led industrial decarbonisation.

    Focus Sectors

    • Thermal power plants, Cement industry, Steel sector and Energy intensive manufacturing. 
    • These sectors contribute significantly to India’s greenhouse gas emissions.
    [2023] Consider the following activities: 

    1. Spreading finely ground basalt rock on farmlands extensively. 

    2. Increasing the alkalinity of oceans by adding lime. 

    3. Capturing carbon dioxide released by various industries and pumping it into abandoned subterranean mines in the form of carbonated waters. 

    How many of the above activities are often considered and discussed for carbon capture and sequestration? 

    (a) Only one (b) Only two (c) All three (d) None