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Subject: Economics

  • Why Did the Government Cut Excise Duty on Petrol and Diesel but Prices Did Not Fall?

    Why in News?

    The Union Government reduced Special Additional Excise Duty (SAED) on petrol and diesel by ₹10 per litre each. However, fuel prices at petrol pumps remained unchanged because the benefit was not passed on to consumers.

    Why Did Fuel Prices Not Decrease Despite Excise Duty Cut?

    • Government reduced Special Additional Excise Duty (SAED)
    Diesel duty reduced to Zero
    Petrol duty reduced to ₹3 per litre
    Oil Marketing Companies (OMCs) absorbed benefit instead of consumers
    • Objective was to reduce losses faced by OMCs
    • Government clarified cut not meant to lower retail prices

    Why Are Oil Marketing Companies Facing Losses?

    Global crude oil prices surged above $111 per barrel
    Public sector OMCs selling fuel below cost
    Under recovery around ₹24 per litre petrol
    Under recovery around ₹30 per litre diesel
    • Total losses around ₹2,400 crore per day

    Why Did Government Increase Export Duties?

    Export duty on diesel increased to ₹21.5 per litre
    Export duty on ATF increased to ₹29.5 per litre
    • Expected additional revenue ₹1,500 crore
    • Helps offset fiscal loss from excise duty cut

    What Is the Fiscal Impact of the Decision?

    Excise duty cut cost around ₹7,000 crore
    Export duty increase adds ₹1,500 crore
    Net revenue loss around ₹5,500 crore per 15 days
    Review every fortnight by government

    What Other Measures Were Announced?

    Commercial LPG allocation increased by 20%
    Total LPG allocation raised to 70% of pre crisis levels
    Priority sectors where Piped Natural Gas (PNG) unavailable

    [2025] Suppose the revenue expenditure is ₹80,000 crores and the revenue receipts of the Government are ₹60,000 crores. The Government budget also shows borrowings of ₹10,000 crores and interest payments of ₹6,000 crores. Which of the following statements are correct?
    I Revenue deficit is ₹20,000 crores.
    II Fiscal deficit is ₹10,000 crores. 
    III Primary deficit is ₹4,000 crores. 
    Select the correct answer using the code given below: (a) I and II only (b) II and III only (c) I and III only (d) I, II and III
  • India’s Power Demand Hits Five Year High in Early 2026

    Why in News

    India recorded highest electricity demand in five years during January February 2026, driven by unusual winter weather patterns, cold spells and early heat conditions.

    Key Data

    January 2026

    • Electricity demand: 143 Billion Units
    • January 2025: 136 Billion Units
    • Peak demand: 245.4 GW
    • January 2022 peak: 193 GW
    • Five year increase: Nearly 28 percent

    February 2026

    • Electricity demand: 133 Billion Units
    • Peak demand: 244 GW
    • Highest February demand in five years
    • Nearly equal to summer demand

    Long Term Trend

    • January demand increased 28 percent since 2022
    • February demand increased 23 percent since 2022
    • Peak load increased 26 to 27 percent
    • Indicates structural growth in electricity demand

    [2025] Consider the following statements: 
    1 Carbon dioxide (CO 2 ​ ) emissions in India are less than 0.5 t CO 2 ​ /capita. 
    2 In terms of CO 2 ​ emissions from fuel combustion, India ranks second in Asia-Pacific region.
    3 Electricity and heat producers are the largest sources of CO 2 ​ emissions in India. 
    Which of the statements given above is/are correct? (a) 1 and 3 only (b) 2 only (c) 2 and 3 only (d) 1, 2 and 3
  • RBI Scraps Treasury Bill Auctions to Boost Liquidity

    Why in News

    • Reserve Bank of India rejected all bids in Treasury Bill auction
    • Government planned to raise ₹35,000 crore
    • Move aimed at boosting banking system liquidity before financial year end (March 31)

    What RBI Did

    • Cancelled auction of:
      • 91 day Treasury Bills
      • 182 day Treasury Bills
      • 364 day Treasury Bills
    • No borrowing by government
    • First full cancellation in 13 months

    What are Treasury Bills

    • Short term government borrowing instruments
    • Issued by Government of India
    • Managed by Reserve Bank of India
    • Zero coupon securities
    • Sold at discount, redeemed at face value
    • Types of T Bills: 91 day Treasury Bills, 182 day Treasury Bills and 364 day Treasury Bills. 

    Why RBI Cancelled Auction

    1. Improve Banking Liquidity

    • Government not borrowing means:
      • Money remains in banking system
      • Banks have more funds to lend
    • Liquidity boost estimated: ₹35,000 crore

    2. Financial Year End Liquidity Needs

    • Banks need funds for:
      • Balance sheet adjustments
      • Meeting regulatory requirements
      • Managing withdrawals

    3. Tax Inflows to Government

    • Government recently received: Advance tax payments and GST collections
    • Reduced need for immediate borrowing

    4. Avoid Market Pressure

    • Higher yields expected in auction
    • RBI avoided: Interest rate spikes and Market volatility
    [2018] Consider the following statements: 
    1 The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities. 
    2 Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments. 
    3 Treasury bills offer are issued at a discount from the par value. 
    Select the correct answer using the code given below: 
    (a) 1 and 2 only (b) 3 only (c) 2 and 3 only (d) 1, 2 and 3
  • How agriPV can turn India’s farms into dual purpose powerhouses

    Why in the News?

    India’s target of 300 GW solar capacity by 2030 has intensified land-use conflicts with agriculture, bringing agrivoltaics (AgriPV) into focus as a dual-use solution. The near doubling of PM-KUSUM allocation to ₹5,000 crore signals a shift toward farmer-centric solarisation. However, despite ~50 pilots, AgriPV faces scalability challenges due to high costs and regulatory gaps.

    What is Agrivoltaics?

    Agrivoltaics, also known as AgriPV or agrophotovoltaics (APV), is the simultaneous use of land for both solar energy generation and agriculture. Unlike traditional solar farms where panels are ground-mounted on bare land, AgriPV systems are designed to allow crops to grow, livestock to graze, or pollinator habitats to thrive underneath or between the solar panels.

    AgriPV systems optimize land use by placing solar panels in specific configurations to balance electricity production with agricultural needs: 

    1. Elevated (Stilted) Systems: Panels are mounted on tall structures (at least 2.1m to 4m high), providing enough clearance for tractors and farming machinery to operate underneath.
    2. Inter-row (Ground-mounted) Systems: Panels are placed at lower heights but with wide spacing between rows to allow crops to be cultivated in the alleys between arrays.
    3. Vertical Systems: Bifacial panels are mounted vertically (like walls), often at the periphery of fields, capturing sunlight primarily during sunrise and sunset while leaving the maximum amount of ground open for farming.
    4. PV Greenhouses: Solar modules are integrated into the roof or exterior of a greenhouse to regulate internal temperature and power its climate control system.

    How does Agrivoltaics address the land-energy-agriculture conflict?

    1. Dual Land Use: Enables simultaneous electricity generation and crop cultivation on the same land parcel.
    2. Land Efficiency: Reduces pressure on agricultural land compared to utility-scale solar requiring large tracts.
    3. Food-Energy Balance: Maintains agricultural output while expanding renewable capacity.
    4. Example: Elevated panel systems allow crops to grow underneath without disrupting farming operations.

    What are the design and technological variations in AgriPV systems?

    1. Elevated Systems: Panels mounted several metres above ground ensure adequate sunlight for crops.
    2. Row-based Systems: Panels placed between crop rows minimise shading impact.
    3. Vertical Systems: Upright panels reduce land obstruction and optimise sunlight distribution.
    4. Greenhouse Integration: Panels installed on rooftops or walls support controlled farming environments.
    5. Agro-climatic Adaptation: Crop selection varies across regions (e.g., tomato, onion, turmeric in MP; grapes, tomato in Maharashtra).

    What economic benefits does Agrivoltaics provide to farmers?

    1. Income Diversification: Farmers earn through electricity sales, leasing land, or revenue-sharing models.
    2. Reduced Input Costs: Solar-powered irrigation lowers diesel dependency.
    3. Risk Mitigation: Protection from extreme weather (hail, rainfall) stabilises farm output.
    4. Example: PM-KUSUM promotes decentralised solar pumps and power plants to enhance farm incomes.

    What environmental and productivity benefits does AgriPV offer?

    1. Water Conservation: Reduced evapotranspiration due to panel shading improves soil moisture retention.
    2. Climate Resilience: Protection against extreme weather events enhances crop stability.
    3. Energy Sustainability: Supports clean energy generation aligned with net-zero goals.
    4. Example: Partial shading benefits crops sensitive to excessive sunlight.

    What are the key challenges limiting large-scale adoption?

    1. High Capital Costs: Elevated structures and specialised mounting systems increase investment costs beyond conventional solar.
    2. Regulatory Uncertainty: Lack of clarity in land classification, tariffs, and grid connectivity.
    3. Design Gaps: Absence of standardised benchmarks for crop-panel configurations.
    4. Institutional Barriers: Limited access to affordable finance and weak governance frameworks.
    5. Data Deficit: Insufficient empirical evidence across agro-climatic zones.

    What policy measures can accelerate Agrivoltaics deployment?

    1. National Mission Integration: Inclusion in a proposed National Agri-Photovoltaics Mission under PM-KUSUM 2.0.
    2. Financial Support: Viability Gap Funding (VGF) reduces capital cost burden.
    3. State-level Interventions: Identification of clusters and streamlined approvals.
    4. Capacity Building: Integration into farmer training and advisory systems.
    5. Market Linkages: Clear tariffs and long-term purchase agreements ensure financial viability.

    What is the current status of Agrivoltaics in India?

    1. Pilot Projects: Around 50 installations across different regions.
    2. Policy Recognition: Increasing mention in renewable energy discussions.
    3. Scaling Constraint: Lack of commercial-scale implementation due to financial and regulatory barriers.

    Conclusion

    Agrivoltaics provides a viable pathway to reconcile India’s energy transition with agricultural sustainability. Scaling requires policy clarity, financial innovation, and region-specific design optimisation.

    PYQ Relevance

    [UPSC 2022] What is Integrated Farming System? How is it helpful to small and marginal farmers?

    Linkage: AgriPV represents an advanced form of Integrated Farming System, combining agriculture with solar energy generation on the same land. It enhances income diversification and resource efficiency for small and marginal farmers, aligning directly with the objectives of IFS.

  • PRARAMBH 2026 – Income Tax Awareness Campaign 

    Why in the News

    • Government launched PRARAMBH 2026, a nationwide awareness campaign for the Income Tax Act, 2025 (effective from 1 April 2026).

    About PRARAMBH 2026

    • Full form: Policy Reform and Responsible Action for Mission Viksit Bharat
    • Nature: Nationwide taxpayer awareness and outreach campaign
    • Mode:
      • Print, TV, radio, digital, social media
      • On-ground workshops and engagement

    Key Objectives

    • Promote: Tax awareness and Ease of compliance
    • Shift behaviour: From confusion to trust-based compliance
    • Ensure: Smooth implementation of new tax law

    Key Features

    1. Taxpayer Outreach

    • Guidance material: FAQs, Brochures and Tutorial videos
    • Available in: 10 regional languages plus English and Hindi

    2. Digital Initiatives

    • Launch of Income Tax Website 2.0
      • Improved usability
      • Simpler navigation
    • AI chatbot:
      • Kar Saathi
      • Helps with: Act, Rules, and Forms

    3. Capacity Building

    • Nationwide: 300 plus workshops
    • Focus:
      • Training tax officials
      • Stakeholder engagement

    4. Citizen-Centric Approach

    • Principle: Nagrik Devo Bhava
    • Focus on:
      • Empathy
      • Trust-based tax administration
      • Reduced human interface through technology

    New Income Tax Act, 2025

    • Effective from: 1 April 2026
    • Key aims: Simplicity, Clarity, Reduced litigation, and Better compliance

    Governance Philosophy

    • Based on: M.A.N.A.V. framework
      • Moral and ethical systems
      • Accountable governance
      • National sovereignty
      • Accessible and inclusive AI
      • Valid systems
    [2020] In the context of India, which one of the following is the characteristic appropriate for bureaucracy? (a) An agency for widening the scope of parliamentary democracy (b) An agency for strengthening the structure of federalism (c) An agency for facilitating political stability and economic growth (d) An agency for the implementation of public policy
  • India’s Nuclear Energy Mission  

    Why in the News

    • Government has accelerated Nuclear Energy Mission with ₹20,000 crore allocation for Small Modular Reactors (SMRs) development and a long-term goal of 100 GW nuclear capacity.

    Budget Allocation

    • ₹20,000 crore announced in Budget 2026
    • Focus:
      • Research
      • Design
      • Development
      • Deployment of SMRs

    Key Institutions Involved

    • Department of Atomic Energy (DAE)
    • Bhabha Atomic Research Centre (BARC)
    • Nuclear Power Corporation of India Ltd (NPCIL)

    Types of SMRs Being Developed

    1. BSMR-200 (Bharat SMR)

    • Capacity: 220 MWe
    • Jointly developed by: BARC + NPCIL
    • Construction timeline: 60–72 months

    2. SMR-55

    • Capacity: 55 MWe

    3. HTGCR (High Temperature Gas-Cooled Reactor)

    • Capacity: Up to 5 MWth
    • Use: Hydrogen production
    [2023] Consider the following statements: 
    Statement-I: India, despite having uranium deposits, depends on coal for most of its electricity production. 
    Statement-II: Uranium, enriched to the extent of at least 60%, is required for the production of electricity. 
    Which one of the following is correct? 
    (a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I (b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I (c) Statement-I is correct but Statement-II is incorrect (d) Statement-I is incorrect but Statement-II is correct
  • Urban Cooperative Banks (UCBs) – New RBI Eligibility Norms

    Why in the News

    • An internal working group of the Reserve Bank of India (RBI) has proposed stricter eligibility criteria for granting licences to Urban Cooperative Banks (UCBs).

    Proposed Eligibility Criteria

    To qualify for a UCB licence, credit cooperative societies must meet:

    • Minimum capital: ₹300 crore
    • Capital Adequacy Ratio (CAR): Above 12%
    • Net Non-Performing Assets (NPAs): Below 3%
    • Track record: At least 5 years of sound financial performance

    Governance Reforms

    • UCBs to adopt governance standards similar to commercial banks
    • Requirements include:
      • Professional management
      • Independent board members
      • Strong regulatory oversight

    Current Status of UCB Sector

    • Total weak UCBs under regulatory scrutiny: 82
      • 28 UCBs under All-Inclusive Directions (AID)
      • 32 UCBs under Prompt Corrective Action (PCA)
      • 22 UCBs under Supervisory Action Framework (SAF)

    Key Concerns

    • Weak financial health of many UCBs
    • Poor governance and management issues
    • Rising NPAs and capital inadequacy

    Significance of Reforms

    • Strengthens financial stability
    • Improves credibility of cooperative banking sector
    • Protects depositors’ interests
    • Aligns UCB regulation with banking sector standards
    [2021] With reference to ‘Urban Cooperative banks’ in India, consider the following statements: 
    1. They are supervised and regulated by local boards set up by the State Governments. 
    2. They can issue equity shares and preference shares. 
    3. They were brought under the purview of the Banking Regulation Act, 1949 through an Amendment in 1966. 
    Select the correct answer using the code given below: 
    (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2, and 3
  • RELIEF Scheme for Exporters 

    Why in the News

    • Government approved RELIEF (Resilience & Logistics Intervention for Export Facilitation) under Export Promotion Mission (EPM)
    • Aim: Support exporters amid West Asia crisis and maritime logistics disruption

    Background

    • Disruptions in Strait of Hormuz region
    • Issues:
      • Vessel diversion
      • Longer shipping routes
      • Port congestion
      • High freight cost + insurance premium + war-risk surcharge
      • Increased export uncertainty

    Objective

    • Ensure export continuity
    • Reduce logistics cost escalation
    • Provide risk mitigation
    • Protect MSME exporters and employment

    Coverage

    • Regions:
      • UAE, Saudi Arabia, Qatar, Oman, Kuwait, Israel, Bahrain, Iraq, Iran, Yemen
    • Covers:
      • Past shipments (disruption period)
      • Future consignments

    Key Components

    1. Enhanced Risk Coverage (Insured Exporters)

    • Up to 100% additional coverage
    • For shipments during disruption period

    2. Support for Upcoming Exports

    • Up to 95% risk coverage
    • Encourages export flow continuity

    3. MSME Support (Non-Insured)

    • Up to 50% reimbursement
    • Covers:
      • Freight escalation
      • Insurance surcharge
    • Cap: ₹50 lakh per exporter
    [2023] Consider the following statements with reference to India: 
    1. According to the ‘Micro, Small and Medium Enterprises Development (MSMED) Act, 2006’, the ‘medium enterprises’ are those with investments in plant and machinery between Rs. 15 crore and Rs. 25 crore. 
    2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector. 
    Select the correct answer using the code given below: 
    (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
  • Core Sector Growth Slows to 2.3% (February 2026)

    Why in the News

    • Government data shows growth in the Index of Eight Core Industries slowed sharply to 2.3% in February 2026, a three-month low.

    What are Core Sectors

    • Eight industries with high weight in IIP: Coal, Crude oil, Natural gas, Refinery products, Fertilisers, Steel, Cement, and Electricity

    Key Findings

    1. Sharp Slowdown

    • Growth declined from 4.7% (January) → 2.3% (February)
    • Broad-based slowdown across sectors

    2. Best Performing Sectors

    • Cement: 9.3% growth (though slowing)
    • Steel: 7.2% growth

    3. Weak Performing Sectors

    • Crude oil: –5.2% (6th month of decline)
    • Natural gas: –5% (20th month of decline)
    • Refinery products: –1%
    • Electricity: 0.5% (low growth)
    • Coal: 2.3% (slowed)
    [2015] In the ‘Index of Eight Core Industries’, which one of the following is given the highest weight? (a) Coal Production (b) Electricity generation (c) Fertilizer production (d) Steel production
  • India Power Sector Outlook (CEA 2026) 

    Why in the News

    • Central Electricity Authority released midterm review of 20th Electric Power Survey (EPS).

    About Central Electricity Authority: 

    • The Central Electricity Authority of India advises the government on policy matters and formulates plans for the development of electricity systems. 
    • It is a statutory organisation constituted under section 3 of Electricity Supply Act 1948, which has been superseded by section 70 of the Electricity Act, 2003.

    Demand & Growth

    • Peak demand: 459 GW (2035-36)
    • Electricity need: 3,365 BU
    • Growth: ~5.6–6.4% CAGR

    Capacity Expansion

    • From ~520 GW (2026)1,121 GW (2035-36)

    Energy Mix:

    • Solar: 509 GW (45%)
    • Coal: 315 GW (28%)
    • Wind: 155 GW (14%)
    • Hydro: 77 GW
    • Others: small share
      • Non-fossil capacity ~70%

    Key Insight

    • Solar leads in capacity
    • Coal dominates generation (51%) → ensures baseload power

    Energy Storage Need

    • 174 GW / 888 GWh
      • BESS: 80 GW
      • Pumped storage: 94 GW
    • Critical for renewable integration + grid stability
    • Investment: ~$2.2 trillion required

    Challenges

    • Import dependence: 75–80% lithium-ion cells
    • Critical minerals vulnerability: Lithium, Cobalt, Nickel
    [2024] Recently, the term “pumped-storage hydropower” is actually and appropriately discussed in the context of which one of the following? (a) Irrigation of terraced crop fields (b) Lift irrigation of cereal crops (c) Long duration energy storage (d) Rainwater harvesting system