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Subject: Economics

  • SC to examine Constitutional Validity of Securities Transaction Tax (STT)

    Why in the News?

    The Supreme Court of India has agreed to examine a petition challenging the constitutional validity of the Securities Transaction Tax (STT) imposed under the Finance Act, 2004.

    Legal Context of this Case:

    Petitioner: Aseem Juneja – contends that STT violates fundamental and economic rights.

    Bench: Headed by Justice J.B. Pardiwala; formal notice issued to Union Ministry of Finance.

    • The plea invokes Article 265 — “No tax shall be levied or collected except by authority of law.”
    • The Court will assess reasonableness, equity, and proportionality in transaction-based taxation.
    • A ruling against STT may impact ₹30,000-crore annual revenue and require redesign of securities taxation.

    SC to examine Constitutional Validity of Securities Transaction Tax (STT)

    What is the Securities Transaction Tax (STT)?

    • About: A direct tax levied on purchase and sale of securities through recognised stock exchanges.
    • Introduction: Under the Finance Act, 2004, to ensure transparency and curb tax evasion in capital markets.
    • Objective: Replace complex capital-gains tracking with a small, upfront levy to counter under-reporting and increase tax buoyancy.
    • Administered by: Central Board of Direct Taxes (CBDT), Ministry of Finance.
    • Scope: Applies to-
      1. Equity shares of listed companies
      2. Derivatives (futures & options)
      3. Equity-oriented mutual funds and ETFs.
    • Purpose:
      • Simplify tax collection from capital market participants.
      • Create a traceable, automated tax mechanism.
      • Generate steady revenue while discouraging speculative trading.
    • Nature: A transaction-based tax (TBT) collected automatically at the time of trade, irrespective of overall profit or loss.
    • Distinctive features:
        • Applies even on loss-making trades payable merely for conducting a transaction.
        • Non-refundable and non-adjustable, unlike TDS.
        • Raises transaction costs for high-frequency traders.
    • Imposition of STT:
      • Mode of collection: Automatically deducted by stock exchanges on every taxable trade and deposited into the government account; Ensures near-universal compliance and minimal evasion.
      • Rate & coverage: Varies across instruments and between buy/sell transactions; Periodically revised through Union Budgets.

    Key Grounds of Challenge:

    • Violation of Fundamental Rights:
      1. Article 14 (Equality): Unequal treatment; tax imposed irrespective of gain or loss.
      2. Article 19(1)(g) (Right to Trade): Penalises the act of trading itself.
      3. Article 21 (Livelihood & Dignity): Non-refundable levy burdens small traders.
    • Double Taxation: Traders already pay Capital Gains Tax on profits; STT adds a second layer on the same transaction.
    • Arbitrariness / Lack of Proportionality: Taxing even unprofitable transactions violates the principle of reasonable classification and fiscal fairness.
    • No Refund or Adjustment Mechanism: Absence of provision similar to TDS refunds; creates permanent loss even when income is negative.
    • Changed Circumstances: With digital audit trails, PAN-linked demat accounts, and near-complete transparency, the original rationale (to curb evasion) may no longer hold.
    [UPSC 2009] Consider the following:

    1. Fringe Benefit Tax 2. Interest Tax 3. Securities Transaction Tax

    Which of the above is/are Direct Tax/Taxes?

    Options: (a) 1 only (b) 1 and 3 only (c) 2 and 3 only (d) 1,2 and 3*

     

  • [6th October 2025] The Hindu Op-ed: Treating employment as a national priority

    PYQ Relevance

    [UPSC 2022] Economic growth in the recent past has been led by increase in labour productivity. Explain this statement. Suggest the growth pattern that will lead to creation of more jobs without compromising labour productivity

    Linkage: The article highlights that India needs consistent, job-oriented growth policies focusing on labour-intensive sectors like textiles, tourism, and MSMEs to ensure “growth with jobs” rather than jobless productivity gains — directly aligning with the UPSC 2022 question’s call for a balanced growth pattern.

    Mentor’s Comment

    Employment generation is not just an economic issue, it is the moral and strategic foundation of India’s long-term growth story. As India moves toward Viksit Bharat 2047, it must transform its demographic dividend into productive employment. This article explores why employment must be treated as a national mission, the urgent need for an integrated framework, and how inclusive job creation can become the cornerstone of equitable and resilient growth.

    Why in the News?

    India is standing at a historic demographic crossroads, poised to add 133 million people to its working-age population in the next 25 years, accounting for 18% of the global workforce addition. However, this window is closing fast, with the working population expected to peak by 2043. Despite multiple government schemes, India still lacks a unified national framework for employment and livelihoods. Sanjiv Bajaj, Past President of CII, argues for treating employment as a national priority through a coherent, multi-level policy that integrates growth, skilling, social protection, and mobility. This issue is not merely about job numbers; it’s about ensuring equity, inclusion, and sustainable economic resilience. In a consumption-driven economy like India, employment is both the driver and the outcome of growth.

    India’s Employment Challenge: The Demographic Window is Closing

    1. Demographic Dividend – India will add 133 million working-age individuals by 2047, nearly 18% of global addition, creating a unique window for productivity gains.
    2. Limited Timeframe – Worker population expected to peak by 2043, after which the demographic advantage will fade.
    3. Risk of Wasted Potential – Without large-scale, quality employment, India risks a demographic disaster rather than a dividend.
    4. Consumption Linkage – Quality jobs at scale broaden consumption, ensuring equitable and stable growth.

    Why a Unified Employment Policy is the Need of the Hour?

    1. Fragmented Efforts – Despite initiatives like Skill India, PMEGP, and social security schemes, India lacks an Integrated National Employment Policy (INEP).
    2. Need for Coordination – Employment generation spans multiple ministries — Labour, Skill Development, Industry, and Education — requiring unified planning and execution.
    3. Institutional Mechanism – Bajaj recommends an Empowered Group of Secretaries for oversight and District Planning Committees for implementation.
    4. Policy Alignment – Trade, industrial, education, and labour policies must be synchronised to ensure job-oriented growth.

    Bridging the Demand–Supply Divide in Labour Markets

    1. Demand-Side Drivers – Growth in high-employment-potential sectors like textiles, tourism, healthcare, agro-processing, real estate, and MSMEs.
    2. Supply-Side Gaps – Low employability of graduates, outdated curricula, and poor skilling alignment with emerging technologies (AI, robotics, green tech).
    3. Policy Reform – Curricula revamp, vocational training integration, and targeted skilling to meet industry needs.
    4. Mobility Barriers – Need for Centre–State cooperation on migration policies and worker support systems to promote “One India for Employment”.

    Labour Codes, Urban Employment, and MSME Empowerment

    1. Labour Code Implementation – Timely execution of the four Labour Codes is critical, with clear transition and business support guidelines.
    2. MSMEs as Job Engines – Employing over 25 crore people, MSMEs need enhanced access to finance, markets, and technology to drive “growth with jobs.”
    3. Urban Employment Guarantee – Piloting schemes in selected cities can address urban job distress, akin to MGNREGA for urban India.
    4. Regional Focus – Targeted interventions in 100 underdeveloped districts and rural internships for graduates can promote balanced employment.

    The Gig Economy Revolution

    1. Current Size – The gig economy currently employs 80 lakh–1.8 crore workers, expected to rise to 9 crore by 2030.
    2. Opportunity for Formalisation – With Tier-2 and Tier-3 cities participating, gig platforms can transform informal work into semi-formal, tech-enabled livelihoods.
    3. National Gig Policy – Should ensure worker protection, financial inclusion, and social security, supported by a centralised worker registry.
    4. Workplace Dignity – Ensure fair contracts, safety standards, and grievance redressal mechanisms.

    Enhancing Female Labour Force Participation

    1. Current Gaps – India’s female labour force participation (FLFP) remains among the lowest globally.
    2. Policy Incentives – Employment-Linked Incentive (ELI) schemes, childcare and eldercare infrastructure, and formalising Anganwadi and ASHA roles can improve participation.
    3. Societal Barriers – Campaigns must challenge gender norms restricting women’s economic mobility.
    4. Economic Multiplier – A 10% rise in FLFP could add up to $700 billion to India’s GDP by 2025 (McKinsey estimate).
    5. The Missing Link: Reliable Employment Data
      • Data Gaps – Existing surveys understate informal and rural employment realities.
      • Need for Real-Time Data – A dedicated task force must improve methodologies and reduce data publication lag.
    6. Policy Relevance – High-frequency data can guide interventions in dynamic sectors like gig work and MSMEs.

    Conclusion

    India’s demographic dividend offers a fleeting window to achieve inclusive and sustainable growth. Treating employment as a national priority through an integrated policy, labour reforms, skill alignment, and gender inclusion is essential. Generating growth with jobs will ensure equitable prosperity and long-term resilience. Employment, therefore, is not just an economic goal, it is the foundation of nation-building and social justice.

  • Niti Aayog proposes Presumptive Taxation for Foreign Companies

    Why in the News?

    NITI Aayog has released a working paper recommending the introduction of an optional presumptive taxation scheme for foreign companies operating in India.

    What is Presumptive Taxation?

    • Overview: Presumptive taxation allows taxpayers to declare income at a fixed percentage (presumed rate) of total turnover or receipts without maintaining detailed books of accounts.
    • Purpose: Simplifies taxation for small businesses or specific sectors by reducing compliance and administrative burden.
    • Domestic Example: Under the Income Tax Act, Sections 44AD, 44ADA, and 44AE permit presumptive taxation for small businesses, professionals, and transporters.
    • Key Feature:
      • Tax is levied on deemed profits instead of actual income.
      • Taxpayers opting for this scheme are exempt from detailed audits or complex record-keeping.

    What has NITI Aayog Proposed?

    • Scope: Extend the presumptive taxation concept to foreign companies operating in India.
    • Objective: To reduce litigation related to Permanent Establishment (PE) status and profit attribution in cross-border taxation.
    • Main Features:
      • Optional Scheme: Foreign companies can either choose the presumptive scheme for certainty or file regular returns if actual profits are lower.
      • Sector-Specific Rates: Different deemed profit rates for sectors such as manufacturing, digital services, and logistics.
      • Safe Harbour Clause: Once a company opts in, tax authorities cannot separately litigate the PE existence for that activity.
      • Alignment with Global Norms: Codify PE and attribution principles in domestic law consistent with OECD standards.
      • Administrative Reforms: Training of tax officials to ensure consistent application in digital and cross-border cases.

    Significance:

    • Provides tax certainty and simplicity for foreign investors.
    • Reduces disputes and promotes ease of doing business.
    • Balances India’s sovereign tax rights with the need for a predictable, investor-friendly regime.
    • Positions India as a more attractive FDI destination, aligned with its economic and tax reform agenda.
    [UPSC 2020] With reference to India’s decision to levy an equalization tax of 6% on online advertisement services offered by non-resident entities, which of the following statements is/are correct?

    1. It is introduced as a part of the Income Tax Act.

    2. Non-resident entities that offer advertisement services in India can claim a tax credit in their home country under the “Double Taxation Avoidance Agreements”.

    Select the correct answer using the code given below:

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

     

  • [pib] BRO Project Swastik marks 65 years of service

    Why in the News?

    Border Roads Organisation (BRO) Project Swastik celebrated its 65th Raising Day on October 01, 2025.

    About Project Swastik:

    • Origin: Established in 1960 as Project DRAGON, renamed Project Swastik on 1 October 1963.
    • Organisation: A flagship initiative of the Border Roads Organisation (BRO) under the Ministry of Defence.
    • Mandate: Construction and maintenance of strategic roads, bridges, and tunnels in the high-altitude Himalayan terrain.
    • Area of Responsibility: Covers North and East Sikkim up to forward border areas, also parts of North Bengal. The region is prone to landslides, fragile geology (Phyllites, Schists), and extreme weather conditions.
    • Strategic Role: Provides vital support for Armed Forces mobility, disaster relief operations, and socio-economic connectivity for remote communities.

    Major Accomplishments:

    • Road & Bridge Network: Built and maintained over 1,412 km of roads and 80 major bridges since inception.
    • Recent Achievements: In the last decade, completed 350 km of new roads, 26 bridges, and 1 tunnel, ensuring year-round access to forward areas.
    • Key Road Links: Developed lifelines like the Gangtok–Chungthang and Gangtok–Nathula roads, critical for defence and civilian movement.
    • Disaster Response: Effectively restored connectivity after Glacial Lake Outburst Floods (GLOFs), cloudbursts, and Teesta River floods. Widely praised during the 2023 Sikkim flash floods.

  • More Women join the labour force, but are they really employed?

    Introduction

    The female labour force participation rate (FLFPR) is often viewed as a proxy for gender equality and economic dynamism. India’s FLFPR dropped from 31.2% in 2011-12 to 23.3% in 2017-18 but has dramatically risen to 41.7% in 2023-24. At first glance, this looks like a success story. However, closer scrutiny reveals that most women are being absorbed into agriculture, unpaid household enterprises, and low-paying self-employment, rather than formal or secure wage jobs. The paradox is clear: more women are being “counted” in the labour market, but their earnings and economic independence remain stagnant or declining.

    Why is female labour force participation in the news?

    1. Sharp rise in FLFPR: Jumped from 23.3% in 2017-18 to 41.7% in 2023-24.
    2. First-time reversal: After years of decline, the participation rate is rising again.
    3. Underlying concern: Despite more women “working,” earnings have fallen, and secure wage jobs remain elusive.
    4. Contradiction: Participation has grown, but instead of diversifying into services/industry, women are moving back into agriculture.

    What explains the rise in female participation?

    1. Rural women as drivers: Most of the rise is accounted for by women in rural India.
    2. Shift from domestic duties: Share of women reporting “domestic duties” fell from 57.8% (2017-18) to 35.7% (2023-24).
    3. Rise in unpaid helpers: Share of “helpers in household enterprises” rose from 9.1% to 19.6%.
    4. Self-employment increase: “Own account workers and employers” rose from 4.5% to 14.6%.

    Are women moving to better jobs?

    1. Agriculture dominance: Share of rural women in agriculture rose from 71.1% (2018-19) to 76.9% (2023-24).
    2. Decline in other sectors: Women’s share in both secondary (industry) and tertiary (services) sectors has fallen.
    3. Blurring boundaries: Women’s unpaid household work overlaps with helper roles in household enterprises, making it questionable whether this should count as “employment.”

    What about earnings and job quality?

    1. Declining real earnings: Except for casual workers, earnings have declined across categories—self-employed, salaried, and even employers.
    2. Vulnerability of self-employment: More women are reporting self-employment, but this has not translated into higher income.
    3. No wage expansion: Growth in FLFPR has not been accompanied by secure wage-based jobs.

    Why does this matter for India’s economy and gender equality?

    1. False signal of empowerment: Higher FLFPR without earnings security reflects distress-driven participation, not genuine empowerment.
    2. Economic vulnerability: Rising unpaid and low-paid work lowers household resilience and women’s autonomy.
    3. Policy challenge: Employment growth is not keeping pace with women’s entry into the workforce, pointing to structural issues in India’s labour market.

    Conclusion

    The sharp rise in India’s female labour force participation hides more than it reveals. Women are being pushed into unpaid or poorly paid work, especially in agriculture and household enterprises, while real earnings are falling. This suggests that India’s growth story is not translating into dignified employment for women. For true gender equality, the focus must shift from mere participation numbers to quality, security, and remuneration of women’s work. Only then will women’s economic empowerment become a reality.

    PYQ Relevance

    [UPSC 2023] Distinguish between ‘care economy’ and ‘monetized economy’. How can the care economy be brought into a monetized economy through women empowerment?

    Linkage: The article highlights women’s shift from domestic duties to unpaid helper roles, directly linking the care economy to the challenge of integrating it into the monetized economy through women’s empowerment.

  • Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme

    Why in the News?

    The Government has extended the Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme until March 31, 2026, providing relief and policy certainty to exporters.

    About the RoDTEP Scheme:

    • Launch & Context: Introduced on 1 January 2021 under the Foreign Trade Policy 2015–20, replacing the Merchandise Exports from India Scheme (MEIS) after India lost a case at the World Trade Organisation (WTO).
    • Administration: Managed by the Department of Revenue, Ministry of Finance, and implemented via the Central Board of Indirect Taxes and Customs (CBIC).
    • Objective: Refund hidden domestic taxes/duties on exports to ensure goods leave the country free of embedded levies, enhancing competitiveness and ensuring WTO compliance.
    • Coverage: Applicable to all Indian exporters (manufacturers and merchants) including SEZs, Export Oriented Units (EOUs), Advance Authorisation (AA) holders, and Domestic Tariff Area (DTA) units.
    • Timeline: Initially valid till 5 February 2025, restored in May 2025 for AA, EOU, and SEZ exports after industry lobbying, and now extended till 31 March 2026.

    Key Features:

    • Hidden Taxes Covered: Refunds duties such as electricity duty, mandi tax, fuel charges in transport, and local cesses.
    • Rebate Mechanism: Calculated as a percentage of the Free on Board (FOB) value of exports.
    • Refund Mode: Benefits disbursed as electronic scrips (e-scrips), stored in CBIC’s digital ledger.
    • Use of E-Scrips: Can be utilised to pay basic customs duty or transferred to other importers.
    • Sectoral Priority: Focus on labour-intensive industries like textiles, handicrafts, leather, etc.
    • Exclusion: Re-exported goods are not eligible under RoDTEP.
    • Budgetary Control: Operates strictly within annual budget allocations, as clarified by DGFT.
    • Policy Certainty: Extension till 2026 ensures stability for exporters facing global trade headwinds.
    [UPSC 2020] With reference to the international trade of India at present, which of the following statements is/are correct?

    1.  India’s merchandise exports are less than its merchandise imports.

    2. India’s imports of iron and steel, chemicals, fertilizers and machinery have decreased in recent years.

    3. India’s exports of services are more than its imports of services.

    4. India suffers from an overall trade/current account deficit.

    Select the correct answer using the code given below:

    Options: (a) 1 and 2 only  (b) 2 and 4 only (c) 3 only (d) 1, 3 and 4 only*

     

  • World’s highest bridge opens to traffic in China 

    Why in the News?

    The Huajiang Grand Canyon Bridge in Guizhou province, China, is now the world’s tallest bridge, standing 625 m above the Beipan River.

    World's highest bridge opens to traffic in China 

    About Huajiang Grand Canyon Bridge:

    • Height: Rises 625 m above the Beipan River, surpassing the previous record-holder, the Beipanjiang Bridge (565 m).
    • Connectivity: Links the Liuzhi Special District and Anlong Special District, reducing travel time from 2 hours to just 2 minutes.
    • Transport Network: Part of the Guizhou S57 Expressway and the 190 km Shantian–Puxi Expressway, boosting transport, economy, and tourism.
    • Engineering Hub: Guizhou, called the “bridge museum of the world”, now has nearly half of the world’s 100 tallest bridges, showcasing China’s leadership in high-altitude civil engineering.

    Key Features of the Bridge:

    • Height Record: Deck-to-water clearance of 625 m, taller than most skyscrapers.
    • Span & Length: Total length 2,890 m, with a 1,420 m suspension span, the longest in any mountainous region globally.
    • Construction: Began January 2022, completed in just over three years; final truss installed January 2025; load-tested with 96 trucks.

  • What an empty plate of food should symbolise

    Introduction

    Globally, nearly one-third of all food produced is lost or wasted, undermining both food security and climate action. For India, the cost of post-harvest losses is about ₹1.5 trillion every year, almost 3.7% of its agricultural GDP. Beyond economics, this wastage squanders nutrition, water, energy, and labour, aggravating the climate crisis. The problem is not consumer-driven, as in developed nations, but arises early in the value chain, in handling, processing, and distribution. International Day of Awareness of Food Loss and Waste (IDAFLW) highlights this as both a challenge and an opportunity: to build resilient, efficient, and climate-smart food systems.

    Why is Food Loss in the News?

    The recent FAO–NIFTEM–GCF study has provided the first sector-, state– and operation-wise estimates of greenhouse gas emissions from post-harvest losses and retail waste in India, covering 30 crops and livestock products. The findings are striking: even modest losses in cereals like paddy account for over 10 million tonnes of CO₂-equivalent emissions annually due to rice’s methane intensity. Overall, food loss generates more than 33 million tonnes of emissions every year. For a country aiming to balance food security with climate commitments, this is both alarming and unprecedented in scale.

    The Economic Burden of Food Loss

    1. ₹1.5 trillion annual cost: Post-harvest losses in India amount to nearly 3.7% of agricultural GDP.
    2. Sectoral vulnerability: Fruits and vegetables suffer 10–15% losses; even staples such as paddy (4.8%) and wheat (4.2%) are significantly affected.
    3. Farmer incomes at risk: Such losses reduce food availability and directly affect the livelihood security of millions of farmers.

    The Climate Connection

    1. Greenhouse gas emissions: Food loss from 30 key commodities produces 33 million tonnes of CO₂-equivalent emissions annually.
    2. Cereal losses critical: Paddy alone contributes over 10 million tonnes of emissions due to methane intensity.
    3. Livestock products’ footprint: Wastage in dairy and meat is equally damaging, given their heavy resource requirements.
    4. Link with SDGs: India has integrated SDG 12.3.1 (Global Food Loss and Waste) into its National Indicator Framework for systematic monitoring.

    Where Do the Losses Occur?

    1. Early supply chain stages: Losses in India occur during handling, processing, and distribution, unlike high-income countries where waste is consumer-driven.
    2. Infrastructure gaps: Lack of modern cold chains, refrigerated transport, and efficient storage are major bottlenecks.
    3. Fragmented supply chains: Weak value-chain integration adds to inefficiency and wastage.

    Practical Solutions in Sight

    1. Cold chain modernisation: Programmes like PM Kisan SAMPADA Yojana (PMKSY) focus on modernising storage, processing, and logistics.
    2. Affordable technologies: Solar cold storage, low-cost cooling chambers, and moisture-proof silos can reduce spoilage for smallholders.
    3. Digital interventions: IoT sensors, AI-driven forecasting, and tracking tools like the FAO Food Loss App (FLAPP) (launched in 2023, used in 30+ countries) improve efficiency.
    4. Circular economy practices: Redirecting surplus to food banks/community kitchens and converting unavoidable waste into compost, feed, or bioenergy.
    5. Policy support: Subsidies, credit guarantees, and low-interest loans are needed to scale up solutions.

    Shared Responsibility Across Stakeholders

    1. Government: Integrate food loss reduction in climate strategies and invest in infrastructure.
    2. Private sector: Adopt circular business models and scalable innovations.
    3. Civil society & academia: Drive awareness and research.
    4. Consumers: Practice mindful consumption and support redistribution mechanisms.

    Conclusion

    An empty plate should symbolise nourishment received, not the silent wastage of resources and opportunities. Reducing food loss in India is not just about saving food — it is about strengthening farmer incomes, ensuring food security, cutting emissions, and meeting global sustainability goals.

    PYQ Relevance

    [UPSC 2019] Examine the scope of the food processing industries in India. Elaborate the measures taken by the government in the food processing industries for generating employment opportunities.

    Linkage: Food loss and waste directly highlight the gaps in India’s food processing sector, where inadequate cold chains, fragmented supply chains, and weak storage infrastructure undermine both farmer incomes and climate goals, making this question highly relevant.

    Value Addition

    International Day of Awareness of Food Loss and Waste (IDAFLW): Observed on September 29; raises global attention to the issue of food loss and waste undermining food and climate security.

    Value Chain and Food Processing Sector in India

    Economic Significance

    1. Contribution to GDP : Food processing sector contributes about 10% of manufacturing GDP and nearly 13% of India’s exports.
    2. Employment Potential : Provides large-scale rural and semi-urban employment, with strong potential for women and smallholder farmers.

    Infrastructure and Policy Interventions

    1. Pradhan Mantri Kisan SAMPADA Yojana (PMKSY) : Umbrella scheme for cold chains, mega food parks, and agro-processing clusters.
    2. Mega Food Parks : Around 42 Mega Food Parks sanctioned across the country to integrate farm-to-market supply chains.
    3. Operation Greens (TOP to TOTAL) : Price stabilisation and value chain strengthening for perishable crops like tomato, onion, potato.
    4. PLI Scheme for Food Processing (2021) : ₹10,900 crore outlay to boost exports, ready-to-eat, organic, and marine food products.

    Post-Harvest Losses and Value Chain Gaps

    1. High Economic Losses : NABCONS (2022) estimated ₹1.5 trillion annual post-harvest losses, equivalent to 3.7% of agricultural GDP.
    2. Crop-wise Losses : Fruits and vegetables face 10–15% losses; paddy 4.8%; wheat 4.2%.
    3. Comparative Gap : Only 10% of India’s produce is processed, compared to 65–70% in developed nations.

    Technology and Innovation in Value Chains

    1. IoT and AI : Used for forecasting, tracking, and real-time storage monitoring.
    2. Affordable Storage Solutions : Solar cold storage, low-cost cooling chambers, and moisture-proof silos reduce wastage.
    3. Digital Platforms : FAO’s Food Loss App (FLAPP) (2023) monitors value-chain losses; adopted in 30+ countries.

    Sustainability and Circular Economy

    1. Resource Efficiency : Cutting losses conserves embedded water, energy, and labour.
    2. Surplus Redistribution : Food banks and community kitchens absorb edible surplus.
    3. Waste Conversion : Composting, animal feed, and bioenergy generation from unavoidable waste.
    4. Global Commitments : Strengthens India’s alignment with SDG 2 (Zero Hunger), SDG 12 (Responsible Consumption and Production), and SDG 13 (Climate Action).

    Case Study Box: Food Processing and Value Chain in India

    Case Study 1: Tumkur Mega Food Park, Karnataka

    • Launched : Under PMKSY.
    • Facilities : Cold storage, warehousing, quality control labs, logistics hubs
    • Impact :
      • Reduced post-harvest losses of perishable crops.
      • Generated ~5,000 direct and indirect jobs.
      • Enhanced farmer linkages with retail chains and exporters.

    Case Study 2: Operation Greens – Onion Price Stabilisation (Maharashtra, 2018–19)

    • Problem : Frequent onion price crashes and volatility in Maharashtra.
    • Intervention : Subsidised transport and storage under Operation Greens (TOP to TOTAL).
    • Impact :
      • Prevented distress sales by farmers.
      • Stabilised retail onion prices for consumers.
      • Demonstrated the role of value chain management in food security.

    Case Study 3: Amul Dairy Cooperative (Gujarat)

    • Model : Farmer-owned cooperative integrating production, processing, and distribution.
    • Impact :
      • Dairy farmers receive better price realisation.
      • Efficient cold chain logistics reduce milk spoilage.
      • Became a global model of agri-value chain success.

  • Analysing Indian State’s macro-fiscal health

    Introduction

    India’s federal system depends heavily on States for delivering core welfare, infrastructure, and development. For much of the 2000s, reforms and tax buoyancy allowed States to report surpluses, better spending, and healthier balance sheets. However, the COVID-19 pandemic marked a turning point: revenues plummeted while emergency spending skyrocketed, forcing States into unprecedented borrowing. The Comptroller and Auditor General (CAG)’s decade-long analysis highlights this transition, exposing systemic stress points in India’s fiscal federalism.

    Why is this issue in the news?

    India’s States, once showing signs of fiscal prudence with even surpluses, now find themselves trapped in a debt spiral. The pandemic alone pushed almost every State into record borrowing, reversing earlier trends. For example, Uttar Pradesh, once lauded for surplus budgets, reported a revenue surplus of only ₹2,000 crore, down sharply from ₹37,000 crore in FY20. Kerala, which borrowed ₹80,575 crore in 2020-22, saw its debt mount to unsustainable levels. The contrast is stark: States that earlier prospered through buoyancy and reforms are today weighed down by heavy fiscal deficits and repayment burdens.

    How has the States’ borrowing changed over time?

    1. Sharp rise post-pandemic: Borrowings spiked everywhere during the pandemic, with Kerala, Maharashtra, Andhra Pradesh, and Tamil Nadu reporting unprecedented debt levels.
    2. Uttar Pradesh’s decline: From a revenue surplus of ₹37,000 crore in 2019-20, UP fell to only ₹2,000 crore.
    3. Kerala’s crisis: Borrowed ₹80,575 crore between 2020-22 and exceeded ₹1.04 lakh crore later, making it one of the most indebted States.
    4. National trends: From 2017 to 2022-23, States’ gross borrowings rose from ₹5.6 lakh crore to ₹8.2 lakh crore, reflecting widespread fiscal strain.

    Why are States borrowing so heavily?

    1. Emergency spending: The pandemic forced huge expenditures on health, welfare, and relief, while revenues collapsed.
    2. Welfare paradox: Despite borrowing, States continue with high welfare commitments such as free electricity, pensions, and subsidies.
    3. GST regime pressures: Dependence on GST compensation and delayed transfers added strain to State finances.
    4. Capital expenditure trade-offs: More money went into welfare subsidies than infrastructure, raising concerns of long-term growth stagnation.

    What are the fiscal risks emerging?

    1. Debt sustainability: States like Punjab, Kerala, and Rajasthan carry some of the heaviest debt burdens relative to GSDP.
    2. Revenue shortfall: Weak own-tax revenues coupled with GST dependency reduce fiscal space.
    3. Deficit pressures: Gross fiscal deficit (GFD) levels remain elevated, restricting maneuverability.
    4. Crowding out growth: Excessive borrowing for subsidies diverts funds from capital creation, weakening long-term competitiveness.

    How are States coping with fiscal pressures?

    1. Raising borrowings: Kerala, Maharashtra, and Tamil Nadu remain among the largest borrowers.
    2. Cutting investments: Many States reduced capital expenditure to fund populist schemes.
    3. Seeking Centre’s support: GST compensation and Union transfers remain critical lifelines.
    4. Relying on lotteries and land: Kerala and other States turn to non-tax sources like lottery revenues or land monetisation.

    What is the way forward for States’ fiscal health?

    1. Prudent fiscal management: Focus on long-term debt sustainability instead of short-term populism.
    2. Rationalised welfare: Targeted subsidies over blanket schemes to avoid unsustainable fiscal stress.
    3. Strengthened GST framework: Ensure timely compensation and greater autonomy in tax mobilisation.
    4. Balanced expenditure: Redirect focus toward capital creation and infrastructure while safeguarding essential welfare.

    Conclusion

    The macro-fiscal health of Indian States has reached a critical juncture. The transition from buoyancy and surpluses in the 2000s to widespread borrowing and debt stress post-pandemic illustrates both structural vulnerabilities and political compulsions. While welfare commitments reflect democratic imperatives, unchecked populism coupled with weak revenue growth risks undermining fiscal stability. The future of India’s growth story rests not only on the Centre but equally on how States recalibrate their spending priorities and borrowing practices.

    PYQ Relevance

    [UPSC 2024] Examine the pattern and trend of public expenditure on social services in the post-reforms period in India. To what extent this has been in consonance with achieving the objective of inclusive growth?

    Linkage: The article’s discussion on States’ rising welfare spending, shrinking capital outlays, and mounting debt post-pandemic directly links to this PYQ by questioning whether such expenditure patterns genuinely advance inclusive growth.

  • [pib] The Indian Ports Act, 2025

    Why in the News?

    The Indian Ports Act, 2025 enacted in August, repealing the age-old Indian Ports Act of 1908 seeks to establish a more modern legal and institutional framework for India’s port sector.

    About Indian Ports Act, 2025:

    • Overview: Enacted in August 2025, replacing the Indian Ports Act of 1908 to modernize India’s port governance.
    • Aim: To integrate port law, tariff regulation, safety, environmental standards, and Centre–State cooperation into one comprehensive legal framework.
    • Vision: Aligns with broader maritime reforms alongside the Merchant Shipping Act, 2025 and Carriage of Goods by Sea Act, 2025.
    • Seeks to position India’s port sector for global competitiveness through transparency, sustainability, and efficient regulation.

    Key Features:

    • Maritime State Development Council (MSDC): Becomes a statutory consultative body to coordinate between Centre and States, advise on national port strategy, tariff transparency, data standards, and connectivity planning.
    • State Maritime Boards: Each coastal state must establish or recognize a board within 6 months to regulate non-major ports, manage licensing, tariffs, development, safety, and environmental compliance.
    • Tariff Setting:
      • Major Ports: Tariffs fixed by Port Authority Boards or Boards of Directors.
      • Non-Major Ports: Tariffs fixed by State Maritime Boards or concessionaires.
      • All tariffs must be electronically published for transparency.
    • Dispute Resolution: States must create Dispute Resolution Committees; appeals go directly to High Courts. Arbitration and ADR allowed.
    • Environmental Norms: Mandates waste management, pollution control, disaster preparedness, ballast water restrictions, and penalties for violations.
    • Applicability: Covers all existing and future ports, navigable channels, and vessels within port limits, except those serving armed forces, Coast Guard, or customs.
    [UPSC 2023] With reference to India, consider the following pairs:

    Port : Well Known as

    1. Kamarajar Port : First major port in India registered as a company

    2. Mundra Port : Largest privately owned port in India

    3. Visakhapatnam Port : Largest container port in India

    How many of the above pairs are correctly matched?

    (a) Only one pair (b) Only two pairs* (c) All three pairs (d) None of the pairs