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Subject: Economics

  • Inflation Hits 77-Month Low

    Why in the News?

    India’s inflation indicators have shown a significant downward trend, with the Consumer Price Index (CPI) dropping to a 77-month low of 2.1% in June 2025, and the Wholesale Price Index (WPI) contracting by -0.13%, marking its first decline in 20 months.

    Key Highlights on Inflation (June 2025):

    • Consumer Price Index (CPI) inflation dropped to 2.1%, the lowest in 77 months (since January 2019).
    • Wholesale Price Index (WPI) contracted by -0.13%, marking its first decline in 20 months.
    • Food and Beverages (CPI component) registered deflation of 0.2%, after being at 8.4% in June 2024.
    • WPI Food Articles saw a sharp fall of 3.75%, compared to 11.1% inflation in June 2024.
    • Crude Petroleum and Natural Gas (WPI) prices contracted by 12.3%, the 10th straight month of decline.
    • Inflation in Fuel and Light (CPI) eased to 2.55% (from 2.8% in May 2025).
    • Housing inflation increased marginally to 3.24%, while Pan, Tobacco and Intoxicants stayed stable at 2.4%.

    Back2Basics: Consumer Price Index (CPI) vs. Wholesale Price Index (WPI)

    Consumer Price Index (CPI) Wholesale Price Index (WPI)
    Definition Measures the change in retail prices of goods and services consumed by households Measures the change in wholesale prices of goods traded between businesses
    Compiled By National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI) Office of Economic Adviser, Ministry of Commerce and Industry
    Base Year 2012 (CPI-Industrial Workers has 2016 as base year) 2011–12
    Coverage Goods and Services Only Goods
    Data Collection Prices from 1,181 villages & 1,114 urban markets across India Prices collected from wholesale markets, factories, and mandis
    Purpose/Use Measures retail inflation, used for the RBI’s inflation targeting and monetary policy decisions Measures producer-level inflation, used as a GDP deflator
    Users Consumers, RBI, Government (for social welfare schemes like DA/DR) Policymakers, manufacturers, and financial markets
    Publication Frequency Monthly Monthly
    Number of Items 299 items 697 items
    Components – Food & Beverages (45%)
    – Housing (10%)
    – Fuel & Light (6.8%)
    – Miscellaneous (services, etc.) (28.3%)
    – Clothing & Footwear (6.5%)
    – Pan, Tobacco & Intoxicants (2.4%)    		 – Primary Articles (22.6%)
    – Fuel & Power (13.2%)
    – Manufactured Products (64.2%)
    Weight of Food Items High (~45%) Lower (~24.4%)
    Impact on Economy Direct impact on consumer purchasing power and cost of living Indicates trends in production costs and supply chain
    Volatility More volatile due to food and fuel price changes Less volatile due to base price considerations
    Use in Policy Directly used by RBI for inflation targeting (e.g., 4% CPI target) Used for GDP deflation, price policy formation
    Criticism May not reflect production-side price pressures Does not capture consumer-level inflation or services
    Inflation Indicator Preferred indicator for common people More relevant to manufacturers and wholesale traders

     

    [UPSC 2021] With reference to the Indian economy, demand-pull inflation can be caused or increased by which of the following:

    1. Expansionary policies 2.Fiscal stimulus 3.Inflation-indexing of wages 4.Higher purchasing power 5.Rising interest rates

    Select the correct answer using the code given below:

    Options: (a) 1, 2, and 4 only* (b) 3, 4, and 5 only (c) 1, 2, 3, and 5 only (d) 1, 2, 3, 4, and 5

     

  • ADEETIE Scheme

    Why in the News?

    The Union Ministry of Power has launched a new national scheme — Assistance in Deploying Energy Efficient Technologies in Industries & Establishments (ADEETIE).

    About ADEETIE Scheme:

    • Launch: It was launched by the Ministry of Power through the Bureau of Energy Efficiency (BEE).
    • Objective: It aims to promote energy efficiency in Micro, Small, and Medium Enterprises (MSMEs) to cut energy consumption, reduce emissions, and enhance competitiveness.
    • Background: It builds upon successful state-level pilots, such as decarbonisation projects in Andhra Pradesh’s MSME clusters.
    • Climate Alignment: It supports India’s climate goals, including 45% emission intensity reduction by 2030 and achieving Net Zero by 2070.
    • Budget Allocation: The scheme has a dedicated budget of â‚č1,000 crore, with a focus on MSMEs, EXCLUDING large enterprises.

    Key Features of ADEETIE Scheme:

    • Interest Subsidy Support: MSMEs adopting energy-efficient tech will receive interest subsidies on loans:
      • 5% for small enterprises
      • 3% for medium enterprises
    • Digital Portal Utility: The platform acts as a one-stop portal for financing, project development, and knowledge sharing on energy-efficient solutions.
    • Supported Technologies: It promotes adoption of cutting-edge clean technologies, including:
      • Automation and digital control systems
      • Combustion control systems for boilers
      • Methane capture technology
      • Air-dyeing in textiles
    • Collaboration: It fosters industry partnerships through MoUs with major MSME associations.
    • Legal Backing: It aligns with the Energy Conservation (Amendment) Act, 2022, which enables carbon markets and mandates clean energy usage.
    [UPSC 2016] On which of the following can you find the Bureau of Energy Efficiency Star Label?

    1. Ceiling fans

    2. Electric geysers

    3. Tubular fluorescent lamps

    Select the correct answer using the code given below.

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

     

  • Dedicated Freight Corridor (DFC) Project  

    Why in the News?

    India’s flagship freight rail infrastructure project — the Dedicated Freight Corridor (DFC) — is nearing full commissioning.

    About the Dedicated Freight Corridor (DFC) Project:

    • Overview: It is a flagship railway initiative by the Ministry of Railways to modernise and streamline freight movement in India.
    • Launch: The foundation stone was laid in 2006 by PM Dr. Manmohan Singh.
    • Implementing Agency: It is implemented by the Dedicated Freight Corridor Corporation of India Ltd. (DFCCIL), a Special Purpose Vehicle established in October 2006.
    • Objective: The main aim is to develop high-capacity, high-speed freight-only rail corridors to decongest passenger routes and improve logistics efficiency.
    • Investment Size: With a total estimated cost of â‚č1.25 lakh crore, the DFC is among India’s largest rail infrastructure investments.
    • Corridor Coverage:
      1. Eastern DFC (EDFC): Spans 1,337 km from Sonnagar (Bihar) to Sahnewal (Punjab) — fully operational.
      2. Western DFC (WDFC): Stretches 1,506 km from JNPT (Mumbai) to Dadri (UP) — 93% complete, to be commissioned by Dec 2025.
    • Need for DFCs: The project was necessitated by overuse of the Golden Quadrilateral, which carries over 50% of freight on just 16% of India’s rail routes.
    • Freight Transport Target: The goal is to increase the rail share of freight to 45% by 2030 as part of the National Rail Plan.

    Key Features of the DFC:

    • Dedicated Infrastructure: The DFCs feature electrified double-line tracks, exclusively for freight, separating them from passenger traffic.
    • Load and Speed Capacity: Built to handle 32.5-tonne axle loads and support freight train speeds of up to 100 km/h.
    • Cargo Type by Corridor:
      1. Eastern DFC: Focused on coal and raw materials.
      2. Western DFC: Transports containers, cement, fertilisers, and other industrial goods.
    • Train Speed: Trains currently operate at 50–60 km/h, with further speed gains expected through modern rolling stock.
    • Capacity Utilization: Already operating at over 85% capacity, with projections of 480 daily trains (240 each direction) by mid-2026.
    • Future Expansion Plans:
      1. East Coast Corridor: Paradip to Vijayawada
      2. East–West Corridor: Kharagpur to Mumbai
      3. North–South Corridor: Delhi to Chennai
    • Estimated Expansion Cost: The combined cost of these three new corridors is around â‚č4 lakh crore, with the East Coast Corridor prioritized first.
    [UPSC 2000] Which one of the following ports of India handles the highest tonnage of import cargo?

    Options: (a) Calcutta (b) Kandla (c) Mumbai* (d) Visakhapatnam

     

  • [pib] Sanchar Mitra Scheme

    Why in the News?

    The Department of Telecommunications (DoT) has launched an expanded Sanchar Mitra Scheme to engage engineering students as digital ambassadors for promoting telecom literacy, digital safety, and citizen engagement.

    What is the Sanchar Mitra Scheme?

    • Launching Body: An initiative by the Department of Telecommunications (DoT), Government of India.
    • Primary Aim: To engage student volunteers as “Sanchar Mitras” or digital ambassadors to spread awareness about telecom-related issues.
    • Purpose:
      • Bridge the communication gap between citizens and the telecom ecosystem.
      • Promote safe and informed use of telecom services.
      • Encourage public participation in India’s digital transformation.
    • Implementation Status:
      • Piloted in select institutions.
      • Now being scaled up for nationwide rollout.

    Key Features and Highlights:

    • Target Audience: It primarily targets students from engineering and technical backgrounds such as telecommunications, computer science, electronics, and cybersecurity.
    • Selection of Volunteers: Students will be nominated as Sanchar Mitras in consultation with DoT field units and educational institutions.
    • Training Modules: Volunteers will be trained to conduct grassroots campaigns on cyber fraud prevention, EMF radiation concerns, and responsible digital behavior.
    • Training Institutions: Training will be delivered by the National Communications Academy–Technology (NCA-T) and the Media Wing of the DoT.
    • Core Pillars: The scheme is structured around three key pillars: Connect, Educate, and Innovate.
    • Tech Awareness Promotion: Sanchar Mitras will promote awareness on emerging telecom technologies like 5G, 6G, AI, and cybersecurity.
    • Community Outreach: Students will engage with communities, NGOs, and schools to foster a culture of informed digital citizenship.
    • Strategic Alignment: It aligns with India’s strength in the “Four Ds”: Democracy, Demography, Digitisation, and Delivery.
    [UPSC 2010] Which among the following do/does not belong/belongs to the GSM family of wireless technologies?

    Options: (a) EDGE (b) LTE (c) DSL* (d) Both EDGE and LTE

     

  • [pib] E-Truck Incentive Scheme

    Why in the News?

    The Ministry of Heavy Industries (MHI) has launched E-Truck Incentive Scheme to provide financial incentives for electric trucks (e-trucks) under the PM E-DRIVE initiative.

    What is E-Truck Incentive Scheme?

    • Overview: It is a dedicated scheme to provide financial incentives for electric trucks under the broader PM E-DRIVE initiative.
    • First-of-its-Kind Support: This is the first direct government support specifically for electric trucks to promote clean, efficient, and sustainable freight mobility.
    • Target Vehicle Categories: It targets N2 and N3 category trucks, as per Central Motor Vehicle Rules (CMVR):
      • N2: GVW above 3.5 tonnes up to 12 tonnes
      • N3: GVW above 12 tonnes up to 55 tonnes
    • Incentive for Articulated Vehicles: For articulated vehicles, the incentive applies only to the puller tractor of the N3 category, not the trailer.
    • Warranty Requirements:
      • Battery: 5 years or 5 lakh km, whichever comes first
      • Motor & Vehicle: 5 years or 2.5 lakh km
    • Incentive Details:
      • Based on Gross Vehicle Weight (GVW)
      • Maximum support capped at â‚č9.6 lakh per e-truck
      • Incentives are given as upfront discounts, reimbursed to Original Equipment Manufacturers (OEMs) through the PM E-DRIVE portal
    • Deployment Goal: It aims to support the deployment of 5,600 electric trucks across India.
      • 1,100 trucks reserved for Delhi, with â‚č100 crore allocated due to high pollution levels
    • Mandatory Scrappage Clause: To qualify, applicants must scrap an old diesel truck via scrappage centres approved by the Ministry of Road Transport and Highways (MoRTH).
    • Sectoral Impact: It is expected to benefit sectors like steel, ports, cement, and logistics by reducing fuel costs and improving air quality.

    About PM E-DRIVE Scheme:

    • Overview: It stands for Prime Minister’s Electric Drive Revolution in Innovative Vehicle Enhancement, launched by the Ministry of Heavy Industries in September 2024.
    • Long-Term Goal: To to foster an EV ecosystem, reduce carbon emissions, and help India achieve Net Zero emissions by 2070.
    • Budget Allocation: It has a total outlay of â‚č10,900 crore for two years, aimed at accelerating India’s electric mobility transition.
    • Scope and Coverage: It supports multiple vehicle categories: Two-wheelers; Three-wheelers; Electric trucks; Electric buses and Electric ambulances.
    • Demand Incentive: It provides direct demand incentives to buyers through OEMs, lowering the upfront cost of EVs.
    • Category-wise Allocation:
      • â‚č3,679 crore: For two-wheelers, three-wheelers, ambulances, and trucks
      • â‚č500 crore: Specifically for electric ambulance procurement
      • â‚č4,391 crore: To procure 14,028 electric buses in 9 major cities (Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Surat, Bangalore, Pune, Hyderabad)
    • Charging Infrastructure: â‚č2,000 crore allocated to build 72,300 public charging stations nationwide, including:
      • Fast chargers for four-wheelers, buses, two-wheelers, and three-wheelers
    • Digital E-Voucher System:
      • Incentives claimed through Aadhaar-authenticated e-vouchers
      • Signed digitally by both buyer and dealer for transparency
    • Vehicle Scrappage Mandate: Scrapping of old vehicles is mandatory to claim certain incentives, especially for electric trucks, promoting fleet modernization.

     

    [UPSC 2025] Consider the following types of vehicles:

    I. Full battery electric vehicles II. Hydrogen fuel cell vehicles III. Fuel cell electric hybrid vehicles

    How many of the above are considered as alternative (powertrain) vehicles?

    Options: (a) Only one (b) Only two (c) All the three* (d) None

     

  • Bridge too far: A regular audit of all major infrastructure projects is a must

    Why in the News?

    Recently, a span of a 40-year-old bridge collapsed in Vadodara, Gujarat, on July 9, sending multiple vehicles into the Mahisagar river and resulting in the death of 18 people.

    What causes recurring public infrastructure failures in India?

    • Ageing and outdated infrastructure: Many structures like the Morbi suspension bridge (2022) in Gujarat had exceeded their intended lifespan, yet continued to be in use without adequate upgrades.
    • Overuse and overload beyond design capacity: Bridges and roads originally designed for lower traffic volumes now face high urban and industrial load, as seen in the Indrayani pedestrian bridge collapse in Pune (2024) due to overloading.
    • Neglect and poor maintenance: Lack of routine inspections and maintenance led to incidents like the Vadodara bridge collapse (2024), where locals had raised concerns that were ignored by authorities.
    • Institutional inefficiency and under-resourcing: Municipal and local bodies often remain understaffed and underfunded, unable to monitor and maintain growing infrastructure needs, especially in peri-urban areas.
    • Lack of accountability and transparency: Even after fatal accidents like the Mizoram railway bridge girder collapse (2023), failure analysis reports are rarely made public, limiting systemic learning and corrective action.

    What is Peri-urban infrastructure? 

    Peri-urban infrastructure refers to the basic facilities and services (like roads, bridges, water supply, drainage, electricity, etc.) found in the transitional zones between urban and rural areas.

    Why is peri-urban infrastructure more prone to collapse?

    • Unregulated and informal urban expansion: Peri-urban areas often develop without proper zoning laws, building codes, or infrastructure planning. This results in substandard construction, making infrastructure vulnerable to collapse. In many Indian outskirts, flyovers and water systems are built around unplanned colonies, lacking load assessment.
    • Jurisdictional ambiguity and poor coordination: Peri-urban regions often fall between urban and rural governance structures, leading to confusion in responsibility for maintenance and oversight. In Delhi NCR’s fringes, conflicts between municipal bodies and panchayats delay repair and auditing of key infrastructure.
    • Low visibility and weak political prioritization: These areas lack media attention and political pressure seen in core urban centres, resulting in deferred maintenance. In Hyderabad’s outer zones, repeated complaints about weakening culverts were ignored until seasonal floodingcaused failure.

    How can AMRUT and UIDF improve asset upkeep?

    • Focused maintenance and retrofitting: AMRUT 2.0 prioritizes the retrofitting of old urban infrastructure such as pipelines, water supply, and sewerage systems. Eg: In cities like Agra and Pune, AMRUT funding has helped upgrade outdated drainage systems to prevent floodingand infrastructure degradation.
    • Targeted financial support for smaller cities: UIDF provides low-cost loans to Tier-2 and Tier-3 cities that often lack budgetary resources for upkeep. Eg: In peri-urban areas of Madhya Pradesh, UIDF enabled the repair of worn-out roads and bridges strained by rapid population growth.
    • Promotion of digital monitoring and audits: Both schemes encourage the use of geo-tagging and digital tracking tools to monitor asset health and schedule timely repairs. Eg: Cities like Bhubaneswar and Surat use AMRUT-linked dashboards to track infrastructure health and flag issues before failures occur.

    What gaps delay audits and accountability post-collapse?

    • Jurisdictional overlap between agencies: Multiple departments—urban development, public works, and local bodies—often share responsibility for infrastructure. This leads to confusion over which authority must initiate audits after a collapse. Eg: After a flyover collapse in Hyderabad, delays occurred as both the GHMC and state PWD passed the responsibility to each other.
    • Political interference and blame-shifting: In high-profile accidents, inquiries are sometimes delayed or diluted due to political pressures or attempts to shield influential contractors. Eg: In the Kolkata Vivekananda flyover collapse (2016), early accusations were politicized, stalling a clear and prompt audit process.

    Way forward: 

    • Establish a unified statutory audit authority: Create a dedicated, independent body responsible for conducting post-collapse audits across all public infrastructure, ensuring timely investigations, clear jurisdiction, and mandatory public disclosure of findings.
    • Implement real-time digital monitoring systems: Use GIS mapping, IoT sensors, and AI-based predictive maintenance tools to track structural health and alert authorities proactively, minimizing risks and improving accountability.

    Mains PYQ:

    [UPSC 2014] Explain how Private Public Partnership arrangements, in long gestation infrastructure projects, can transfer unsustainable liabilities to the future. What arrangements need to be put in place to ensure that successive generations’capacities are not compromised?

    Linkage: The article highlights several incidents of catastrophic public infrastructure failures in India, such as a 40-year-old bridge collapse in Vadodara, a pedestrian bridge collapse in Pune, and a metro pillar collapse in Bengaluru. This PYQ is highly relevant as it directly addresses the critical themes of long-term infrastructure management, potential liabilities, and ensuring future capacity.

  • Death by negligence: The Railways must ensure interlocked gates at all manned level crossings

    Why in the News?

    Recently, three schoolchildren lost their lives on Tuesday (July 8, 2025) when a fast-moving passenger train hit their school van at a manned railway crossing in Semmankuppam, Cuddalore district, Tamil Nadu, and dragged it for about 50 metres. The Railways should make sure that all manned level crossings have interlocked gates for better safety.

    What makes non-interlocked crossings more dangerous than interlocked ones?

    • Non-interlocked crossings rely solely on the gatekeeper’s alertness and manual judgment.
    • Interlocked gates are linked to train signals, which only turn green if the gate is securely closed, ensuring safety.
    • Human error is more likely at non-interlocked gates, leading to higher risk of accidents.

    Why are non-interlocked gates still in use despite safety concerns?

    • Delayed Infrastructure Projects: Projects to replace non-interlocked gates with overbridges or interlocked systems often face delays due to land acquisition and administrative hurdles. Eg: In Cuddalore, an underpass project funded by Indian Railways remained pending for over a year due to lack of clearance by local authorities.
    • Resource and Budget Constraints: The cost of upgrading thousands of level crossings requires significant investment, which may be postponed due to competing budgetary priorities.
    • Dependence on Manual Operation: Gatekeepers often face pressure from impatient motorists to open gates quickly, leading to protocol violations. Without automation, safety depends solely on their discretion and alertness.

    How do delays in land acquisition hinder safety infrastructure projects?

    • Stalls Construction of Critical Structures: Projects like railway overbridges (ROBs) and underpasses cannot begin without legal possession of land, leading to prolonged delays. Eg: In Bihar, the construction of a railway overbridge in Araria district was delayed by over 3 years due to disputes over land ownership and compensation, leaving an accident-prone level crossing operational.
    • Escalates Project Costs Over Time: Delays increase material and labour costs, making projects financially unviable or deprioritised later. ROBs planned years earlier often need revised budgets due to inflation and changing land prices.
    • Keeps High-Risk Crossings Operational: Until new infrastructure is built, dangerous level crossings remain in use, putting lives at risk. Eg: Many non-interlocked gates in Southern Railway zone remain active due to delayed land acquisition for safer alternatives.

    What are the steps taken by the Indian Government to improve railway crossing safety?

    • Phasing Out Unmanned Level Crossings (UMLCs): The Indian Railways eliminated all UMLCs on broad gauge lines by January 2020 to reduce accidents. Eg: Over 5,900 UMLCs were removed between 2014 and 2020 across Indian Railways.
    • Construction of Road Overbridges (ROBs) and Underpasses: Railway and State Governments jointly fund ROBs and underpasses to eliminate level crossings altogether. Eg: The Setu Bharatam Project aims to build 208 ROBs across India to improve safety.
    • Awareness and Training Programmes: Regular safety awareness drives and training for gatekeepers and the public are being undertaken. Eg: Campaigns like “Mission Zero Accident” educate local communities and railway staff about level crossing safety protocols.

    Why must Indian Railways urgently upgrade level crossings?

    • Prevent Fatal Accidents Due to Human Error: Non-interlocked crossings rely on manual judgment, making them prone to errors and tragic mishaps.
    • Enhance Operational Efficiency and Safety: Interlocked and automated systems ensure smoother train operations and reduce delays caused by manual gate coordination. Eg: Northern Railway’s use of interlocked gates near busy junctions like Ghaziabad has improved train punctuality and road traffic flow.
    • Reduce Pressure and Risk on Gatekeepers: Manual crossings burden gatekeepers with high responsibility and risk of protocol violations under pressure from motorists.

    Way forward: 

    • Accelerate Conversion to Interlocked Crossings: Prioritise high-risk and high-traffic areas for upgrading non-interlocked gates to fully interlocked systems with automated signalling to eliminate human error.
    • Fast-Track Land Acquisition for Infrastructure Projects: Implement time-bound clearances and simplified procedures for land acquisition to ensure timely construction of overbridges and underpasses, replacing hazardous level crossings.

    Mains PYQ:

    [UPSC 2024] What is the technology being employed for electronic toll collection on highways? What are its advantages and limitations? What are the proposed changes that will make this process seamless? Would this transition carry any potential hazards?

    Linkage: The PYQ asks about technology making a process “seamless”. The article explicitly states that interlocked gates, unlike non-interlocked systems, ensure that “train signals turn green only when gates are securely locked”. This technology-driven interlocking mechanism is presented as a “foolproof solution to prevent such fatal incidents”, as it removes the sole reliance on a gatekeeper’s alertness.

  • RECLAIM Framework for Inclusive Mine Closure

    Why in the News?

    The Ministry of Coal has launched RECLAIM Framework— A Community Engagement and Development Framework for Mine Closure and Repurposing.

    About the RECLAIM Framework:

    • Launch: The Ministry of Coal has launched the RECLAIM framework to guide inclusive and sustainable coal mine closures in India.
    • Developed By: The framework was developed by the Coal Controller Organisation in collaboration with the Heartfulness Institute.
    • Objective: It aims to ensure a just, inclusive, and locally relevant transition for communities affected by mine closures.
    • Inclusivity Measures: The framework places special emphasis on gender equity, the inclusion of vulnerable groups, and alignment with Panchayati Raj Institutions to enhance accountability and relevance.

    Key Features of the Framework:

    • Guidelines: Mine closure guidelines were introduced in 2009 and revised in 2013 and 2020 to improve environmental safety and social accountability.
    • Community Engagement: The framework promotes community-centric planning by actively involving local stakeholders in mine closure processes.
    • Equity and Representation: It prioritizes the inclusion of women and marginalized groups to ensure that benefits are distributed equitably.
    • Institutional Convergence: RECLAIM aligns mine closure planning with existing institutional structures, especially Panchayati Raj Institutions and local governance systems.
    • Phased Implementation: The framework follows three phases:
      • Pre-Closure: Includes needs assessments and capacity building.
      • Closure: Involves participatory execution of closure plans.
      • Post-Closure: Focuses on monitoring, livelihood restoration, and asset repurposing.
    • Support Tools: RECLAIM is backed by field-tested tools, templates, and methodologies tailored to the Indian mining context.
    • Broader Impact: It supports the achievement of Sustainable Development Goals (SDGs) and can be replicated in other resource-intensive sectors and states.

    Challenges in Coal Mine Closure in India:

    • Policy–Practice Gap: Despite guidelines issued in 2009, only three coal mines have been formally closed as of 2024.
    • Low Compliance: Out of 299 non-operational coal mines, only eight have applied for formal closure, while the rest remain unscientifically abandoned.
    • Environmental Risks: Abandoned mines lead to methane emissions, ecological degradation, increased accident risks, and illegal mining.
    • Community Displacement: Unsustainable mining has caused unemployment and migration, reducing community engagement during closure planning.
    • Land Return Issues: India lacks a clear policy for returning post-mining land to original owners or communities.
    • Policy Gaps in Draft Bill: The 2024 Draft Coal Bearing Areas (CBA) Amendment Bill proposes land return but lacks clarity on enforcement mechanisms.
    • Financial Barriers: High escrow fund requirements—â‚č14 lakh per hectare for opencast mines—discourage mine operators from initiating closure processes.

     

    [UPSC 2019] Consider the following statements:

    1. The coal sector was nationalized by the Government of India under Indira Gandhi.
    2. Now, coal blocks are allocated on lottery basis.
    3. Till recently, India imported coal to meet the shortages of domestic supply, but now India is self-sufficient in coal production.

    Which of the statements given above is/are correct?

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

     

  • Women MSMEs still struggle for credit despite schemes

    Why in the News?

    Women-led MSMEs are a key part of India’s economic growth, but they still remain underserved. Even though they make up 20% of all registered MSMEs, they contribute only 10% of the total income and receive disproportionate credit and lack of support.

    Why do women-led MSMEs face persistent credit gaps?

    • Discriminatory Credit Disbursement: Women face a higher credit gap (35%) compared to men (20%), as per SIDBI reports. Eg: Despite applying for â‚č10 lakhs in business loans, many women entrepreneurs receive only â‚č6.5 lakhs, limiting their operational expansion.
    • Lack of Collateral and Property Ownership: Many women lack land or asset ownership, making it difficult to meet banks’ collateral requirements. Eg: A rural woman running a tailoring unit may not own property, so her loan request is denied despite good business potential.
    • Lower Financial Literacy: Many first-generation women entrepreneurs, especially in rural areas, lack awareness of financial schemes and documentation processes. Eg: Women in small towns often don’t know how to access PMMY or Stand-Up India loans, resulting in underutilisation of available credit.
    • Gender Bias in Credit Risk Assessment: Financial institutions often perceive women as risky borrowers, especially if they operate in informal sectors.
    • Overdependence on Informal Credit Sources: Due to a lack of formal access, many women rely on moneylenders, who charge high interest rates and offer no legal protection. Eg: In the absence of bank loans, women-led microenterprises may borrow from informal lenders at 24% interest, leading to debt traps.

    What limits the effectiveness of schemes like PMMY?

    • Low Sanction-to-Application Ratio: While a high number of women open loan accounts, the actual sanctioned amount is disproportionately lower. Eg: In 2024, women held 64% of PMMY accounts, but received only 41% of the total disbursed amount, reflecting a gap in meaningful financial access.
    • Administrative Inefficiencies: Delays and inconsistencies in processing applications, verification, and disbursal reduce scheme impact.
    • Lack of Awareness: Many potential beneficiaries, especially in rural or semi-urban areas, are unaware of PMMY’s features or how to apply. Eg: Women entrepreneurs with informal businesses often fail to access collateral-free loans due to absence of facilitation from banks or local agencies.

    How does low financial literacy hinder women entrepreneurs?

    • Inability to Navigate Formal Banking Systems: Lack of knowledge in budgeting, credit scores, or interest rates discourages women from applying for loans. Eg: First-generation entrepreneurs in rural areas avoid formal credit channels and depend on informal moneylenders with high-interest rates.
    • Limited Confidence in Business Decision-Making: Low financial skills reduce confidence in investment planning, profit calculation, and risk management, hampering business growth. Women running micro-enterprises often hesitate to expand operations or apply for working capital loans, fearing repayment complexities.

    What is the role of the Udyam Assist Portal in women’s empowerment?

    • Formal Recognition of Informal Enterprises: The portal helps register Informal Micro Enterprises (IMEs), especially women-led ones, bringing them into the formal financial ecosystem. Eg: In 2024, 70.5% of IMEs registered on the portal were women-owned, enabling access to priority sector lending.
    • Improved Access to Formal Credit: By assigning a Udyam Registration Number, it enables collateral-free loans and better eligibility under various government credit schemes. Eg: Registered women entrepreneurs can now avail benefits under schemes like PMMY and Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
    • Boost to Employment and Income Generation: The portal supports women in starting and scaling up their enterprises, thus enhancing livelihood security and job creation. Eg: Women-led IMEs contributed over 70.8% to employment generation in the informal micro-business segment.

    Which reforms can improve credit access for women-led IMEs? (Way forward)

    • Expand Collateral-Free Credit Schemes: Widen the reach of schemes like PMMY and CGTMSE with targeted provisions for first-generation women entrepreneurs and flexible documentation norms. Eg: Lower the threshold for loan amounts and simplify eligibility for Udyam-registered IMEs.
    • Strengthen Financial Literacy and Credit Counselling: Launch grassroots training programmes in regional languages to raise awareness about credit products, budgeting, and digital banking. Eg: Tie-up with SHGs and local NGOs to educate women in rural and semi-urban areas.
    • Mandate Gender-Sensitive Banking Practices: Instruct public and private banks to set quotas for women-led MSME lending, and monitor disbursal with gender-segregated data. Eg: Introduce incentive-based targets for bank branches lending to women-run enterprises.

    Mains PYQ:

    [UPSC 2021] Can the vicious cycle of gender inequality, poverty and malnutrition be broken through microfinancing of women SHGs? Explain with examples.

    Linkage: The article explicitly highlight the how government schemes like the Pradhan Mantri MUDRA Yojana (PMMY) aim to support self-employment and financial independence for women, which aligns with microfinancing efforts. This question is highly relevant as it directly addresses the effectiveness of “microfinancing of women” as a tool for empowerment and breaking negative societal cycles.

     

  • Invisible Exports of India

    Why in the News?

    As of 2024–25, India’s “invisibles” trade—comprising services exports and private money transfers—has not only surpassed its merchandise exports but also emerged as a key stabiliser of the current account deficit.

    What are Invisible Exports (in India’s context)?

    • What is it: Invisible exports refer to international trade in services and income flows that do not involve physical goods crossing borders. These transactions are digital or financial, rather than visible at ports or airports.
    • Types of Services Included: They comprise a wide range of service-based exports such as IT services, financial consulting, legal and accounting services, R&D, and BPO operations.
    • Inclusion of Remittances: Private remittances—money sent home by Indians working abroad—are counted as part of invisibles in India’s Balance of Payments (BoP).
    • BoP Classification: These transactions are recorded under the “Current Account” of the BoP, specifically in the sub-categories of services, primary income, and secondary income.
    • Characteristics: Unlike physical exports, invisible exports do not require shipping, face fewer trade barriers, and rely heavily on skilled human capital.
    • Leading Examples: India’s key invisible exports include software and IT-enabled services (by firms like Infosys, TCS, Wipro), Global Capability Centers, financial and legal services, and education, tourism, and medical services.
    • Role of Migrant Remittances: Remittances from NRIs and migrant workers play a crucial role and are one of the largest components of India’s invisible receipts.

    Their Contribution in Trade

    • Higher Value than Goods Exports: In 2024–25, India’s gross invisible receipts reached $576.5 billion, surpassing merchandise exports of $441.8 billion. Services alone brought in $387.5 billion, a major leap from $26.9 billion in 2003–04, while remittances added $135.4 billion.
    • Buffer Against Trade Deficits: While the merchandise trade deficit stood at $287.2 billion, a net invisible surplus of $263.8 billion helped reduce the overall current account deficit to just $23.4 billion, providing crucial stability.
    • Resilience Across Global Crises: Invisible exports remained strong during major disruptions like the 2008 financial crisis, COVID-19 pandemic, and ongoing geopolitical tensions, showcasing greater resilience than merchandise trade.
    • Human Capital-Driven Growth: Services exports are powered by India’s skilled workforce, not physical infrastructure. India thrives as the “office of the world”, moving beyond the traditional “back office” label.
    • Less Policy Dependence: Growth in invisible exports occurred largely without heavy government incentives or trade agreements. India still lacks strong service-sector provisions in its major trade deals.
    [UPSC 2006] Assertion (A): Balance of Payments represents a better picture of a country’s economic transactions with the rest of the world than the Balance of Trade.

    Reason (R): Balance of Payments takes into account the exchange of both visible and invisible items whereas Balance of Trade does not.

    Options: (a) Both A and R are individually true and R is the correct explanation of A **  (b) Both A and R are individually true and R is not the correct explanation of A (c) A is true but R is false (d) A is false but R is true