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Subject: Economics

  • Energy and efficiency: On India and greater energy efficiency mandates

    Why in the News?

    Despite rising power deficits amid urbanisation and climate pressures, India’s UJALA scheme showcases energy efficiency’s impact—saving $10B and 9,500 MW—highlighting efficiency over mere capacity expansion.

    What challenges does India face in meeting its peak power demand?

    • Rising Peak Demand due to Urbanisation and Climate Change: Rapid urbanisation and increasing use of cooling appliances during hotter summers have significantly increased electricity demand. Eg: In 2023–24, India’s peak power demand reached 250 GW, making it the third-largest power consumer globally.
    • Slow Expansion of Power Generation Capacity: Building new power plants, especially coal-based, is capital- and time-intensive, which cannot keep pace with rising demand. Eg: Despite efforts, power deficit widened from 0.69% in FY20 to about 5% in FY24, reflecting supply constraints.
    • Integration Challenges with Renewable Energy: While renewables are growing, their intermittent nature and grid integration issues limit their effectiveness in meeting peak demand. Eg: Solar and wind power face supply variability, making it difficult to meet peak-hour requirements consistently.

    What is UJALA Scheme? 

    The UJALA scheme (Unnat Jyoti by Affordable LEDs for All) is a flagship energy efficiency program launched by the Government of India in 2015. It aims to promote energy-saving lighting solutions by distributing LED bulbs, tube lights, and energy-efficient fans at affordable prices

    How has the UJALA scheme contributed to energy efficiency and savings?

    • Massive Reduction in Power Consumption: The scheme distributed over 37 crore LED bulbs and enabled the sale of 407 crore more, replacing energy-inefficient lighting. Eg: LED bulbs consume half the power of CFLs and 1/9th the power of incandescent bulbs, leading to major power savings in households.
    • Reduction in Peak Demand and Generation Needs: By improving lighting efficiency nationwide, UJALA helped reduce peak power demand by over 1,500 MW. Eg: It avoided the need to build 9,500 MW of new power capacity—equivalent to 19 new 500 MW coal-fired plants.
    • Lower Costs and Emissions: UJALA reduced the cost of LED bulbs from ₹500 to ₹70, making them accessible and cutting emissions. Eg: The scheme has helped India save over $10 billion and significantly reduced CO₂ emissions.

    Why is enhancing energy efficiency crucial for India’s energy future?

    • Bridges the Gap Between Demand and Supply: India faces a widening peak power deficit (from 0.69% in FY20 to ~5% in FY24) despite increased generation. Eg: Energy efficiency helps reduce demand quickly—schemes like UJALA lowered peak demand by 1,500 MW, easing pressure on the grid.
    • Delays the Need for New (Often Fossil-Based) Power Plants: Building new fossil-fuel-based power plants is time-consuming and costly. Eg: Efficiency measures like LED lighting under UJALA avoided building 19 new coal plants (9,500 MW)—cutting cost, time, and pollution.
    • Supports Climate Goals and Reduces Emissions: India’s energy mix still depends 70% on coal, worsening climate and pollution. Eg: Energy efficiency improvements between 2000–2018 helped avoid 300 Mt of CO₂ emissions, according to the International Energy Agency.

    Where can further energy efficiency mandates be applied in India?

    • Buildings and Construction Sector: Residential and commercial buildings consume significant energy, especially for cooling and lighting. Eg: Mandating energy-efficient designs and green building codes (like ECBC) in urban housing projects can reduce long-term electricity use.
    • Home Appliances: Many households still use inefficient devices that consume more electricity. Eg: Expanding BEE’s star-rating program to cover more appliances like fans, refrigerators, and ACs can push consumers toward efficient options.
    • Micro, Small and Medium Enterprises (MSMEs): MSMEs often use outdated machinery that wastes energy. Eg: Energy audits and subsidized upgrades in sectors like textiles or ceramics can reduce energy costs and improve competitiveness.

    Way forward:

    • Invest in Grid Flexibility and Energy Storage: Promote battery storage, pumped hydro, and smart grid systems to manage peak loads and integrate renewable energy reliably.
    • Strengthen Energy Efficiency Mandates: Enforce stricter efficiency norms for buildings, appliances, and MSMEs, backed by incentives, audits, and awareness campaigns.

    Mains PYQ:

    [UPSC 2016] “Give an account of the current status and the targets to be achieved pertaining to renewable energy sources in the country. Discuss in brief the importance of National Programme on Light Emitting diodes (LEDs).”

    Linkage: Despite growth in electricity generation, including recent additions of renewable energy, India has faced peak power demand deficits. While adding new power production capacity takes time, especially for fossil fuels, focusing on energy efficiency is presented as the quickest and least expensive way to address rising power demand and climate change. This question is highly relevant as it specifically asks about renewable energy targets and the importance of the National Programme on LEDs.

  • Centre restores RoDTEP Scheme

    Why in the News?

    To boost India’s export strength, the government has restored Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme benefits for eligible exports starting June 1, 2025.

    Details of the Latest Update:

    • RoDTEP benefits have now been restored for Advance Authorization (AA) holders, Export-Oriented Units (EOUs), and Special Economic Zones (SEZs).
    • These categories were previously excluded from February 5, 2025, but are now eligible again from June 1, 2025.
    • The move ensures a level playing field for all exporters and encourages broad-based export growth.

    About the RoDTEP Scheme:

    • Launch: It started on January 1, 2021, as part of the Foreign Trade Policy 2015–20.
    • Objective: It helps exporters get refunds for hidden taxes and duties that are not refunded under other schemes.
      • Examples of Hidden Taxes: These include taxes like electricity duty, mandi tax, and fuel charges during transport.
    • Why it was introduced: RoDTEP replaced the earlier Merchandise Export Incentive Schemes (MIES) after India lost a case at the World Trade Organisation (WTO).
    • Global Compliance: The scheme is WTO-compliant, following the rule that exported goods should not carry domestic taxes.
    • Administered by: It is managed by the Department of Revenue under the Ministry of Finance.

    Eligibility under RoDTEP:

    • Who can apply: All Indian exporters — whether manufacturers or merchant exporters — are eligible.
    • Eligible exports: Exports from SEZs, EOUs, and e-commerce platforms are also covered.
    • Not Eligible: Re-exported goods are not eligible for benefits.
    • Sector Focus: The scheme gives priority to labour-intensive sectors that earlier benefitted from MEIS.

    How the refund works:

    • Rebate Calculation: The refund is given as a percentage of the export value (Free on Board value).
    • Mode of Refund: The benefit comes in the form of e-scrips, which are stored in a digital ledger by the Central Board of Indirect Taxes and Customs (CBIC).
    • Usage of E-Scrips: These e-scrips can be used to pay basic customs duty or be transferred to other importers.
    [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*

     

  • Kumbakonam Vetrilai Betel Leaf gets GI Tag

    Why in the News?

    The Kumbakonam Vetrilai (betel leaf or paan leaf) has received the Geographical Indication (GI) tag from the Government of India.

    About Kumbakonam Vetrilai

    • Cultivation: It is grown in the Thanjavur region, especially in Kumbakonam, Thiruvaiyaru, Papanasam, Thiruvidaimarudur, and Rajagiri.
    • Characteristics: The leaf is heart-shaped, dark to light green, with a strong aroma and pungent taste, thanks to the fertile Cauvery basin soil.
    • Cultural Importance: It is a main ingredient in paan, a popular post-meal chew in South Asia.
    • Harvest: The first-year yield, called maaruvethalai, produces the largest and longest-lasting leaves (6–7 days shelf life); Farmers hand-pick leaves, working from early morning until late night due to the labour-heavy process.

    Back2Basics: Geographical Indication (GI) Tag

    • A GI is a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.
    • Nodal Agency: Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry
    • India, as a member of the World Trade Organization (WTO), enacted the Geographical Indications of Goods (Registration and Protection) Act, 1999 w.e.f. September 2003.
    • GIs have been defined under Article 22 (1) of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.
    • The tag stands valid for 10 years and can be renewed.

     

    [UPSC 2015] Which of the following has/have been accorded ‘Geographical Indication’ status?

    (1) Banaras Brocades and Sarees (2) Rajasthani Daal-Bati-Churma (3) Tirupathi Laddu

    Select the correct answer using the code given below.

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

     

  • State of the World’s Animal Health Report, 2025 by WOAH

    Why in the News?

    The World Organisation for Animal Health (WOAH) released the first-ever State of the World’s Animal Health report.

    Key Highlights of the Report:

    • India faces high risk from transboundary animal diseases, with 47% of global outbreaks between 2005–2023 being zoonotic, affecting both animals and humans.
    • African Swine Fever (ASF), which jumped 1,800 km to Sri Lanka in 2024, threatens India’s northeast pig-rearing regions already impacted in past years.
    • Avian Influenza (HPAI) saw outbreaks in non-poultry species surpass poultry in 2024; India’s dense poultry population makes cross-species transmission a growing concern.
    • Foot and Mouth Disease (FMD), endemic in India, showed new serotype SAT 3 and SAT 1 activity in other countries, posing vaccine adaptation challenges.
    • Diseases like Lumpy Skin Disease and PPR, both reported in India earlier, are now spreading to new global regions, highlighting potential for reintroduction.
    • WOAH urges global action on vaccine equity, surveillance, and biosecurity, which align with India’s need to safeguard livelihoods, trade, and food security.

    About the World Organisation for Animal Health (WOAH):

    • Establishment: WOAH, formerly known as OIE, was founded in 1924 and is headquartered in Paris, France.
    • Membership: It has 183 member countries, including India, and operates independently from the United Nations.
    • Mandate: WOAH is the global authority on animal health, working to control animal epidemics (epizootics) and improve global animal welfare.
    • Key Functions:
      • Runs the World Animal Health Information System (WAHIS) to track disease outbreaks.
      • Sets international health standards for trade in animals and animal products.
      • Promotes science-based animal welfare policies and transparent disease reporting.
      • Offers technical support to countries, especially developing nations.
    • Global Cooperation: Works with over 70 global partners, including the FAO.
    • India’s Role: India is a member and an active participant through the World Assembly of Delegates.
    [UPSC 2005] Which one of the following diseases of milching animals are infectious?

    1. Foot and Mouth disease

    2. Anthrax

    3. Black Quarter

    4. Cowpox

    Select the correct answer using the codes given below.

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

     

  • Trade deals will bring opportunities for Indian agriculture. But there will also be challenges

    Why in the News?

    India achieved record exports of $820.93 billion in FY25, rising 6.5%, but faced growing trade deficits as agriculture lagged, growing only 2.3% yearly despite employing half the workforce.

    What was India’s trade performance in FY25?

    • Total exports (goods + services) reached $820.93 billion, marking a 6.5% increase over FY24.
    • Merchandise exports contributed $437.42 billion (53% of total exports), while services exports contributed $383.51 billion (47%).
    • Imports grew by 6.85% to $915.19 billion, with merchandise imports at $720.24 billion (79%) and services imports at $194.95 billion (21%).
    • The trade deficit widened to $94.26 billion from $78.39 billion in FY24.
    • The trade-to-GDP ratio stood at a robust 41.4%, reflecting India’s deeper integration with global markets.

     

     

    How will Trade deals bring opportunities for Indian agriculture? 

    • Reduced Dependence on Price-Sensitive Markets: Trade deals open new and stable markets for Indian agricultural exports, reducing over-reliance on traditional destinations and shielding against price volatility. Eg: The India-UK FTA could boost exports of premium products like Basmati rice, tea, spices, and processed foods to the UK, which is a high-value market with established Indian diaspora demand.
    • Boost Processed Agricultural Exports: Trade agreements typically reduce tariffs and non-tariff barriers, enhancing competitiveness of value-added and processed agri-products, which fetch higher margins. Eg: Under the India-UK FTA, processed foods and marine products can gain better access, enhancing India’s earnings from exports of ready-to-eat meals, seafood, and organic food products.

    Why did agri-export growth slow down over the last decade?

    • Frequent Export Bans and Restrictions: Domestic policies often imposed export bans or curbs on essential commodities like rice, wheat, sugar, and onions to control inflation, disrupting export momentum. Eg: Restrictions on broken rice exports and duties on Basmati rice led to a 27% fall in rice export volume in FY24.
    • Global Price Fluctuations: Agri-exports are heavily influenced by global price trends — when world prices fall, Indian exports lose competitiveness and earnings. Eg: Rice export values declined despite volume recovering after lifting restrictions, due to price volatility.
    • Declining Productivity and Competitiveness: Lack of investment in research, technology, and resource-efficient farming practices lowered growth compared to earlier periods of rapid expansion. Eg: Average annual agri-export growth dropped from 20% (FY05–14) to just 2.3% (FY15–25).

    How did rice export restrictions impact trade and prices?

    • Export Volume Decline: Restrictions like export bans, duties, and minimum export prices caused a sharp drop in rice export volumes. Eg: Rice exports fell by 27% from 22.3 million metric tonnes (MMT) in FY23 to 16.3 MMT in FY24.
    • Global Price Spike: Reduced supply due to restrictions pushed up global rice prices, affecting international markets. Eg: Imposition of export duties and minimum export price (MEP) on Basmati rice led to a spike in global rice prices.
    • Value Impact Less Severe than Volume: Despite the fall in export volume, the value of exports dropped only slightly because of higher prices. Eg: Rice export value fell by only 6% even as volumes dropped 27%, showing price effects cushioned revenue loss.

    What are the environmental risks of rice exports?

    • Water Resource Depletion: Rice cultivation requires large amounts of water, which can strain local water supplies. Eg: In regions like Punjab, intensive rice farming has led to groundwater depletion and lowered water tables.
    • Methane Emissions: Flooded rice paddies emit methane, a potent greenhouse gas contributing to climate change. Eg: In Southeast Asia, vast rice fields are significant sources of methane emissions impacting global warming.
    • Soil Degradation and Pollution: Continuous rice farming with chemical fertilizers and pesticides can degrade soil quality and contaminate water bodies. Eg: Excessive use of agrochemicals in rice fields in Vietnam has caused soil salinization and river pollution.

    What is the status of edible oil imports? 

    • 2022–23 (November–October): India imported approximately 16.5 million metric tons of edible oils, marking a 17% increase from the previous year. This surge was driven by lower import duties on key oils like palm, soybean, and sunflower oils.
    • 2023–24 (November–October): Imports declined by about 3.1%, totaling 15.96 million metric tons, due to higher domestic oilseed production and reduced demand amid rising global prices.

    The recent reduction in edible oil imports is very small. So, we need to take more steps to further cut down these imports.

    How can India cut edible oil import dependence?

    • Increase Domestic Oilseed Production: Boost cultivation of oilseeds like groundnut, mustard, sunflower, and soybean through better seeds, irrigation, and farmer support. Eg: The “Oilseeds Production Mission” aims to raise domestic output and reduce imports.
    • Promote Sustainable Farming Practices: Encourage crop diversification and intercropping to improve yields and soil health, reducing reliance on imported oils. Eg: States like Madhya Pradesh have successfully adopted intercropping mustard with wheat to increase oilseed production.
    • Develop Processing Infrastructure: Invest in modern oil extraction and refining units to enhance local processing capacity and reduce post-harvest losses. Eg: Setting up mega oilseed processing clusters in regions like Rajasthan to strengthen the supply chain and self-reliance.

    Way forward: 

    • Strengthen Oilseed Ecosystem: Enhance productivity through quality seeds, MSP support, and targeted R&D under national missions like the Oil Palm and Oilseeds Mission.
    • Build Agro-Processing Capacity: Invest in decentralized, modern oilseed processing units to reduce wastage, improve value addition, and boost farmer income.

    Mains PYQ:

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

    Linkage: Agricultural subsidies are a key area of contention in international trade negotiations, particularly within the WTO. Trade deals often involve discussions around reducing or reforming subsidies, which presents both a challenge (potential reduction of support for farmers) and an opportunity (creating a more level playing field or accessing new markets if other countries also reduce subsidies) for Indian agriculture.

  • Short Selling and Associated Risks

    Why in the News?

    The Securities and Exchange Board of India (SEBI) is considering a proposal to ease restrictions on short selling in most stocks.

    SEBI’s January 2024 proposal to bar short-selling in stocks that are not in the futures and options segment had caused uncertainty.

    What is Short Selling?

    • Definition: Short selling is a strategy where an investor sells a stock first and buys it later, aiming to profit from a price drop.
    • Opposite of Normal Trade: Unlike regular buying (buy low, sell high), short selling works on selling high and buying low.
    • How It Works: You borrow the stock from a broker, sell it at the market price, and later buy it back at a lower price to return it.
    • Example: If a stock is sold at ₹2,100 and later bought at ₹1,900, the profit is ₹200. If the price rises to ₹2,300 instead, the loss is ₹200.

    Types of Short Selling:

    1. Short Selling in the Spot Market (Cash Segment):
    • Shorting is allowed only for intraday trading (buying and selling financial instruments (like stocks) on the same day).
    • You must square off the position (buy back the stock) before 3:30 p.m. on the same day.
    • If not squared off, it leads to short delivery, where the exchange settles the trade through an auction.
    • There may be heavy penalties if the position is not closed on time.
    1. Short Selling in the Futures Market:
    • Here, you can hold your short position overnight or even roll it over to the next month.
    • You must deposit margin money, which is generally higher.
    • Futures shorting is riskier and is mostly used by experienced traders.
    • This type allows more flexibility but involves greater financial commitment.

    Risks Associated with Short Selling:

    • Unlimited Losses: If the stock price rises sharply, losses are unlimited.
    • Short Delivery Risk: Failing to buy back in the spot market can lead to penalties.
    • Liquidity Risk: Hard-to-trade stocks may lead to delayed buybacks and losses.
    • Margin Requirements: High margin costs in futures trading limit retail participation.
    • Market Volatility: Sudden movements may cause unexpected losses.
    • Not for Beginners: Due to complexity and high risk, short selling is unsuitable for new investors.
    [UPSC 2025] Consider the following statements:

    Statement I: As regards returns from an investment in a company, generally, bondholders are considered to be relatively at lower risk than stockholders.

    Statement II: Bondholders are lenders to a company whereas stockholders are its owners.

    Statement III: For repayment purpose, bondholders are prioritized over stockholders by a company.

    Which one of the following is correct in respect of the above statements?

    (a) Both Statement II and Statement III are correct and both of them explain Statement I

    (b) Both Statement I and Statement II are correct and Statement I explains Statement II

    (c) Only one of the Statements II and III is correct and that explains Statement I

    (d) Neither Statement II nor Statement III is correct

     

  • PLI Scheme for 11 Pharma Products rolled out

    Why in the News?

    The Department of Pharmaceuticals has invited drug manufacturers to apply for benefits under the Production Linked Incentive (PLI) scheme.

    It has invited fresh applications for 11 unsubscribed or partially subscribed pharmaceutical products, including Neomycin, Gentamycin, Erythromycin, Streptomycin, Tetracycline, Ciprofloxacin, and Diclofenac Sodium, to boost domestic production capacity.

    About the PLI Scheme:

    • Launch: The Production Linked Incentive (PLI) Scheme was launched in March 2020.
    • Objectives: Aimed to boost domestic manufacturing, reduce import dependency, and create employment.
    • Initial Focus: Targeted three sectors — mobile manufacturing, electronic components, and medical devices.
    • Expansion: Later extended to 14 key sectors, including pharmaceuticals, textiles, IT hardware, automobiles, and electronics.
    • Incentive Structure: Offered 1%–4% incentives on incremental sales.
    • Impact: Attracted large-scale investments and enhanced global competitiveness of Indian industries.

    PLI Scheme for Pharmaceuticals:

    • Target Area: Designed to promote bulk drug and formulation manufacturing in India.
    • Product Focus: Encouraged domestic production of Key Starting Materials (KSMs), Drug Intermediates (DIs), and Active Pharmaceutical Ingredients (APIs).
    • Strategic Aim: Aimed to reduce import dependence, particularly on China.
    • Financial Allocation: Total outlay for the pharmaceutical PLI scheme is ₹6,940 crore.

    Tap to read more about various versions of Production Linked Incentive (PLI) Scheme.

    [UPSC 2023] Consider the following statements:

    Statement-I: India accounts for 3.2% of global exports of goods.

    Statement-II: Many local companies and some foreign companies operating in India have taken advantage of India’s ‘Production-linked Incentive’ scheme.

    Which one of the following is correct in respect of the above statements?

    Options: (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

     

  • Self-Reliant India (SRI) Fund Scheme

    Why in the News?

    The Self-Reliant India (SRI) Fund has invested about ₹10,979 crore in 577 MSMEs across India as of March 2025.  The highest number of investee firms are in Karnataka (151), followed by Maharashtra (144) and Delhi (69).

    About the Self-Reliant India (SRI) Fund Scheme:

    • Launch: The SRI Fund was launched in 2020 under the Atmanirbhar Bharat Package to provide equity funding to MSMEs with growth potential.
    • Total Corpus: It targets ₹50,000 crore, with ₹10,000 crore from the Government of India and ₹40,000 crore to be raised from private investors.
    • Structure and Management: The fund is a Category-II Alternative Investment Fund (AIF) registered with SEBI.  The fund uses a two-tier structure:
      1. A Mother Fund managed by NSIC Venture Capital Fund Limited (NVCFL).
      2. 60 empanelled Daughter Funds that make direct investments in MSMEs.
    • Progress: As of March 2025, the SRI Fund has invested ₹10,979 crore in 577 MSMEs.
    • Package Alignment: It is a component of the ₹20 lakh crore Atmanirbhar Bharat package, equivalent to 10% of India’s GDP.

    Key Features Impact:

    • Funding Type: Offers equity or quasi-equity support to reduce MSMEs’ reliance on debt and strengthen long-term growth.
    • Sectoral Focus: Prioritises manufacturing, services, and high-growth MSMEs, especially those engaged in innovation, R&D, and exports.
    • Addressing Credit Gap: Helps bridge India’s ₹30 lakh crore MSME credit gap by complementing credit guarantee schemes with equity-based support.
    • Revised Eligibility: With the turnover limit raised to ₹500 crore, more companies now qualify for SRI and related MSME support.
    [UPSC 2017] The term ‘Domestic Content Requirement’ is sometimes seen in the news with reference to:

    Options: (a) Developing solar power production in our country* (b) Granting licenses to foreign T.V. channels in our country. (c) Exporting our food products to other countries. (d) Permitting foreign educational institutions to set up their campuses in our country.

     

  • SPICED Scheme

    Why in the News?

    The Spices Board of India has decided to disburse ₹130 crore to almost 45,000 beneficiaries in 2025-2026 under the SPICED (Sustainability in Spice Sector through Progressive, Innovative and Collaborative Interventions for Export Development) Scheme.

    Back2Basics: Spices Board of India

    • The merger of the erstwhile Cardamom Board and Spices Export Promotion Council on 26th February 1987, under the Spices Board Act 1986 led to the formation of the Spice Board of India.
    • The Board functions as an international link between the Indian exporters and the importers abroad with a nodal Ministry of Commerce & Industry.
    • It is headed by a Chairman, a rank equivalent to Joint Secretary to the GoI.
    • Headquartered in Kochi, it has regional laboratories in Mumbai, Chennai, Delhi, Tuticorin, Kandla and Guntur.

    About SPICED Scheme and its Features:

    • Launch: It is launched by the Spices Board under the Ministry of Commerce and Industry.
    • Timeline and Budget: The scheme runs till 2025–26 with a total outlay of ₹422.30 crore, aligned with the 15th Finance Commission period.
    • Objectives: It aims to boost spice exports, improve cardamom productivity, enhance post-harvest quality, and promote value addition and sustainability.
    • Funding Support: In 2025–26, about ₹130 crore will be distributed to 45,000 beneficiaries.
    • Focus Areas: Includes Mission Value Addition, Mission Clean and Safe Spices, promotion of GI-tagged spices, and development of Spice Incubation Centres.
    • Priority Beneficiaries: Special focus on farmer groups, FPOs, FPCs, SHGs, SC/ST communities, SMEs, and exporters from the North-East.
    • Monitoring: All activities are geo-tagged for transparency and tracking.

    Key Facts about Spices Production and Trade:

    • Global Position: India is one of the largest producers and exporters of spices, cultivating 75 of 109 ISO-listed spices.
    • Major Producing States: Include Madhya Pradesh, Rajasthan, Gujarat, Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Assam, and others.
    • Key Spices: India grows and exports pepper, cardamom, chili, ginger, turmeric, coriander, cumin, fennel, celery, nutmeg, and spice oils.
    • Top Products by Volume: Chili, cumin, turmeric, ginger, and coriander account for 76% of production.
    • Export Leaders: Chili is the top export earner, generating around $1.1 billion annually. Ginger exports are growing at 27% CAGR.
    • Export Value: In 2023–24, India exported $4.25 billion worth of spices, capturing 12% of the global spice trade.
    • Export Destinations: India exported to 159 countries. Key markets include China, USA, Bangladesh, UAE, Thailand, Malaysia, Indonesia, UK, and Sri Lanka — together accounting for 70% of exports.
    [UPSC 2019] Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?

    (a) Spices

    (b) Fresh fruits

    (c) Pulses

    (d) Vegetable oils

     

  • Analyzing Poverty Levels in India by Comparing various Surveys

    Why in the News?

    A recent study titled ‘Poverty Decline in India after 2011–12: Bigger Picture Evidence’ shows that poverty in India fell from 37% in 2004-05 to 22% in 2011-12. However, poverty declined by only an additional 18% until 2022-23, and officials have not released any poverty estimates after 2011-12.

    What are the three methods used to estimate post-2011 poverty in India?

    • Alternative NSSO Surveys: Using different socio-economic surveys like the Usual Monthly Per Capita Consumption Expenditure (UMPCE) from NSSO rounds after 2011-12, despite comparability issues with earlier surveys. Eg: Estimates based on UMPCE suggest poverty between 26-30% in 2019-20.
    • Private Final Consumption Expenditure (PFCE) Scaling: Scaling consumption data from the 2011-12 Household Consumption Expenditure Survey using the growth rate of PFCE from National Accounts Statistics (NAS) to estimate consumption trends. Eg: Used by economist Surjit Bhalla and colleagues in 2022.
    • Survey-to-Survey Imputation: Filling data gaps by linking related surveys (e.g., consumption surveys with employment surveys) through imputation models, often at the State level for better accuracy. Eg:  The recent study titled ‘Poverty Decline in India after 2011–12: Bigger Picture Evidence’ study using NSSO Employment-Unemployment Surveys with Consumer Expenditure Surveys to estimate poverty decline to about 18% in 2022-23.

    Note: Surjit Bhalla is an Indian economist, author, and columnist who served as Executive Director for India at the International Monetary Fund.

    How much has poverty declined post-2011–12, and how does it compare with the earlier period?

    • Sharp slowdown: Poverty fell from 37% (2004–05) to 22% (2011–12), a 15-point drop, but only to 18% by 2022–23, a mere 4-point reduction in over a decade.
    • Absolute poverty numbers: Number of poor declined from 250 million to 225 million in 10 years — a decline of only 10%, compared to a much faster fall earlier.
    • GDP correlation: GDP growth slowed from 6.9% (2004–12) to 5.7% (2012–23), consistent with slower poverty reduction.

    Why has the poverty reduction slowed since 2011-2012?

    • Slower GDP Growth: Average GDP growth declined from 6.9% (2004-05 to 2011-12) to 5.7% (2011-12 to 2022-23), correlating with slower poverty reduction.
    • Declining Real Wage Growth: Growth in rural wages slowed down significantly — from 4.13% annually before 2011-12 to 2.3% after 2011-12.
    • Rising Agricultural Workforce with Lower Productivity: After a decline in agricultural workers till 2017-18, 68 million workers joined agriculture post-2017-18, leading to lower agricultural productivity and wages, which hampers poverty reduction.

    How do the Poverty trends vary across Indian States? 

    • Significant Poverty Reduction: Some states have shown marked improvement in reducing poverty levels after 2011-12. Eg: Uttar Pradesh has notably decreased its poverty rate during this period.
    • Slow Progress: Historically poor states continue to struggle with slow poverty reduction due to persistent socio-economic challenges. Eg: Jharkhand and Bihar have experienced much slower declines in poverty rates.
    • Stagnation: Several large and economically important states have seen poverty reduction stagnate, with little change over the years. Eg: Maharashtra and Andhra Pradesh show almost no improvement in poverty reduction post-2011-12.

    What are the steps taken by the Indian Government? 

    • Implementation of Social Welfare Schemes: The government has launched various targeted welfare programs to support the poor and vulnerable groups. Eg: Pradhan Mantri Awas Yojana for affordable housing.
    • Focus on Employment Generation: Programs aimed at creating jobs, especially in rural areas, to increase income and reduce poverty. Eg: Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
    • Financial Inclusion Initiatives: Efforts to increase access to banking and financial services for the poor. Eg: Jan Dhan Yojana, which promotes opening of bank accounts for the unbanked.
    • Agricultural Support and Reforms: Policies to improve farmers’ incomes and agricultural productivity to support rural livelihoods. Eg: PM-Kisan Samman Nidhi, providing direct income support to farmers.
    • Health and Education Programs: Investments in healthcare and education to improve human capital and break the cycle of poverty. Eg: Ayushman Bharat health insurance scheme for poor families.

    Way forward: 

    • Rural Wage & Productivity Growth: Boost rural wages and agricultural productivity by implementing reforms, improving access to technology, and providing skill development to increase income and reduce poverty sustainably.
    • Data Accuracy & Monitoring: Improve data collection and real-time monitoring of poverty indicators to ensure precise measurement, enabling better-targeted policies and effective poverty alleviation programs.

    Mains PYQ:

    [UPSC 2015] Though there have been several different estimates of poverty in India, all indicate reduction in poverty levels over time. Do you agree? Critically examine with reference to urban and rural poverty indicators.

    Linkage: Estimates consistently show a reduction in poverty over time rather than the underlying surveys or methodologies used to produce them, answering this question effectively would require knowledge that various estimates exist, often derived from different data sources or approaches.