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Subject: Economics

  • PM inaugurates New Pamban Bridge 

    pamban bridge

    Why in the News?

    The newly constructed Pamban Bridge was inaugurated by PM Modi to replace a 110-year-old structure that connected Rameswaram to the Indian mainland.

    About the Pamban Bridge  

    • The Pamban Bridge, completed in 1914, was India’s first sea bridge, connecting Rameswaram on Pamban Island to the mainland.
    • It featured a double-leaf bascule span, allowing ships to pass through when the bridge lifted.
    • Standing 12.5 meters above sea level and spanning 145 piers, the bridge faced challenges, including cyclones and workforce issues.
    • The old bridge had become unsafe due to severe corrosion and structural weaknesses, highlighted by vibrations detected in 2022.
    • The new bridge features a vertical lift span that can raise in just 5 minutes, with a 22-meter clearance to allow larger vessels to pass, compared to the old bridge’s 1.5 meters.
    • Trains can now travel at speeds up to 75 km/h, a significant improvement from the previous 10 km/h limit.

  • India’s Subsea Cable Infrastructure

    Why in the news?

    India is gradually expanding its undersea cable infrastructure, with new systems like Airtel’s 2Africa Pearls and SEA-ME-WE-6 boosting its international internet bandwidth.

    What are Undersea Cables?

    • Undersea cables are fiber optic cables laid on the ocean floor that connect internet networks between countries.
    • These cables are heavily insulated and contain fiber optic strands for transmitting data.
    • They surface at landing points, connect to landing stations, and then link to broader terrestrial networks.
    • Approximately 600 undersea cables exist globally.
    • These cables handle 90% of global data, 80% of world trade, and $10 trillion in financial transactions.

    India’s Current Undersea Cable Ecosystem:

    • India’s two main hubs for subsea cables are Mumbai and Chennai.
      • 17 international cables land in India, with 95% of subsea cables concentrated in a 6-km stretch in Versova, Mumbai.
    • India has two domestic cable systems:
    1. Chennai–Andaman–Nicobar Islands (CANI)
    2. Kochi–Lakshadweep Islands
    • While current bandwidth is considered sufficient, rising data traffic may soon outpace available capacity.
      • Experts warn that India’s current capacity may become inadequate in the near future.
    • India contributes only 1% of global cable landing stations and 3% of subsea cable systems, highlighting its underrepresentation in the global network.

    [UPSC 2016] With reference to ‘LiFi’, recently in the news, which of the following statements is/are correct?

    1. It uses light as the medium for high speed data transmission.

    2. It is wireless technology and is several times faster than ‘WiFi’.

    Select the correct answer using the codes given below:

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

     

  • GI Tags Awarded in April 2025

    Why in the News?

    Recently, several Geographical Indication (GI) tags have been awarded to unique products, enhancing their protection in the market and giving them a platform for global recognition.

    Here is the list of all the GI tags recently Awarded:

    State Product Name Description
    Meghalaya Ryndia (Meghalaya Handloom Products) Ryndia is an eco-friendly fabric made from Ahimsa Silk by indigenous Khasi, Bhoi, and Jaintia artisans. Known for its durability and luxurious texture, Ryndia is used to make stoles, shawls, and garments with organic dyes from local plants.
    Kerala Kannadippaya A traditional tribal handicraft made from the inner layers of reed bamboo. This mat, known for its reflective pattern, provides a cooling effect in summer and warmth during winter. It is woven by various tribal communities, including the Oorali, Mannan, Muthuva, Malayan, and Kadar tribes, primarily in the Idukki, Thrissur, Ernakulam, and Palakkad districts of Kerala.
    Tamil Nadu Panruti Cashew This cashew variety is celebrated for its mildly sweet, nutty flavor and its crisp yet tender texture. Grown primarily in Panruti, Tamil Nadu, it has a high demand both domestically and internationally, setting it apart from other cashew varieties due to its unique taste and texture.
    Panruti Jackfruit The Panruti jackfruit is a prized agricultural product from Panruti, where commercial cultivation is concentrated. Known for its large size and distinctive flavor, it is available throughout the year, with different varieties ripening at different times. The jackfruit is widely used for making chips, curries, and sweets and has potential for value-added products.
    Chettikulam Small Onion Grown in the Aalathur block of Perambalur district, this small onion variety is an important crop in Tamil Nadu, known for its strong aroma and robust flavor. Over 8,000 hectares in the district are dedicated to small onion cultivation, producing 65,000 to 70,000 tonnes annually. This variety is integral to local cooking and is used in various dishes, offering a unique flavor to regional cuisine.
    Puliyangudi Acid Lime Known as the Lemon City of Tamil Nadu, Puliyangudi produces acid lime that is small to medium-sized (4–6 cm in diameter) with a vibrant green color and thin, smooth skin. The limes are famous for their tangy taste and are widely used in cooking, especially in Southern Tamil Nadu and Kerala, as well as for producing lime juice and lime-based products.
    Virudhunagar Samba Vathal These bright red, spicy sambal chilies from Virudhunagar are renowned for their distinct flavor and are a crucial ingredient in Southern Indian cuisine. They are often used in the oleoresin extraction process, which plays a significant role in the spice industry.
    Ramanadu Chithiraikar Rice A red rice variety from Ramanadu, this rice is known for its ability to keep hunger at bay for hours, making it a staple in many households. The rice is commonly consumed as a hearty porridge and is recognized for its nutritional value and ability to provide long-lasting energy.
    Kumbakonam Betel Leaf Grown in the fertile Cauvery River basin, Kumbakonam Betel Leaf is known for its distinct taste and aroma. It is used in the preparation of paan and as a symbol of hospitality in the region.
    West Bengal Thovalai Flower Garland A handcrafted floral garland made from a mix of white, red, and green flowers, Thovalai Flower Garland is used for festivals and special occasions. It is woven in a mat-like fashion and is celebrated for its artistic beauty.
    Murshidabad Chhanobora This sweet from Murshidabad is made from chhena (curdled milk) and flavored with cardamom. It is known for its smooth texture and distinct taste, being a traditional treat prepared during festivals and significant occasions.
    Bishnupur Motichur Laddu A traditional Bengali sweet laddu, made from finely ground chickpeas, sugar, and ghee. It has a delicate, aromatic flavor and is often enjoyed during festivals like Durga Puja and Diwali. Its historical roots trace back to the Bishnupur region, known for its unique preparation methods.
    Kamarpukur Sada Bode A fried Bengali sweet, Kamarpukur Sada Bode is made from wheat flour, sugar, and ghee. It is an important part of Bengali festivals and local traditions, valued for its crisp texture and sweet, rich taste.
    Malda Nistari Silk Yarn Known for its fine texture, durability, and the intricate traditional weaving techniques used, Malda Nistari Silk Yarn is produced in Malda, Bengal. This silk is highly sought after for its luxurious feel and is used for making high-quality garments.
    Radhunipagal Rice A local variety of rice from Bengal, Radhunipagal is known for its resilient texture and ability to stay filling for extended periods, making it perfect for hearty meals. This rice is a staple in many traditional Bengali dishes.
    Baruipur Guava Baruipur Guava, grown in the fertile soil of West Bengal, is known for its distinct taste and texture. The fruit has a sweet flavor and is used in juices, jams, and desserts.
    Jammu and Kashmir 

     

    		 Kashmir Namda A woolen rug from Kashmir, Namda is known for its thick texture and intricate designs. Traditionally crafted by hand using sheep wool, it is prized for its insulating properties and is a significant part of Kashmir’s textile heritage.
    Kashmir Gabba A traditional woolen product from Kashmir, Gabba is used in home decor and textiles. It is made using local wool and features intricate handwoven patterns.
    Kashmir Willow Bat Kashmir Willow is used for making high-quality cricket bats, known for their lightweight and durable properties, making it a sought-after material for professional cricket bats.
    Kashmir Tweed Kashmir Tweed is a finely woven fabric, made from wool, and is renowned for its warmth and luxury. It has been traditionally used to make winter garments, particularly coats and shawls.
    Kashmir Crewel A hand-embroidered fabric from Kashmir, Crewel features intricate floral designs and is traditionally used in making home textiles like curtains, bedspreads, and cushions.
    Kashmir Chain Stitch A traditional embroidery technique from Kashmir, Chain Stitch is used to create decorative textiles. The embroidery is vibrant, with floral patterns, and is used in making garments and home furnishings.
    Kashmir Shikara The Shikara is a traditional boat from Kashmir used primarily for tourism and transportation in the Dal Lake. It is a symbol of Kashmir’s rich heritage and has been part of the region’s culture for centuries.
    Kashmir Wagguv Wagguv is a traditional handcrafted product from Kashmir, made using local materials and is known for its unique craftsmanship and cultural significance in the region.

     

    [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.

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

     

  • RBI celebrates 90 years

    Why in the News?

    The first monetary policy of RBI Governor Sanjay Malhotra in 2025 marks 90 years since the Reserve Bank of India (RBI) announced its inaugural monetary policy in 1935.

    RBI’s First Monetary Policy in 1935

    • On July 3, 1935, RBI set the bank rate at 3.5%, reflecting the Imperial Bank’s rate.
    • The CRR was set at 5% of demand liabilities and 2% of time liabilities on July 5, 1935.

    Evolution of RBI’s Monetary Policy

    • Bank Rate in Early RBI History:
      • The bank rate was a key tool introduced by the RBI in 1935 to control credit and liquidity. On July 3, 1935, the RBI set the bank rate at 3.5%, mirroring the rate of its predecessor, the Imperial Bank of India.
      • The RBI Act (1934) mandated its use for buying or re-discounting commercial paper, and it played a crucial role in India’s interest rate structure.
    • Role of Cash Reserve Ratio (CRR):
      • The CRR, introduced by the RBI, required banks to maintain a percentage of their deposits as reserves.
      • Influenced by the Federal Reserve Act of the USA, the CRR helped stabilize the banking system, especially during failures.
      • The CRR was set at 5% for demand liabilities and 2% for time liabilities in 1935, with adjustments made over time.
    • Exchange Rate Management
      • In 1935, the RBI managed the exchange rate of the 1 Indian rupee at 1 shilling and 6 pence.
      • This caused friction between nationalists, who favoured a lower exchange rate to boost exports, and the British, who preferred a higher rate to facilitate cheaper imports.
    • Disputes Between Government and RBI
      • The RBI’s decision to reduce the bank rate in 1935 was opposed by the government, fearing rupee depreciation.
      • This led to a conflict, resulting in the resignation of Osborne Smith, the first RBI Governor.
      • The incident highlighted tensions between the RBI’s monetary autonomy and government priorities.

    About Reserve Bank of India (RBI)

    • The RBI is the central bank and monetary authority of India established on April 1, 1935, under the Reserve Bank of India Act, 1934.
    • Its idea was incepted from the recommendations of the Hilton Young Commission.
    • Sir Osborne Arkell Smith, an Australian, served as the inaugural Governor.
    • He was succeeded by Sir C D Deshmukh, the first Indian to hold the position.
    • It is a centralized institution for India to effectively regulate its monetary and credit policies.
    • RBI had its initial headquarters in Kolkata, later moving permanently to Mumbai in 1937.
    • Initially, the RBI operated as a privately owned entity until its full nationalization in 1949.

    Functions and Initiatives:

    • Monetary Authority: The RBI controls the supply of money in the economy to stabilize exchange rates, maintain a healthy balance of payment, and control inflation.
    • Issuer of Currency: Sole authority to issue currency and combat circulation of counterfeit notes.
    • Banker to the Government: Acts as a banker to both the Central and State governments, providing short-term credit and financial advisory services.
    • Lender of Last Resort: Provides emergency liquidity assistance to banks during crises.
    • Custodian of Foreign Exchange Reserves: Manages foreign exchange reserves and administers the Foreign Exchange Management Act, 1999 (FEMA).
    • Regulator and Supervisor of Payment and Settlement Systems: Oversees payment and settlement systems in the country, ensuring efficiency and security.
    • Credit Control and Developmental Role: Promotes credit availability to productive sectors and fosters financial infrastructure development.

    Dr. Ambedkar’s Role in the Establishment of RBI:

    • Dr. B.R. Ambedkar’s contributions were particularly notable during the Hilton Young Commission discussions in 1926, where he presented his recommendations based on his book “The Problem of the Rupee – Its Origin and Its Solution.”
    • These discussions laid the foundation for establishing the RBI on April 1, 1935.

     

    [UPSC 2004] Consider the following statements:

    1. Reserve Bank of India was nationalized on 26 January 1950.

    2. The borrowing programme of the Government of India is handled by the Department of Expenditure, Ministry of Finance.

    Which of the statements given above is/are correct?

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

     

  • [pib] NITI NCAER States Economic Forum

    Why in the News?

    The Finance Minister is set to launch the “NITI NCAER States Economic Forum” portal.

    About the NITI NCAER States Economic Forum Portal

    • The “NITI NCAER States Economic Forum” portal is a comprehensive digital platform developed by NITI Aayog in collaboration with the National Council of Applied Economic Research (NCAER).
    • It serves as a centralized repository of data, research reports, and expert commentary on state-level finances and social, economic, and fiscal parameters spanning from 1990-91 to 2022-23.
    • The portal aims to facilitate evidence-based policymaking by providing users with easy access to key trends and insights on state performance.

    Features of NITI NCAER: 

      1. State Reports: Summarizes the macro and fiscal landscape of 28 Indian states. Structured around indicators on demography, economic structure, socio-economic, and fiscal parameters.
      2. Data Repository: Access to a comprehensive database categorized into 5 verticals: Demography; Economic Structure; Fiscal Data; Health; Education.
      3. State Fiscal and Economic Dashboard: Provides graphical representations of key economic variables over time; Includes summary tables and raw data for easy reference.
      4. Research and Commentary: Offers in-depth research reports and expert commentary on state finances, fiscal policy, and financial management; Supports long-term academic and policy research.

    Significance:

    • Benchmarking Capabilities: it enables comparison of state performance with national averages, fostering a competitive and cooperative approach to development.
    • Data Accessibility: it bridges data accessibility gaps, ensuring that policymakers, researchers, and academics can make informed decisions based on reliable and comprehensive data.
    • Promotes Transparency: By offering open access to detailed data, the portal enhances fiscal transparency and encourages cooperative federalism.
    [UPSC 2018] Consider the following statements:

    1.The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 60% for the general (combined) government by 2023, comprising 40% for the Central Government and 20% for the State Governments.

    2.The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments.

    3.As per the Constitution of India, it is mandatory for a State to take the Central Government’s consent for raising any loan if the former owes any outstanding liabilities to the latter.

    Which of the statements given above is/are correct?

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

     

  • India’s Coal Dependence rose to 79%

    Why in the News?

    According to MoSPI’s Energy Statistics in India 2025, coal contributed 79% to India’s total energy generation, amounting to 16,906 petajoules (PJ), marking a 2% increase from the previous year.

    Share of Coal in India’s Energy Basket:

    • Dominance: As of 2023-24, coal contributed 79% to India’s total energy generation, amounting to 16,906 petajoules (PJ), marking a 2% increase from the previous year.
    • Production Growth: In 2023-24, India saw a 12% increase in coal production, continuing a strong growth trajectory from the 15% growth in 2022-23, marking one of the fastest growth rates in the past decade.
    • Dependence on Imports: Despite a surge in domestic production, India remains 26% dependent on coal imports, although this has decreased from 31% in 2019-20.

    India’s Total Energy Basket:

    • Coal: Discussed above.
    • Nuclear Energy: Nuclear power contributes approximately 1.7% to the total electricity generation capacity, with an installed capacity of about 8,180 MW as of late 2024.
    • Crude Oil: The share of crude oil has decreased from 11% in 2014-15 to 6% in 2023-24, indicating a long-term decline in its contribution to India’s energy mix.
    • Natural Gas: Similarly, natural gas’s share has decreased from 9% in 2014-15 to 7% in 2023-24, reflecting a shift away from natural gas in the energy mix.
    • Renewable Energy: Despite significant investments and efforts by the government, renewable energy sources (solar, wind, hydro, and nuclear) contribute only 7% to the total energy mix in 2023-24, showing slow but steady growth over the past decade.

    Shift Towards Renewable Energy:

    • Total Contribution: Renewable sources contributed 7% of India’s total energy production in 2023-24, a modest increase from 6% in 2014-15. While this share remains small, the absolute production from renewables has grown at a 6.76% CAGR over the past 10 years.
    • Growth in Solar and Wind Energy:
      • The generation from solar, wind, and other renewable sources (excluding large hydro) has surged by 210% over the last decade, increasing from 6,555 KToE in FY15 to 20,279 KToE in FY24.
    • Key Renewable Energy Potential:
      • Wind energy holds the largest share of India’s renewable potential at 55.17%, with an estimated potential of 11,63,856 MW.
      • Solar energy is the second-largest contributor at 35.50%, with a potential of 7,48,990 MW.
      • Large hydro contributes 6.32% of the renewable energy potential with 1,33,410 MW.
    • Future Targets:
      • India added 3.4 GW of new wind capacity in 2024, with Gujarat (1,250 MW), Karnataka (1,135 MW), and Tamil Nadu (980 MW) leading the way.
      • India is aiming for 500 GW of non-fossil fuel-based energy capacity by 2030, which would significantly boost the share of renewables in the energy mix, reducing the reliance on coal and crude oil over the coming years.
    [UPSC 2020] Consider the following statements:

    1. Coal ash contains arsenic, lead and mercury.

    2. Coal-fired power plants release sulphur dioxide and oxides of nitrogen into the environment.

    3. High ash content is observed in Indian coal.

    Which of the statements given above is/are correct?

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

     

  • [pib] 10 Years of Sagarmala Project

    Why in the News?

    The Sagarmala Programme, launched in 2015 by the Ministry of Ports, Shipping, and Waterways (MoPSW), has completed 10 years of transformative success, positioning India as a maritime powerhouse.

    About Sagarmala Programme

    • The Sagarmala Programme was launched in 2015 by the Ministry of Ports, Shipping, and Waterways (MoPSW).
    • It aims to transform India’s maritime sector by enhancing port-led development, modernizing ports, and promoting sustainable coastal development.
    • The program is a key part of the Maritime Amrit Kaal Vision 2047 (MAKV), which aims to make India a global maritime leader by 2047.
    • Five Key Components:
    1. Port Modernization & New Port Development: Upgrading ports to boost efficiency and capacity.
    2. Port Connectivity Enhancement: Improving multimodal logistics and port hinterland connectivity.
    3. Port-Led Industrialization: Establishing industrial clusters near ports to foster economic growth.
    4. Coastal Community Development: Supporting skill development and livelihood opportunities for coastal communities.
    5. Coastal Shipping & Inland Waterways Transport: Promoting eco-friendly coastal shipping and inland waterways to reduce congestion.
    • Implementation & Funding
      • Implementation: Managed by Major Ports, central ministries, State Governments, and agencies.
      • Funding: Primarily through Public-Private Partnerships (PPP), IEBR, Grant-in-Aid, and Equity (Sagarmala Development Company Limited).

    Maritime Amrit Kaal Vision, 2047 (MAKV):

    The MAKV sets ambitious targets for India’s maritime sector:

    • 4 million GRT of shipbuilding capacity.
    • 10 billion metric tons of port handling annually.
    • Aiming for top five shipbuilding nations by 2047.

    Progress Till Date:

    • 839 projects identified with ₹5.79 lakh crore investment; 272 completed with ₹1.41 lakh crore investment.
    • 118% growth in coastal shipping over the past decade, reducing logistics costs and emissions.
    • 700% increase in inland waterway cargo, easing road and rail congestion.
    • Over 40 lakh passengers transported via Ro-Pax ferries.
    • Nine Indian ports ranked among the top 100 globally.
    • Sagarmala 2.0 focuses on shipbuilding, repair, recycling, and modernization with a ₹40,000 crore budget.
    • Sagarmala Startup Innovation Initiative (S2I2) launched in March 2025 to support startups in green shipping and sustainable development.
    [UPSC 2019] With reference to India’s projects on connectivity, consider the following statements :

    1. East-West Corridor under Golden Quadrilateral Project connects Dibrugarh and Surat.

    2. Trilateral Highway connects Moreh in Manipur and Chiang Mai in Thailand via Myanmar.

    3. Bangladesh-China -India -Myanmar Economic Corridor connects Varanasi in Uttar Pradesh with Kunming in China.

    How many of the above statements are correct?

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

     

  • India BioEconomy Report

    Why in the News?

    The India BioEconomy Report has pegged the value of India’s bioeconomy in 2024 at more than $165 billion, accounting for over 4.2% of the country’s GDP.

    What is Bioeconomy?

    • Bioeconomy refers to the industrial use of biological resources (plants, animals, and microorganisms) and the replication of natural biological processes to produce goods and services.
    • It incorporates sustainable methods to replace traditional, resource-intensive production systems.
    • Applications:
      • Biofuels, bioplastics, medicines, synthetic biology, and agriculture are key sectors where bioeconomy is being applied.
        • Ex. Ethanol produced via microorganisms from crops like sugarcane and corn is a prime example of bioeconomy’s impact on reducing reliance on hydrocarbon-based fuels.

    Key Highlights of the India Bioeconomy Report:

    • Growth in Market Value:
      • India’s bioeconomy has nearly doubled in value from $86 billion in 2020 to $165 billion in 2024.
      • There has been a 90% increase in the number of companies in the bioeconomy sector, from 5,365 in 2021 to 10,075 in 2024, with projections to double again by 2030.
    • Key Sectors:
      • Industrial Sector: Contributes nearly $78 billion, driven by biofuels and bioplastics.
      • Pharmaceuticals: Accounts for 35% of the total bioeconomy value, primarily driven by vaccines.
      • Research and IT: The fastest-growing segment, especially in biotech software development and clinical trials.
    • Regional Contribution:
      • Maharashtra, Karnataka, Telangana, Gujarat, and Andhra Pradesh account for over two-thirds of the bioeconomy value.
      • The Eastern and Northeastern regions contribute less than 6%.
    • Global Comparison:
      • India’s bioeconomy share in GDP (4.2%) is comparable to countries like the US and China.
      • However, countries like Spain and Italy have bioeconomy contributing more than 20% of their GDP.
    • Policy Direction:
      • The BioE3 policy (Biotechnology for Economy, Environment, and Employment), launched in 2024, aims to establish India as a global hub for bio-manufacturing and a major center for biotech R&D.
      • The policy targets growth in areas such as bio-based chemicals, functional foods, precision biotherapeutics, marine and space biotechnology, and climate-resilient agriculture.

    India BioEconomy Report

    [UPSC 2024] Consider the following materials:

    1. Agricultural residues

    2. Corn grain

    3. Wastewater treatment sludge

    4. Wood mill waste

    Which of the above can be used as feedstock for producing Sustainable Aviation Fuel?

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

     

  • Govt discontinues Gold Monetization Scheme

    Why in the News?

    The Centre has decided to discontinue the Gold Monetization Scheme (GMS) starting from March 26, 2025, considering evolving market conditions.

    The short-term deposits (1-3 years) will continue at the discretion of individual banks based on commercial viability, highlighting a shift towards flexible, shorter-term options.

    About Gold Monetization Scheme (GMS) and its Features

    • The GMS was launched in November 2015 as an enhanced version of the Gold Deposit Scheme (GDS) and Gold Metal Loan (GML) Scheme.
    • The main goal was to mobilize idle gold from households and institutions into the formal economy, thereby reducing the country’s reliance on gold imports and improving the current account deficit (CAD).
    • Objectives: Aimed at mobilizing gold, reducing gold imports, and utilizing gold to generate interest as a financial asset, thereby strengthening the economy.
    • The GMS included three deposit options:
      • Short-Term Gold Deposit (STGD): 1-3 years
      • Medium-Term Gold Deposit (MTGD): 5-7 years
      • Long-Term Gold Deposit (LTGD): 12-15 years
    • Interest and Redemption:
      • Short-Term Deposits: Interest rates determined by individual banks; redemption could be in cash or gold.
      • Medium- and Long-Term Deposits: Fixed interest rates at 2.25% (medium-term) and 2.5% (long-term), with cash redemption only.
    • Eligibility Criteria:
      • Open to individuals, institutions, and government entities.
      • Gold tendering accepted only at designated Collection and Purity Testing Centres (CPTC) or through GMS Mobilisation Agents.
      • Deposits were accepted only if the value exceeded ₹1 lakh.

    Reasons for Discontinuation  

    • The Finance Ministry discontinued the Medium-Term and Long-Term Deposits due to changes in the gold market.
    • Gold prices surged by 41.5% from ₹63,920 per 10 grams in January 2024 to ₹90,450 per 10 grams by March 2025.
    • This rise in gold value reduced the attractiveness of schemes like GMS for both depositors and the government.
    • With the closure of the Sovereign Gold Bond Scheme, the government aims to shift towards more market-oriented solutions for gold-related financial products.
    [UPSC 2016] What is/are the purpose/purposes of the Government’s ‘Sovereign Gold Bond Scheme’ and ‘Gold Monetization Scheme’?

    1. To bring the idle gold lying with Indian households into the economy.

    2. To promote FDI in the gold and jewellery sector

    3. To reduce India’s dependence on gold imports

    Select the correct answer using the code given below:

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

     

  • Growth in most Southern States is concentrated in a few districts

    Why in the News?

    Economic growth in southern states lagged behind India’s overall growth in 2023-24. Despite a large working population, unemployment rates in these states remain a major concern, as seen in their Budget and Economic Surveys.

    Growth in most southern States is concentrated in a few districts

    What are the key reasons behind the economic growth of southern states lagging behind India’s overall growth in 2023-24?

    • Lower Growth Rates Compared to National Average – While India’s economy grew at 9.2%, southern states like Tamil Nadu (8.2%) and Telangana (7.4%) recorded slower growth, with Karnataka, Kerala, and Andhra Pradesh growing at over 6%.
    • Regional Income Disparities – Economic advantages are concentrated in select districts, limiting broad-based growth. For example, only 8 of 38 districts in Tamil Nadu and 3 of 33 in Telangana had higher per capita income than their state averages.
    • Unemployment and Labour Force Challenges – Despite a significant working population, labour force participation rates (LFPR) in Tamil Nadu (58.8%), Karnataka (56.8%), and Kerala (56.2%) were below the national average of 60.1%, affecting economic output.
    • Shift Towards Self-Employment – There is a decline in casual labour and an increase in self-employment, often in household enterprises, leading to a lack of stable wage employment. Example: In Telangana, self-employment rose by 8% to 55.9%, while casual labour fell by 5.7% to 18.7%.
    • Slower Industrial and Manufacturing Growth – Despite industrial pushes, manufacturing contributes less than 20% of southern states’ economies, limiting their overall economic expansion.

    Which southern state has the most equitable distribution of per capita income across its districts? 

    • More Even Income Spread: Kerala has 7 out of 14 districts with a per capita income above the state average, making it the most balanced among southern states. In contrast, Tamil Nadu (8 out of 38), Telangana (3 out of 33), and Karnataka (4 out of 31) show higher income concentration in a few districts.
    • Unlike Telangana, where Rangareddy district’s per capita income is more than three times the state average, Kerala’s income distribution is less skewed, ensuring better regional development and social welfare across the state.

    Why is this significant?

    • Reduced Regional Disparities: A more balanced income distribution ensures that economic benefits are spread across districts, preventing excessive wealth concentration in urban centers. Example: Unlike Telangana, where Rangareddy dominates income levels, Kerala’s development is more uniform, reducing economic inequalities.
    • Better Social and Human Development Indicators:  Equitable income distribution translates into better education, healthcare, and infrastructure across all districts, improving overall quality of life. Example: Kerala consistently ranks high in Human Development Index (HDI) due to its statewide access to education and healthcare.
    • Sustainable and Inclusive Growth: A well-distributed economy supports long-term stability by ensuring that no district lags significantly behind, leading to lower migration pressures and balanced urbanization. Example: Unlike Tamil Nadu, where Chengalpattu’s income is double the state average, Kerala’s economy avoids overburdening specific urban hubs, leading to sustainable development.

    Why is unemployment still a pressing concern in southern states?

    • Higher Labour Force Participation but Fewer Job Opportunities – While more people are seeking work, the availability of stable, well-paying jobs remains limited. Example: In 2023-24, Tamil Nadu (58.8%), Karnataka (56.8%), and Kerala (56.2%) had labour force participation rates lower than the national average (60.1%), indicating fewer employment opportunities relative to job seekers.
    • Shift from Casual Labour to Self-Employment Without Formal Jobs Growth – More people are moving away from casual labour towards self-employment, but the growth of regular salaried jobs remains stagnant. Example: In Telangana, the self-employed workforce increased by 8% (to 55.9%), while casual labour declined by 5.7%, reflecting a lack of structured employment.
    • Dominance of the Services Sector with Limited Manufacturing Growth – The services sector contributes over 50% of economic output, but it often lacks the capacity to absorb large numbers of workers, especially in lower-income groups. Example: In Tamil Nadu, despite an industrial push, manufacturing has not significantly increased its share in the state economy, limiting job creation in this sector.

    What role does the services sector play in the economies of southern states?

    • Primary Driver of Economic Growth – The services sector contributes over 50% of economic output in most southern states, making it the main engine of economic expansion. Example: In Karnataka and Telangana, the IT and software services industry significantly boosts state GDP, with Bengaluru and Hyderabad being major global tech hubs.
    • Uneven Job Creation Across Skill Levels – While the services sector creates high-value jobs in IT, finance, and healthcare, it does not generate enough employment for lower-skilled workers, contributing to persisting unemployment. Example: Kerala, despite its strong service-driven economy (tourism, healthcare, remittances), struggles with high unemployment rates due to a lack of blue-collar service jobs.

    Way forward: 

    • Diversify Economic Growth Beyond Services – Strengthen manufacturing and industrial sectors to create stable, large-scale employment opportunities, especially for lower-skilled workers. Example: Expanding MSMEs and industrial corridors in Tamil Nadu and Karnataka can boost job creation.
    • Enhance Skill Development and Labour Market Reforms – Improve vocational training and upskilling programs to align with industry demands, ensuring better job-market absorption. Example: Kerala can integrate its educated workforce into high-value sectors like healthcare and renewable energy.

    Mains PYQ:

    Question: What is regional disparity? How does it differ from diversity? How serious is the issue of regional disparity in India? (UPSC 2024)

    Reason: This question’s demand is directly linked with the regional inequality, which explains why economic growth is concentrated in certain parts of a state. Understanding this helps us see why some districts develop faster than others.