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Subject: Economics

  • GREAT Scheme

    Why in the News?

    As of February 4, 2025, 4 startups have been approved under the ‘Grant for Research & Entrepreneurship across Aspiring Innovators in Technical Textiles (GREAT)’ Scheme.

    About GREAT Scheme:

    • The GREAT Scheme is a government initiative under the National Technical Textiles Mission (NTTM).
    • Launched by the Ministry of Textiles, it provides financial support to startups working in technical textiles.
    • The scheme focuses on Medical Textiles, Industrial Textiles, and Protective Textiles, fostering innovation, research, and entrepreneurship.
    • It aims to promote entrepreneurship in technical textiles by funding early-stage innovations.
    • Provisions and Features:
      • Financial Support: Startups receive grants of up to ₹50 lakh for up to a period of 18 months.
      • No Royalty Requirement: Unlike private funding, the government does not take a share of the startup’s profits.
      • Upfront Contribution: Startups must deposit 10% of the allocated grant (e.g., ₹5 lakh for a ₹50 lakh grant).
      • Sector Focus: Covers Medical, Industrial, and Protective Technical Textiles.
      • Budget Allocation: Part of the ₹375 crore funding for FY 2025 under NTTM.

    Back2Basics: National Technical Textiles Mission (NTTM) 

    • Launched in 2020 to make India a global leader in technical textiles through research and innovation.
    • Budget of ₹1,480 crore, focusing on medical, industrial, protective, and geo-textiles.
    • Supports R&D, skill development, and investment in high-performance textiles for defense, healthcare, and infrastructure.
    • Includes Production-Linked Incentives (PLI), PM MITRA Parks, and quality control regulations to boost manufacturing.
    • Aims to increase India’s technical textiles market to $40-50 billion with 15-20% annual growth.

     

    PYQ:

    [2013] Analyse the factors for highly decentralized cotton textile industry in India.

  • New Makhana Board and Food Institute to be opened in Bihar

    Why in the News?

    The Union Budget 2025 has announced the establishment of a Makhana Board in Bihar to improve production, processing, value addition, and marketing of makhana (fox nut).

    What is Makhana? 

    makhana

    • Makhana, also known as fox nut, is the edible seed of the prickly water lily (Euryale ferox), grown in freshwater ponds across India and South Asia.
    • Bihar produces 90% of India’s makhana, with major hubs in Darbhanga, Madhubani, Purnea, and Katihar.
    • It is nutrient-rich, low-fat, and considered a superfood, gaining popularity in domestic and international markets.
    • Traditionally used in religious rituals, makhana is now promoted for its health benefits and commercial potential.

    About the Makhana Board 

    • The Makhana Board will train farmers, ensure market access, regulate pricing, and promote exports.
    • The Food Processing Institute will focus on value addition, quality control, research, and global trade facilitation.
    • Aims & Objectives:
      • Increase production by promoting high-yield varieties like Swarna Vaidehi and Sabour Makhana-1.
      • Improve processing infrastructure to reduce wastage and enhance product quality.
      • Support exports through cargo infrastructure, trade partnerships, and branding initiatives.
    • Structural Mandate:
      • Governing body led by government officials, farmer representatives, and industry experts.
      • Regional centers in key makhana-producing districts to assist farmers.
      • Partnerships with ICAR, NABARD, and agricultural universities for research and financial support.
      • ₹100 crore initial funding for infrastructure, training, and market expansion.
    • Powers & Functions: Regulate production, enforce quality standards, provide subsidies, promote research, develop export infrastructure, and launch branding campaigns.

  • [6th February 2025] The Hindu Op-ed: A Budget that is mostly good but with one wrong move

    PYQ Relevance:

    Q) Distinguish between Capital Budget and Revenue Budget. Explain the components of both these Budgets. (UPSC CSE 2021)

     

    Mentor’s Comment: UPSC mains have always focused on the Capital Budget and Revenue Budget (2021), and the objectives of Union-Budget (2017).

    The Union Budget’s forecast of 10.1% nominal GDP growth for 2025-26 seems reasonable, based on the Economic Survey’s prediction of 6.3%-6.8% real GDP growth. Although capital spending has gone up, it’s similar to last year’s budget. The Budget aims to drive growth towards becoming a developed nation, though some measures, like tax relief, could have come sooner.

    Today’s editorial talks about the measures taken in the Budget. This content would help in GS paper 3 in the economy section.

    _

    Let’s learn!

    Why in the News?

    Some measures in the Budget should have been introduced earlier and replacing ‘fiscal deficit’ as a key indicator is a wrong decision.

    How realistic are the government’s tax revenue growth assumptions?

    • Gross Tax Revenue (GTR) Trends: The growth in the Government of India’s GTR has been trending downwards in recent years. The buoyancy of GTR has fallen for three successive years from 1.4 in 2023-24 to 1.15 in 2024-25 (RE) and then to 1.07 in 2025-26 (BE). As a result, growth in the Government of India’s GTR has kept falling from 13.5% in 2023-24 to 11.2% in 2024-25 (RE), and to 10.8% in 2025-26 (BE). Within the government’s tax revenues, the growth rate of Goods and Services Tax (GST) has also fallen from 12.7% in 2023-24 to 10.9% in 2025-26 (BE).
    • Shift to Direct Taxes: The structure of the government’s taxation has moved from indirect to direct taxes, with the share of direct taxes in the government’s GTR increasing from 52% in 2021-22 to 59% in 2025-26 (BE).
    • Personal Income Tax: There has been a fall in growth from 25.4% in 2023-24 to 20.3% in 2024-25 (RE) and 14.4% in 2025-26 (BE). This fall in growth in 2025-26 (BE) is partly due to the announced income-tax concessions.
    • Corporate Income Tax: The growth in 2024-25 (RE) is quite low at 7.6%. This growth has been raised to 10.4% in 2025-26 (BE).

    Is the level of government expenditure appropriate, and is its composition efficient?

    • Overall Expenditure: The government is estimated to spend Rs 50,65,345 crore in 2025-26, 7.4% higher than the revised estimate of 2024-25. The size of government expenditure as a percentage of GDP has been reduced from 14.6% in 2024-25 (RE) to 14.2% in 2025-26 (BE). Growth in total expenditure, at 7.6% in 2025-26 (BE), is lower than the budgeted nominal GDP growth at 10.1%.
    • Capital Expenditure: Capital expenditure has been raised from 11.11 lakh crore rupees in the current fiscal year to 11.21 lakh crore rupees for the oncoming fiscal year1. There has been a steady improvement in the quality of government expenditure as the share of capital expenditure in total expenditure has been improving. This share has improved by 10% points over the period from 2020-21 to 2025-26 (BE).
    • Investment in Key Areas: Investment remains a central theme in the Budget, categorized into three key areas—people, economy, and innovation.
      • Investment in people: Includes the establishment of Atal Tinkering Labs, broadband connectivity for schools and health centers, Centers of Excellence for Skilling, and initiatives for Gig workers.
      • Investment in the economy: Focuses on infrastructure projects, interest-free loans to states for capital expenditure, asset monetization, and urban redevelopment projects.
      • Investment in innovation: Allocates funds to private sector-driven R&D initiatives and missions to support urban planning and knowledge systems.
    • AI Infrastructure: The Government of India has to build up large-scale Artificial Intelligence (AI) infrastructure in order to facilitate the adoption of emerging technologies.

    ⁠Is the shift away from using fiscal deficit as a primary indicator of fiscal prudence a positive step?

    • Change in Indicator: One measure introduced in the Budget is to move away from fiscal deficit as an indicator of fiscal prudence. The practice of giving a glide path in terms of fiscal deficit is being discontinued. It has been stated that from now on, the focus will be on reducing the debt-GDP ratio annually.
    • New Target: The central government aims to reduce its outstanding liabilities to around 50% of GDP by March 2031.
    • Debt-GDP Ratio: In the 2025-26 Budget, the practice of giving a glide path in terms of fiscal deficit is being discontinued. Alternative paths of the debt-GDP ratio with nominal GDP growth assumptions of 10.0%, 10.5% and 11.0% are given.
      • The glide paths are indicated in terms of alternative growth assumptions and alternative assumptions regarding mild, moderate, and high degrees of fiscal consolidation. This makes the whole exercise vague and non-transparent.
    • Fiscal Deficit Target: The fiscal deficit target for FY26 is set at 4.4% of GDP, revised down from 4.8% in the current financial year.

    Way forward: 

    • Restore Fiscal Deficit Transparency: Reintroduce clear fiscal deficit targets with specific timelines, instead of focusing solely on the debt-GDP ratio. This would ensure greater clarity and accountability in fiscal management.
    • Enhance Investment Efficiency: Prioritize strategic investments in key areas like AI infrastructure, R&D, and innovation, while ensuring these investments align with long-term growth goals and contribute to overall economic resilience.

  • Union Budget 2025-26 has increased financial support for the PM Surya Ghar scheme

    Why in the News?

    The Union Budget 2025 has significantly increased the allocation for the PM Surya Ghar Muft Bijli Yojana (SGMBY) to ₹20,000 crore, up from ₹11,100 crore in the FY25 Revised Estimates (RE) and ₹6,250 crore in the FY25 Budget Estimates (BE).

    About PM Surya Ghar Muft Bijli Yojana:

    • It is a flagship initiative launched by Prime Minister on February 15, 2024, under the Ministry of New and Renewable Energy (MNRE).
    • It aims to provide free electricity up to 300 units per month by facilitating the installation of rooftop solar panels in 1 crore households across India.
    • The scheme has a budget outlay of ₹75,021 crore and is planned for implementation until FY 2026-27.
    • The initiative is part of India’s clean energy transition, reducing dependency on fossil fuels and promoting sustainable energy solutions.
    • Key Features:
      • 40% subsidy on installation costs through Central Financial Assistance (CFA).
        1. 1 kilowatt: 30,000 rupees
        2. 2 kilowatts: 60,000 rupees
        3. 3 kilowatts: 48,000 rupees
        4. 3 kilowatts or more: 78,000 rupees
      • National Programme Implementation Agency (NPIA) at the national level and State Implementation Agencies (SIAs) at the state level.
      • Two Solar Installation Models:
        1. RESCO Model – Third-party ownership, with consumers paying only for electricity used.
        2. Utility-Led Aggregation (ULA) Model – DISCOMs or state agencies install solar panels for households.
      • Model Solar Village: ₹1 crore incentive for the top-performing village in each district.
      • Payment Security Mechanism (PSM): ₹100 crore fund to encourage private investment in solar energy.

    Significance

    • Reduces Electricity Bills: Households can save ₹15,000 to ₹1,80,000 annually.
    • Boosts Renewable Energy: Helps achieve 40 GW of rooftop solar capacity, bridging the gap from 10.4 GW (as of November 2023).
    • Strengthens Energy Security: Expands access to sustainable and decentralized power.
    • Environmental Impact: Reduces carbon emissions and reliance on fossil fuels.
    • Empowers Rural India: 50% of projects are expected in Tier-2 and Tier-3 cities, promoting economic growth and electrification.

    PYQ:

    [2020] India has immense potential for solar energy though there are regional variations in its developments. Elaborate.

  • What is the ‘Nuclear Energy Mission’?

    Why in the News?

    The Union Budget 2025-26 introduced the Nuclear Energy Mission, aiming to develop at least 5 indigenous Small Modular Reactors (SMRs) by 2033.

    About Nuclear Energy Mission (NEM):

    Details
    • A flagship initiative announced in Union Budget 2025-26 to accelerate India’s nuclear power capacity towards the target of 100 GW by 2047.
    • It focuses on Small Modular Reactors (SMRs), expansion of Bharat Small Reactors (BSRs), and policy reforms to attract private and foreign investment in nuclear energy.
    Key Highlights  of the NEM
    • 100 GW Nuclear Target by 2047 as part of India’s clean energy transition.
    • ₹20,000 crore allocated for R&D and deployment of Small Modular Reactors (SMRs).
    • Public-Private Collaboration for setting up Bharat Small Reactors (BSRs) and advanced nuclear technologies.
    • Amendments to Atomic Energy Act, 1962 to allow private sector participation.
    • Changes to Civil Liability for Nuclear Damage Act, 2010 to attract foreign investment.
    • Deployment of BSRs (220 MWe) and SMRs (30-300 MWe) to replace coal plants and power remote regions.
    Other Initiatives for Enhancing India’s Nuclear Capacity Expansion of Nuclear Power Capacity:

    • Current capacity: 8,180 MW → Target by 2031-32: 22,480 MW.
    • 10 reactors under construction (8,000 MW) across Gujarat, Rajasthan, Tamil Nadu, Haryana, Karnataka, and Madhya Pradesh.
    • Approval for 6 x 1208 MW AP1000 reactors (USA collaboration) at Kovvada, Andhra Pradesh.

    Deployment of Advanced Nuclear Reactors:

      • Bharat Small Reactors (BSRs): 220 MWe PHWRs for industrial decarbonization.
      • Prototype Fast Breeder Reactor (500 MWe) at Kalpakkam achieved milestones in 2024.
    • High-Temperature Gas-Cooled Reactors (HTGRs) & Molten Salt Reactors (MSRs) under development using India’s thorium reserves.

    Recent Developments: 

    • New uranium deposit discovered at Jaduguda Mines (extends mine life by 50+ years).
    • Operationalization of first two 700 MWe PHWR units at Kakrapar, Gujarat (KAPS-3 & 4).
    • NPCIL-NTPC Joint Venture (ASHVINI) launched to build nuclear plants.
    • Rajasthan Atomic Power Project-7 (RAPP-7) reached criticality in 2024.

     

    PYQ:

    [2018] With growing energy needs should India keep on expanding its nuclear energy programme? Discuss the facts and fears associated with nuclear energy. (250 Words, 15 Marks)

    [2011] The function of heavy water in a nuclear reactor is to:

    (a) Slow down the speed of neutrons

    (b) Increase the speed of neutrons

    (c) Stop the nuclear reaction

    (d) None of the above

  • Why the tax cuts are a one way gamble?

    Why in the News?

    The Union Budget offers a major tax cut, benefiting taxpayers earning above ₹7 lakh. Rebates and exemptions have increased to reduce liabilities, though it may lead to an estimated ₹1 lakh crore revenue loss.

    What is the logic behind the tax rebates?

    • Boosting Household Consumption: Taxpayers earning ₹7–12 lakh/year now qualify for a full rebate (earlier limited to sub-₹7 lakh earners), saving ₹70,000–₹1.1 lakh annually.
      • This exemption limit was raised from ₹3 lakh to ₹4 lakh for those earning above ₹12 lakh, reducing tax burdens across income groups.It will Increase disposable income to drive consumption, savings, and private investment.
      • With weak private investment and uncertain global demand, tax rebates are aimed at stimulating domestic consumption.
    • Leveraging Tax Buoyancy for Revenue Growth: Despite an 8% tax rate reduction, the government anticipates a 14% rise in direct tax revenue (₹14.3 lakh crore), requiring a 24% income growth among taxpayers. It Simplified tax slabs and phased out the old regime to improve compliance and widen the taxpayer base.
    • Focus on Middle-Class Welfare: The overarching goal of these tax rebates is to support the middle class, which constitutes a significant portion of the electorate and plays a vital role in the economy. By alleviating their tax burden, the government seeks to enhance their financial well-being and foster a more equitable economic environment.

    What are the implications if tax buoyancy does not work out?

    • Revenue Shortfalls: A failure in tax buoyancy would lead to lower than expected tax revenues, resulting in budget deficits. This could force the government to cut essential services and social programs, negatively impacting the welfare of vulnerable populations.
    • Pro-Cyclical Fiscal Policy: Insufficient tax revenue may compel the government to adopt a pro-cyclical fiscal policy, reducing public spending during economic downturns instead of stimulating growth. This can exacerbate economic slowdowns and hinder recovery efforts.
    • Increased Tax Burden on Compliant Taxpayers: To compensate for revenue shortfalls, the government might increase taxes on those who continue to pay taxes, placing a heavier burden on compliant taxpayers and potentially discouraging further compliance and economic activity.

    Is it ‘Fiscal Consolidation’ or ‘Fiscal Contraction’?

    • The current approach appears to lean more towards fiscal contraction rather than fiscal consolidation. The Finance Minister has set a lower deficit target of 4.4% for 2025-26, down from 4.8% in the previous year. This suggests a tightening of fiscal policy rather than an expansion aimed at stimulating growth.
    • Critics argue that such contractionary measures are ill-timed given the current economic slowdown, as they limit the government’s ability to invest in growth-promoting initiatives. The expectation seems to hinge on corporate investment and export growth to drive recovery, which may not be sufficient if domestic demand remains weak due to reduced government spending.
    Aspect Consolidation Argument Contraction Criticism
    Deficit Target Lowered to 4.4% of GDP (from 4.8% in FY24), aiming for 3% by FY29 Aggressive deficit cuts during slowing growth (projected 10.1% nominal GDP) risk stifling recovery
    Revenue Strategy Bank on ₹28.37 trillion net tax receipts (+11% YoY) via compliance gains and income growth No compensatory taxes for high earners (30% slab unchanged) or wealth assets, risking ₹1.26 lakh crore shortfall
    Expenditure Focus Capital expenditure raised to ₹11.2 lakh crore (+17.4% YoY) for infrastructure multipliers Social sector allocations remain stagnant, with FY24 revised spending 15% below initial estimates.

    Way forward: 

    • Balanced Fiscal Approach – Instead of aggressive fiscal contraction, the government should adopt a gradual deficit reduction strategy while maintaining targeted public spending, especially in infrastructure and social sectors, to sustain domestic demand and economic growth.
    • Enhancing Revenue without Burdening Taxpayers – Strengthen tax compliance through digital tracking, rationalize subsidies, and explore progressive taxation on wealth and high-income segments to ensure fiscal stability without increasing the burden on the middle class.

    Mains PYQ:

    Q  Comment on the important changes introduced in respect of the Long-term Capital Gains Tax (LCGT) and Dividend Distribution Tax (DDT) in the Union Budget for 2018-2019. (UPSC IAS/2018)

  • [pib] Budget 2025-26 removes 7 Custom Duties for Industrial Goods

    Why in the News?

    The Budget proposes to remove 7 customs tariff rates for industrial goods, following a similar step in Budget 2023-24. This will leave only 8 tariff rates, including a zero rate, making customs duty structure more transparent and predictable.

    What is Customs Duty?

    • Customs Duty is a tax imposed on goods that cross international borders to regulate their movement.
    • It helps protect a country’s economy, jobs, environment, and residents by controlling imports and exports.
    • It prevents illegal trade, ensures fair competition, and generates government revenue.
    • The Customs Act, 1962, which defines and regulates customs duty in India.
    • The Central Board of Indirect Taxes and Customs (CBIC) under the Ministry of Finance manages customs duties.
    • Types of Customs Duties in India:
    1. Basic Customs Duty (BCD): Levied on imported goods (0-100%).
    2. Countervailing Duty (CVD): Imposed to balance foreign subsidies (0-12%).
    3. Social Welfare Surcharge (SWS): 10% surcharge to support welfare projects.
    4. Anti-Dumping Duty: Imposed on goods sold below market price to prevent unfair trade.
    5. Compensation Cess: Levied on items like tobacco and pollution-causing goods.
    6. Integrated GST (IGST): Imposed on imports at 5%, 12%, 18%, or 28% rates.
    7. Safeguard Duty: Applied when excessive imports harm domestic industries.
    8. Customs Handling Fee: 1% charge for customs processing.
    • Customs Duty Calculation: Based on product value, origin, composition, and international trade agreements.

    Key Changes Announced to Customs Tariffs:

    • Tariff rates reduced from 15 to 8, Social Welfare Surcharge was removed on 82 items.
    • 36 new life-saving medicines exempted, 5% duty on six more drugs.
    • Full BCD exemption on 35 EV battery capital goods, 28 mobile battery items, and key minerals like cobalt & lithium.
    • 10-year duty exemption for shipbuilding materials; Ethernet Switch duty cut from 20% to 10%.
    • 20% export duty on crust leather removed, handicraft export timeline extended to 1 year.
    • Frozen fish paste duty cut from 30% to 5% to boost seafood exports.
    • Customs assessments limited to 2 years, quarterly importer reporting instead of monthly.

    How India is Protecting Its Economy from Trade War Impact?

    • Rupee-based trade settlements with Russia, UAE & Sri Lanka to reduce dollar dependence.
    • Stockpiling essential imports like semiconductors, rare earth metals, and crude oil.
    • Attracting companies shifting from China with PLI incentives for manufacturing.
    • Paperless customs clearance, AI-driven trade monitoring, and blockchain documentation for smoother trade.
    • Strengthening global trade alliances like IPEF (Indo-Pacific Economic Framework) and Supply Chain Resilience Initiative (SCRI) (Japan-Australia) for supply chain stability.

    PYQ:

    [2018] Consider the following statements

    1. The quantity of imported edible oils is more than the domestic production of edible oils in the last five years.

    2. The Government does not impose any customs duty on all the imported edible oils a special case.

    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

  • [4th February 2025] The Hindu Op-ed: Some wind behind the sails of India’s shipping industry

    PYQ Relevance:

    Q) ‘China is using its economic relations and positive trade surplus as tools to develop potential military power status in Asia’, In the light of this statement, discuss its impact on India as her neighbor. (UPSC CSE 2017)

    Q) The Gati-Shakti Yojana needs meticulous co-ordination between the government and the private sector to achieve the goal of connectivity. Discuss. (UPSC CSE 2022)

     

    Mentor’s Comment: UPSC mains have always focused on Sustainable Development (2016, 2017, 2018 and 2022), and Budget Initiatives (2017 and 2021).

    Currently, India holds only about 0.05% of the global market share in shipbuilding, significantly lower than competitors like China (47%), South Korea (30%), and Japan (17%). This disparity highlights that without addressing inefficiencies in container movement and logistics integration, infrastructure growth alone will not lead to meaningful progress.

    The editorial discusses the recent positive developments in India’s shipping industry, particularly following the government’s announcements in the Union Budget 2025-26. This content can be used to present challenges in the Maritime Sector.

    _

    Let’s learn!

    Why in the News?

    The Union Budget 2025-26 appears to have met most of the shipping industry’s demands; but it has missed an opportunity to address tax disparities.

     

    What specific government initiatives are being introduced to support the shipping industry?

    • Maritime Development Fund (MDF): This initiative is the establishment of a MDF with an initial corpus of ₹25,000 crore which aims to provide long-term financing for the shipbuilding and maritime sectors, facilitating investment and growth within the industry.
    • Shipbuilding Financial Assistance Policy: The government has announced a revamp of the Shipbuilding Financial Assistance Policy (SBFAP) which aims to address cost disadvantages faced by domestic shipyards by providing direct financial subsidies, thereby encouraging local shipbuilding and enhancing competitiveness.
    • Customs Duty Exemptions and Incentives: This Budget extends customs duty exemptions on inputs and components used for manufacturing ships for more than 10 years.
      • Additionally, credit notes will be issued for shipbreaking activities, promoting a circular economy within the industry in order to make shipbuilding and recycling more competitive.
    • Extension of Tonnage Tax Scheme: The benefits of the existing tonnage tax scheme, which previously applied only to sea-going ships, will now be extended to inland vessels registered under the Indian Vessels Act, 2021.
      • This change aims to promote inland water transport and enhance the overall efficiency of the maritime sector.
    • Establishment of Shipbuilding Clusters: The Indian shipping industry has been advocating for the extension of the Shipbuilding Financial Assistance Policy (SBFAP) for another 10 years under the Amritkaal Maritime Vision 2047.
      • The government plans to facilitate the creation of shipbuilding clusters to increase capacity and capabilities in ship manufacturing.

    How can these initiatives impact India’s position in the global shipping market?

    • Enhanced Global Competitiveness: By establishing the Maritime Development Fund and revamping financial assistance policies, India aims to boost its shipbuilding capabilities and reduce costs associated with ship construction and repair.
      • This could elevate India’s ranking in global shipbuilding from 22nd to potentially within the top 10 by 2030 and top 5 by 2047, thereby increasing its share of global ship tonnage from less than 1% to around 5%.
    • Improved Infrastructure and Efficiency: The government’s focus on port modernization through initiatives like the Sagarmala Programme and Maritime India Vision 2030 is set to enhance port infrastructure, logistics efficiency, and multimodal connectivity.
      • These improvements will reduce turnaround times for vessels and lower logistics costs, making Indian ports more attractive for international shipping lines and increasing cargo handling capacity significantly.
    • Attracting Foreign Investment: With a favorable investment climate that allows 100% Foreign Direct Investment (FDI) in port development, India is positioned to attract significant foreign capital into its shipping sector.
      • This influx of investment can lead to technological advancements, better operational practices, and increased capacity, further solidifying India’s role as a key player in global maritime trade.

    What challenges does the Indian shipping industry face despite these positive developments?

    • High Costs and Financial Constraints: Indian shipyards face significant cost disadvantages compared to global competitors, particularly in terms of higher material and labor costs, as well as expensive financing options.
      • This results in a 25-30% cost disadvantage for Indian shipyards compared to those in countries like China and South Korea.
      • Additionally, the imposition of a 5% Goods and Services Tax (GST) on ship imports, which is not refunded for international operations, further strains financial resources for shipping companies.

    Does the SARFAESI Act impact loan availability?

    • Under Section 31(d) of the SARFAESI Act, banks and financial institutions cannot create a security interest in vessels as defined by the Merchant Shipping Act, 1958.
    • This limitation means that lenders cannot easily seize and auction ships in case of loan defaults, which reduces their willingness to extend credit to shipowners.
    • The ongoing discussions about amending the SARFAESI Act to include provisions for ships indicate a recognition of these challenges.
    • By allowing banks to hold security interests in vessels, the government can enhance loan availability and create a more favorable environment for financing within the maritime sector.
    • Infrastructure Bottlenecks: Major Indian ports are grappling with issues such as congestion, inefficiency, and inadequate infrastructure to support increasing traffic volumes.
      • The growth in cargo traffic has outpaced the development of port facilities, leading to delays and higher operational costs.
      • For example, backlogs for rail freight have increased significantly, impacting the timely movement of goods.
      • Furthermore, labor strikes and outdated technology contribute to lower productivity at ports, making them less attractive to global shipping lines.
    • Dependence on Foreign Suppliers: Indian shipyards heavily rely on foreign suppliers for critical components and technology, which increases costs and complicates supply chains.
      • This dependency results in longer lead times for procurement and vulnerability to supply chain disruptions.
      • The lack of a robust domestic supply chain for high-tech maritime components further exacerbates these challenges, limiting the competitiveness of Indian shipbuilding firms.

    Way Forward:

    To realize its aspirations under the Amritkaal Maritime Vision 2047, India must prioritize investments in infrastructure, streamline regulatory processes, and foster a skilled workforce.

    • The path forward requires a concerted effort from all stakeholders to transform these challenges into opportunities for sustainable development in the maritime sector.
    • Establish a National Port Grid Authority to coordinate development across major and minor ports, promoting specialization and eliminating inter-port competition.
    • Implementing a hub-and-spoke model with mega ports acting as transshipment hubs can optimize cargo movement and efficiency.
    • Deploy Smart Port Infrastructure Management Systems (SPIMS) and introduce blockchain-based Port Community Systems to facilitate paperless and IoT based trade.

  • The kind of jobs needed for the ‘Viksit Bharat’ goal

    Why in the News?

    With the Union Budget now presented, this is the right time to focus on three important types of jobs India needs: climate-friendly jobs, jobs that can adapt to AI, and jobs that match people’s aspirations.

    Why must long-term structural reforms in India focus on creating climate-resilient, AI-resilient, and aspiration-centric jobs?

    • Economic Stability & Climate Adaptation: Climate change threatens agriculture, infrastructure, and livelihoods. Structural reforms must promote green jobs in renewable energy (e.g., solar panel manufacturing, e-rickshaw deployment) and climate adaptation (e.g., afforestation, water conservation projects) to ensure sustainable economic growth.
    • Future-Proofing Against Automation: With AI disrupting traditional jobs, reforms should focus on AI-resilient employment by upskilling workers for roles in healthcare, education, and creative industries (e.g., AI-assisted medical diagnostics, digital marketing). This will help maintain workforce relevance and prevent large-scale job losses.
    • Inclusive & Aspirational Workforce: Youth and marginalized groups need jobs that match their ambitions. So, reforms should enhance opportunities in high-growth sectors like tourism, food processing, and local manufacturing (e.g., PM Vishwakarma Yojana for artisans, National Manufacturing Mission in textiles and electronics) to drive social mobility and economic dynamism.

    What are the recent allocation of the budget for Jobs creation? 

    • Skill Development Boost: The budget for the skill development ministry has nearly doubled to ₹6,017 crore for FY26, with ₹3,000 crore allocated for upgrading Industrial Training Institutes (ITIs) to enhance vocational training.
    • Targeted Job Creation: Over 21 lakh direct and indirect jobs are planned in fisheries, tourism, food processing, textiles, and electronics including 11 lakh under PM Matsya Sampada Yojana and 5.8 lakh under the PM Employment Generation Programme.
    • Sector-Specific Focus: Labor-intensive industries like footwear, leather, textiles, and electronics receive significant support, with initiatives like the Footwear Development Programme (₹350 crore) and the National Manufacturing Mission aiming to create 2-3 million jobs.
    • Support for Artisans: The PM Vishwakarma Yojana will uplift over 61 lakh artisans, promoting self-employment and economic inclusion for marginalized communities.
    • Infrastructure & Innovation: Five National Centres of Excellence for skilling will be established, alongside a ₹200 billion allocation for private sector-led R&D to drive technological advancements and job creation.

    What types of jobs are necessary for achieving Viksit Bharat?

    • Manufacturing Jobs: Increasing the contribution of manufacturing to GDP from approximately 16% to 25% by 2030 is crucial. This requires creating jobs in various manufacturing industries, enhancing productivity, and reducing operational costs.
      • MSMEs are vital for employment generation. Policies aimed at supporting these enterprises can create millions of jobs by fostering entrepreneurship and innovation within local communities.
    • Boosting Rural Demand and Agricultural Reforms: Jobs that focus on modernizing agriculture through technology and sustainable practices can enhance productivity and create employment in rural areas. This includes initiatives that support local farmers and agricultural workers.
    • Skill Development Initiatives: With a strong emphasis on skilling the workforce, there is a need for jobs that require specialized training in sectors like technology, healthcare, and renewable energy.
    • Climate-Resilient Employment: As India faces significant challenges due to climate change, creating jobs focused on sustainability—such as in renewable energy sectors (solar, wind) and environmental conservation—will be critical for long-term resilience.
    • AI and Digital Economy Roles: With the rise of artificial intelligence and digital transformation, there is a growing demand for jobs that leverage technology. This includes roles in IT services, software development, data analysis, and digital marketing.
    • Service Sector Jobs: The service sector continues to be a significant contributor to employment in India. Focused efforts on improving service delivery in healthcare, education, and hospitality can create numerous job opportunities.

    How can structural reforms in the economy facilitate job creation?

    • Enhancing Government Investment: Increased funding in infrastructure, education, and healthcare sectors directly correlates with job creation.
      • For instance, investments in rural infrastructure can stimulate local economies and create jobs in construction and services.
    • Promoting Industry Participation: Collaborating with industries for training programs ensures that the skills developed align with market needs, thereby improving employability. This approach can help bridge the gap between educational outcomes and industry requirements.
    • Supporting MSMEs: Strengthening micro, small, and medium enterprises (MSMEs) through financial incentives and easier access to credit can drive job creation. MSMEs are crucial for employment as they account for a significant portion of India’s workforce.

    What role does government policy play in bridging the gap between formal and informal economies? (Way Forward)

    • Implementing Employment Schemes: Programs such as the Employment Linked Incentives (ELI) aim to create jobs through targeted financial support for employers who hire new employees.
      • This encourages formal employment while providing a safety net for workers transitioning from informal sectors.
    • Facilitating Skill Development: Policies focused on skill development ensure that workers are equipped with relevant skills for emerging sectors like technology and renewable energy.
      • This not only helps integrate informal workers into the formal economy but also enhances overall productivity.
    • Encouraging Entrepreneurship: By fostering an environment conducive to startups and small businesses through grants, tax incentives, and simplified regulations, the government can stimulate job creation across various sectors, particularly in rural areas where traditional job opportunities may be limited.

    Mains PYQ:

    Q The nature of economic growth in India in recent times is often described as a jobless growth. Do you agree with this view? Give arguments in favour of your answer. (UPSC IAS/2015)

  • How will the govt. produce the required fuel ethanol?

    Why in the News?

    Union Minister Nitin Gadkari announced that India will reach its goal of blending 20% ethanol with petrol in the next two months, a year earlier than planned. This will require producing about 1,100 crore litres of ethanol in a year.

    Does India’s ethanol distillery industry have the capacity to produce large ethanol? 

    • Current Production Capacity: India’s ethanol distillery capacity has significantly increased to 1,600 crore litres as of 2024-25, up from 423 crore litres in 2019-20. This expansion has been driven by government incentives and a stable market for ethanol.
    • Projected Production: To meet the target of 20% blending of ethanol in petrol, approximately 1,100 crore litres of fuel ethanol will be produced annually, with sugarcane expected to contribute around 400 crore litres this ethanol year.
    • Diverse Feedstocks: Ethanol production is now utilizing not just sugarcane but also high-grade molasses, broken rice, and maize, indicating a shift towards a more diversified feedstock strategy.
    • Government Support: The Indian government has implemented various measures to boost ethanol production, including reducing the Goods & Services Tax on ethanol and encouraging the establishment of grain-based distilleries.

    Why have maize imports increased substantially in the past year?

    • Rising Demand for Ethanol: The increase in maize imports can be attributed to the government’s restrictions on using sugar and high-quality molasses for ethanol production, leading to a greater reliance on maize as an alternative feedstock for ethanol.
    • Import Figures: From April to June 2024, approximately ₹100 crore worth of maize was imported. For the fiscal year 2023-24, maize imports reached about $33 million, with total imports from April to November 2024 valued at $188 million.
    • Impact on Domestic Production: As farmers shift towards maize cultivation due to its lucrative potential for ethanol production, maize output is projected to reach around 42 million tonnes for the 2024-25 ethanol year, with an estimated 9 million tonnes available for ethanol production.
    • Market Adjustments: The growth in maize cultivation is expected to continue without necessitating further imports due to favourable conditions for Kharif crops this year. Farmers are increasingly diverting maize from traditional uses to meet the demands of the ethanol market.

    What are the significance of the ethanol distillery industry?

    • Energy Security and Reduced Import Dependence: The ethanol distillery industry plays a crucial role in enhancing India’s energy security by reducing reliance on imported fossil fuels. By blending ethanol with petrol, India aims to substitute a significant portion of its crude oil imports, which account for over 87% of its needs.
    • Environmental Benefits: Ethanol production and blending contribute to significant reductions in carbon emissions and urban air pollution. Ethanol’s chemical properties allow for more complete combustion, which lowers harmful emissions such as carbon monoxide and particulate matter.
    • Economic Growth and Rural Development: The ethanol industry stimulates economic growth by providing additional income streams for farmers through the cultivation of sugarcane, maize, and other biofuel crops. This has led to increased investments in distilleries and agro-processing industries, creating jobs and revitalizing rural economies.
      • The government’s initiatives, such as the PM-JI-VAN Yojana, further incentivize ethanol production, ensuring stable farmer incomes and promoting diversification in agricultural practices.

    Way forward: 

    • Enhancing Domestic Maize Production: Strengthen R&D in high-yield maize varieties, improve irrigation infrastructure, and provide financial incentives to farmers to ensure a stable domestic supply for ethanol production, reducing import dependency.
    • Sustainable Feedstock Diversification: Promote second-generation (2G) biofuels using agricultural waste and non-food biomass to minimize food security concerns while maintaining ethanol production growth.

    PYQ:

    Q With reference to the usefulness of the by-products of sugar industry, which of the following statements is/are correct? (UPSC IAS/2022)

    1. Bagasse can be used as biomass fuel for the generation of energy.
    2. Molasses can be used as one of the feed stocks for the production of synthetic chemical fertilizers.
    3. Molasses can be used for the production of ethanol.

    Select the correct answer using the codes given below.

    (a) 1 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3