💥Mains Ready By December. Smash Mains & Smash PYQ Admissions Open
Talk to Mentor

Civilsdaily

Login

Type: Explained

These Newscards correspond to the explained section of various newspapers. They become immensely important for both prelims and mains and special attention needs to be paid to them

  • [PREMIUM] An Overview of the Digitalization in Indian Economy

    Why in the news?

    As per RBI findings, India’s core digital economy saw a rise from constituting 8.5% of GVA in 2019 to 12.5% in 2023, marking a growth rate of 15.6% over the span of 2019-2023.

    What is digitisation?

    • Digitization refers to the process of converting information, data, or physical objects into digital format. Digitization enables information to be stored, accessed, and manipulated electronically, often leading to increased efficiency, accessibility, and flexibility compared to traditional analog methods.

    Origin in World 

    • The origin of digitalization can be traced back to the late 19th century when Herman Hollerith developed a punch card system for tabulating data.
    • Alan Turing’s theoretical work on computation in the early 20th century laid the foundation for the development of the first electronic computers in the 1940s, which were pivotal in digitizing various forms of information.

    Origin in India 

    • Late 20th century: The origins of digitalization in India can be traced back to the late 20th century, with the advent of personal computers and the internet.
    • Early 2000s:The government’s concerted efforts to drive digital transformation in the country began in the early 2000s with the launch of the National e-Governance Plan (NeGP) in 2006
    • 2015: The NeGP aimed to make government services available to citizens electronically by improving online infrastructure and connectivity. This laid the foundation for the more comprehensive “Digital India” initiative, which was launched by Prime Minister Narendra Modi in 2015

    Status of Digitalization in the Indian Economy

    • Enhancement of E-Governance: The Digital India initiative has brought about substantial enhancements in e-governance services. Programs such as e-visas and the Digital Locker system have effectively modernized government services, leading to a reduction in paperwork and greater accessibility for citizens.
    • E-Commerce market: India’s e-commerce market is expected to reach $200 billion by 2026. Major players like Flipkart and Amazon have expanded their reach, with the COVID-19 pandemic accelerating online shopping adoption.
    • Digital transaction: The BHIM (Bharat Interface for Money) app, utilizing the Unified Payments Interface (UPI), has garnered immense popularity, enabling secure peer-to-peer transactions. By August 2023, UPI had processed more than 10 billion monthly transactions, amounting to INR 18 trillion ($204.77 billion).
    • Startup Ecosystem in India: India’s rapidly growing startup ecosystem currently encompasses 110 unicorns valued at $347 billion, featuring prominent companies such as Paytm, Ola, and Zomato. These unicorns exemplify India’s prowess as a technology-driven entrepreneurial center.
    • Digital Financial Inclusion: Digital financial services, propelled by programs such as Jan Dhan Yojana, have advanced financial inclusion by facilitating the opening of millions of bank accounts for those previously excluded from or underrepresented in the banking system.
    • Surge in Broadband and Internet Usage: India has experienced a notable surge in broadband adoption, boasting 825 million mobile broadband subscribers as of July 2023. This uptick has resulted in heightened data consumption and escalated online engagement, especially among Generation Z.

    Key challenges related to digitalisation in India:

    • Lack of skills: Rapid technological change increase the demand of skilled workforce. Only 42% of India’s workforce possesses digital skills, highlighting the need for digital literacy and upskilling.
    • Regulatory challenges: For businesses, especially startups, grappling with intricate digital regulations, e-commerce taxation, and intellectual property matters continues to present significant challenges.
    • Privacy issues:The surge in digital transactions and data exchange has sparked notable concerns regarding privacy and data security. These concerns are being tackled by the Personal Data Protection Bill, which introduces regulatory intricacies.
    • Cybersecurity: As digitization increases, the risk of cyber threats and attacks grows. India faced 91 lakh cybersecurity incidents in 2022, ranking third globally in the average cost of data breaches.
    • Digital Divide: Despite advancements, there remains a digital gap, with rural areas experiencing restricted internet and technology accessibility, resulting in approximately 50% of the population being offline.

    Measures to address these challenges:

    • Digital Skills Development: Implement comprehensive digital literacy programs to enhance the skills of the workforce.
    • Regulatory Simplification:Streamline digital regulations, especially for startups, to reduce complexities and facilitate smoother operations.Provide guidance and support to businesses on e-commerce taxation and intellectual property matters.
    • Privacy and Data Security: Enforce the Personal Data Protection Bill to address privacy concerns and ensure data security.Enhance awareness campaigns to educate the public about data privacy and protection measures.
    • Cybersecurity Measures: Strengthen cybersecurity infrastructure to combat the increasing cyber threats and attacks.Invest in advanced cybersecurity technologies and training programs to build a resilient defense system.
    • Closing the Digital Divide:Expand digital infrastructure in rural areas to improve internet and technology accessibility.

     Steps taken by government:

    • Cybersecurity Framework: Enhance cybersecurity infrastructure and awareness, emphasizing collaboration between government agencies and the private sector under National Cyber Security Policy of 2021.
    • Data Protection Laws: Enacted data protection laws and regulations, like the Digital Personal Data Protection Act, of 2023, to ensure privacy and responsible data handling.
    • Expansion of Broadband : Accelerate efforts to expand broadband connectivity in rural and remote areas, leveraging public-private partnerships like the BharatNet project.
    • Digital initiative: Comprehensive digital literacy initiatives targeting both urban and rural communities, exemplified by programs like the Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA).

    Conclusion: 

    Need to Implement widespread digital literacy programs to equip individuals with the necessary skills to navigate the digital landscape and emphasize upskilling and reskilling initiatives to meet the demands of rapid technological advancements.Encourage collaboration between the government and the private sector to drive digitization initiatives.

     

    Mains PYQ

    Q Implementation of Information and Communication Technology (ICT) based projects/programmes usually suffers in terms of certain vital factors. Identify these factors and suggest measures for their effective implementation. (UPSC IAS/2019)

    Q Has digital illiteracy, particularly in rural areas, coupled with lack of Information and Communication Technology (ICT) accessibility hindered socio-economic development? Examine with justification.(UPSC IAS/2021)

  • Why Centre filed an application to modify 2G spectrum scam judgement

    Why in the news? 

    Attorney General R Venkataramani, on April 22, mentioned an application filed by the Centre to modify the Supreme Court’s 2012 judgement in the 2G spectrum scam case.

    What is the 2G scam case?

    • In 2008, under then Telecom Minister A Raja, the Department of Telecommunications (DoT) issued 2G spectrum licenses to specific telecom operators on a first-cum-first-serve basis.
    • In 2009 ,the Central Vigilance Commission directed the CBI to investigate claims that there were illegalities in the allocation of licenses, following which the CBI filed a first information report against unknown officers of the DoT, private persons and companies.
    • In the meantime, the Centre for Public Interest Litigation and Subramanian Swamy filed petitions at the Supreme Court alleging a Rs 70,000 crore scam in the grant of telecom licenses in 2008.
    • In 2010, the Comptroller and Auditor General of India (CAG) filed a report claiming that the allocation had caused a loss of Rs 1.76 lakh crores to the public exchequer. Raja resigned shortly after.
    • In 2011 the CBI filed its first chargesheet, in which Raja was an accused.
    • In February 2012, the Supreme Court cancelled the 122 licenses granted during Raja’s tenure. The court found that Raja had allocated licenses in 2008 based on 2001 prices in order to benefit specific private telecom operators.

    Why is the Centre seeking a modification of the apex court’s decision?

    • Need for Non-commercial Use: The Centre highlights that spectrum allocation is essential not only for commercial telecommunication services but also for public interest functions such as security, safety, and disaster preparedness. These functions may not always align with the profit-oriented nature of auction processes.
    • Situational Preferences: The Centre argues that there are situations where auctions are not technically or economically preferred or optimal. This could include scenarios where there is a one-time or sporadic use of spectrum, which may not justify the complexities and costs associated with conducting auctions.
    • Court’s Clarification on Auctions: The Centre refers to the Supreme Court’s clarification in September 2012, stating that the auction method prescribed in 2012 was not a constitutional principle and not an absolute or blanket statement applicable across all natural resources. The Court expressed respect for the executive’s discretion in such matters.
    • Seeking Clarity for Administrative Process: In light of the Court’s clarification, the Centre seeks clarity on whether it can allocate 2G spectrum in the future through an administrative process if determined through due process and in accordance with the law. This indicates a desire for flexibility in spectrum allocation methods based on situational considerations and public interest needs.

    Conclusion: 

    Need to implement transparent processes for the allocation of public resources such as spectrum. Clearly outline the criteria, procedures, and timelines for allocation, and ensure that these are accessible to all stakeholders.Establish independent oversight bodies or regulatory agencies to monitor and audit the allocation process.

    Mains PYQ:

    Q What is mean by public interest? What are the principles and procedures to be followed by the civil servants in public interest? (UPSC IAS/2018)

  • RBI’s latest recommendations to regulate payment aggregators in offline spaces | Explained

    Why in the news?

    The Reserve Bank of India (RBI) has floated two consultation papers seeking enhanced regulation of payment aggregators carrying out face-to-face transactions. It also seeks to strengthen the ecosystem’s safety.

    What is Payment Aggregators?

    • A payment aggregator is a payment solution or a platform provider that aggregates various payment modes such cards, UPI, net-banking, wallets and alternate credit products by partnering with various processing entities such as acquiring banks, direct banks (in case of net banking) and issuers of wallets and alt credit products on to a single platform.

    What exactly are the norms about?  

    • Extension to Offline Transactions: The existing guidelines for payment aggregators cover their activities in e-commerce and online platforms. The latest draft proposes extending these regulations to offline spaces, including proximity or face-to-face transactions.
    • Convergence on Standards: The proposed norms aim to achieve convergence on standards of data collection and storage across online and offline transactions handled by payment aggregators.
    • Elaborate Guidelines: The proposed norms are detailed and comprehensive, reflecting lessons learned from incidents such as the Paytm Payments Bank crisis.
    • Strengthening Ecosystem: RBI’s objective seems to be strengthening the payment aggregator ecosystem against opacity and ensuring compliance with regulatory standards.
    • Penalties for Non-Compliance: The Financial Intelligence Unit (FIU-IND) imposed penalties on Paytm Payments Bank for engaging in illegal activities and failing to adhere to regulatory requirements, indicating strict consequences for non-compliance with the proposed norms.

    Is registration with the RBI being made compulsory?  

    The primary focus of this guidlines is on non-bank PAs and within them, the offline extensions.

    • PA based on Bank: Banks providing physical PA services as part of their normal banking relationship would not require any separate authorisation from the RBI. They are only expected to comply with the revised instructions within three months after they are issued.
    • PA without Banking: Non-banking entities providing PA services at the point of sale (PoS), that is, offline, would have to inform RBI within 60 days (after the circular is issued), about their intent to seek authorisation.

    Does it talk about provisions for sustainability?  

    • Minimum net worth aims to ensure the sustainability of non-banking entities: While the proposed norms primarily focus on regulatory compliance and financial stability, the requirement for a minimum net worth aims to ensure the sustainability of non-banking entities providing proximity/face-to-face transaction services. This is because entities with a stronger financial base are better positioned to weather economic challenges and uncertainties, thus promoting sustainability in the long run.
    • Risk-Based Payments: Payment aggregators are required to assign risk-based payments to merchants, focusing on sustainability. This involves assessing the risk associated with each merchant and adjusting payment terms accordingly.

    What about KYC requirements?  

    • Extended Scope of KYC: The proposed regulations aim to extend the scope of Know Your Customer (KYC) requirements for merchants onboarded by payment aggregators. While KYC is already mandatory, the regulations seek to make the provisions more nuanced.
    • Document Verification for Medium Merchants: Medium merchants, with a higher annual turnover threshold, must undergo additional document verification. Payment aggregators are expected to verify one official document each of the proprietor, beneficial owner or attorney holder, and the stated business.
    • Ongoing Compliance Monitoring: Payment aggregators must ensure that transactions undertaken by their merchants are in line with their business profiles. This involves ongoing monitoring to ensure compliance with KYC requirements and business activities.

    Conclusion: 

    The proposed norms aim to achieve convergence on standards of data collection and storage across both online and offline transactions handled by payment aggregators. This helps in streamlining regulatory requirements and ensuring consistency in data management practices.

    Mains PYQ 

    Q  How can the Digital India program help farmers to improve farm productivity and income? What step has the government taken in this regard? (UPSC IAS/2015)

    With Inputs from:

    https://www.thehindu.com/business/rbi-clampdown-on-lenders-could-moderate-credit-growth-in-2024-25/article67994838.ece

    https://www.thehindu.com/business/Industry/rbi-to-introduce-offline-erupee-transactions-soon-shaktikanta-das/article67824286.ece

  • SC declines plea against Collegium system to protect public’s best interest

    Why in the news? 

    The petition, filed by advocate Mathews Nedumpara, seeks a revival of the NJAC. SC Registrar says the issue is already settled, and a repeat litigation is a “needless waste of judicial time and energy”

    What is the Registrar of supreme court?

    • The registrar is a chief executive officer of a judicial forum. They are in charge of the entire registry of the department.

    What is NJAC (National Judicial Appointments Commission)? 

    • In August 2014, Parliament passed the Constitution (99th Amendment) Act, 2014 along with the National Judicial Appointments Commission (NJAC) Act, 2014, providing for the creation of an independent commission to appoint judges to the Supreme Court and high courts.
    • In 2015, Supreme Court struck down the National Judicial Appointments Commission (NJAC) and the 99th Amendment

    Actually, Collegium system is used for the appointment of SC Judges 

    First Judges Case (1981): 

    • Also known as S.P. Gupta case (December 30, 1981), the Supreme Court held that consultation does not mean concurrence and it only implies exchange of views
    • It declared that the “primacy” of the Chief Justice of India (CJI)s recommendation on judicial appointments and transfers can be refused for “cogent reasons.”
    • The ruling gave the Executive primacy over the Judiciary in judicial appointments.

    Second Judges Case (1993):

    • SC reversed its earlier ruling and changed the meaning of the word consultation to concurrence.
    • Hence, it ruled that the advice tendered by the Chief Justice of India is binding on the President in the matters of appointment of the judges of the Supreme Court.
    • But, the Chief Justice would tender his advice on the matter after consulting two of his senior most colleagues (this was considered as Collegium)
    • The collegium can veto the government if the names are sent back by the latter for reconsideration.
    • The basic tenet behind the collegium system is that the judiciary should have primacy over the government in matters of appointments and transfers in order to remain independent.
    • The opinions of each member of the Collegium and other judges consulted should be made in writing and form part of the file on the candidate sent to the government.
    • Thus, the executive element in the appointment process was reduced to a minimum.
    • If the CJI had consulted non-judges, he should make a memorandum containing the substance of consultation, which would also be part of the file. After the receipt of the Collegium recommendation, the Law Minister would forward it to the Prime Minister, who would advise the President in the matter of appointment.

    Third Judges Case (1998):

    • SC on President’s reference expanded the Collegium to a five-member body, comprising the CJI and four of his senior-most colleagues while HC collegium is led by its Chief Justice and four other senior most judges of that court.
    • Names recommended for appointment by a HC collegium reaches the government only after approval by the CJI and the SC collegium.

    Conclusion: 

    The primary argument against the NJAC was that it could potentially undermine judicial independence by giving the executive a significant role in judicial appointments. Any alternative system, including a revised version of the NJAC, would need to ensure that judicial independence is safeguarded.

    Mains PYQ 

    Q Critically examine the Supreme Court’s judgement on ‘National Judicial Appointments Commission Act, 2014’ with reference to appointment of judges of higher judiciary in India.

  • On the National Clean Air Programme | Explained

    Why in the news? 

    When the Indian government launched the National Clean Air Programme (NCAP) in 2019, it’s target was to cut the concentration of atmospheric Particulate Matter (PM) by 20-30% by 2024, from 2017 levels. This was later revised to 40% by 2026.

    What is the NCAP?

    • The National Clean Air Programme (NCAP) was launched in India in January 2019 by the Ministry of Environment, Forest and Climate Change (MoEFCC)
    • The NCAP aims to achieve reductions in PM10 levels through various measures.

    What is PM10? 

    • PM 10, also known as particulate matter with an aerodynamic diameter of less than 10 micrometers.
    • PM 10 particles can irritate the eyes, nose, and throat, and prolonged exposure to high levels of PM 10 can lead to serious health problems, including respiratory issues, cardiovascular disease, and even premature death.

    Key features of NCAP (Note: asked in UPSC 2020 mains)

    • Target: Achieving 20% to 30% reduction target in Particulate Matter (PM10 and PM2.5) concentrations by 2024, where 2017 is kept as the base year for the comparison of concentration. But it has been revised to 40% by 2026.
    • Cities based on air quality:Identification of 122 non-attainment cities across the country based on the 2014-2018 Air Quality data.
    • City specific plans: Preparation of city-specific action plans, including measures to strengthen the monitoring network, reduce vehicular/industrial emissions, and increase public awareness.
    • Coordination between centre, state and local: Facilitating collaborative, multi-scale, and cross-sectoral coordination between the relevant central ministries, state governments, and local bodies.
    • Right mix with exixting policies: Establishing a right mix with the existing policies and programs, including the National Action Plan on Climate Change (NAPCC) and other government initiatives related to climate change.
    • Changes as per additional scientific information: Constant change, activity, and progress to get evolved based on the additional scientific and technical information as they emerge.
    • Monitoring station: Increasing the number of monitoring stations in the country, including rural monitoring stations, technology support, and data analysis.
    • Awareness and capicity building: Emphasis on awareness and capacity building initiatives, including public awareness campaigns, training programs, and research and development activities.

     Challenges related to NCAP 

    • Lack of fund Utilization: On average, only 60% of the allocated funds have been utilized so far, with 27% of cities spending less than 30% of their designated budgets. Notably, Visakhapatnam and Bengaluru have spent 0% and 1% of their NCAP funds, respectively.
    • Implementation Delays: Delays in implementing CAAPs are attributed to various factors, including bureaucratic hurdles such as delays in approvals from competent authorities and the absence of standard operating procedures.
    • Technical Challenges: Technical challenges, such as defining technical specifications for tendering processes and procuring necessary equipment like mechanical sweepers and electric buses, contribute to implementation delays.

    How scientific tool can help?

    • Emissions Inventory (EI): EIs provide crucial insights into local pollution sources and their contributions, aiding in forecasting future emissions and shaping targeted pollution control strategies. 
    • Source Apportionment (SA) Studies: SA studies offer detailed analyses of contributions from various pollution sources, including distant ones.
    • Role of Air Quality (AQ) Modelling: AQ modelling helps in understanding pollution dispersion, including from distant sources.
    • Role of EI, SA and AQ: Combining EI, SA studies, and AQ modelling allows for a comprehensive understanding of pollution sources, their contributions, and dispersion patterns.

    Conclusion: 

    Implement stricter monitoring mechanisms to ensure timely and efficient fund utilization. Regular audits and reviews can help identify underutilization and take corrective actions promptly.

    Mains PYQ

    Q What are the key features of the National Clean Air Programme (NCAP) initiated by the government of India? (UPSC IAS/2020)

  • Tensions grow in West Asia, a heavily militarised region

    Why in the news? 

    According to the Stockholm International Peace Research Institute’s ‘Trends in International Arms Transfers 2023’, four of the top 10 largest importers of arms last year were from West Asia, with the U.S. being the main supplier

    SIPRI Report: Trends in International Arms Transfers, 2023

    • India’s Arms Imports: Increased by 4.7% compared to 2014-18.
    • European Arms Imports: Saw a staggering 94% increase between 2014-18 and 2019-23, likely influenced by the Russia-Ukraine conflict.
    • Russia-India Arms Trade: Russia remained India’s largest arms supplier, accounting for 36% of total imports.
    • Top Global Importers: India, Saudi Arabia, and Qatar emerged as the top three importers globally.
    • Ukraine’s Arms Imports: Became the fourth largest arms importer during the specified period.
    • China-Pakistan Arms Trade: Pakistan, the fifth largest arms importer, obtained 82% of its arms from China.
    • France’s Arms Exports: Emerged as the world’s second-largest arms supplier, after the United States.
    • French Arms Exports to India: India was highlighted as the largest single recipient of French arms exports.

     

    West Asia has largest expenditure in Defence as per GDP %

    Reason behind the west Asia is heavily militarised region:

    • Regional Conflicts and Tensions: The region is characterized by ongoing conflicts and tensions, such as those in Yemen and Syria, leading countries to seek advanced weaponry to address security challenges
    • Oil Boom: The oil boom in West Asia has led to increased military spending as countries seek to protect their oil resources and maintain regional stability
    • Internal Factors: The presence of Western arms and personnel in some Persian Gulf countries has contributed to internal resurgences, leading states to invest in military capabilities for self-defense
    • Diversification of Arms Suppliers: West Asian states have adopted the principle of diversifying sources of arms supply, leading to a broader range of arms imports from various suppliers globally
    • Client-Supplier Relationship: The relationship between client states and arms suppliers is often favorable to the recipient, with the recipient receiving the arms they wish and the supplier bowing to their demands
    • Regional Disputes and Border Skirmishes: Border disputes, threats, and wars have made it imperative for West Asian states to resort to modern and efficient national defense systems like conflict between Iran and Israel

    Conclusion: 

    Encourage diplomatic efforts to resolve regional conflicts and tensions through dialogue and negotiation, aiming to reduce the need for excessive military spending. Advocate for the establishment of regional arms control agreements to limit the proliferation of weapons and promote stability in the West Asia region.

    Mains PYQ 

    Q How will I2U2 (India, Israel, UAE and USA) grouping transform India’s position in global politics?

  • The reality of the Swachh Bharat Mission

    Why in the news? 

    India was ranked right at the bottom of 180 countries in the Environment Performance Index (EPI) in 2022. The EPI ranks countries on climate change performance, environmental health, and ecosystem vitality.

    Swachh Bharat Abhiyan

    • It is also known as the Clean India Mission, is a significant campaign initiated by the Government of India on October 2, 2014,
    • It is primarily aimed at eliminating open defecation, improving solid waste management, and promoting cleanliness across the country.

    Key challenges related to Swachh Bharat Mission

    • Poor Quality of Infrastructure: Reports suggest inadequate construction quality of toilets under the Swachh Bharat Mission (SBM), raising questions about the effectiveness of the initiative.
    • Inadequate Access to Sanitation Facilities: Despite government claims, communities in slums and peri-urban areas still lack access to public toilets, contributing to sanitation challenges.
    • Lack of Waste Treatment: Toilet construction in rural areas is not linked to waste treatment, leading to improper disposal of faecal sludge and environmental contamination.
    • Ineffective Waste Management Technologies: Large, capital-intensive waste management technologies have failed to meet expectations, resulting in health crises and the need for additional resources to fix them.
    • Privatization of Public Health Services: The outsourcing of sanitation work to private contractors, often employing subjugated communities, has led to the privatization of public health services and perpetuated caste discrimination.
    • Insufficient Human Resources: Shortage of sanitation inspectors and inadequacy in recruitment efforts hinder effective monitoring and management of sanitation programs at the local level.

    Way forward

    • Enhanced Quality Assurance: Implement stricter quality control measures to ensure the construction of toilets meets prescribed standards. Regular inspections and audits can help identify and rectify any construction deficiencies.
    • Targeted Infrastructure Development: Prioritize the construction of public toilets in slums and peri-urban areas to improve access to sanitation facilities for marginalized communities.
    • Integrated Waste Management: Integrate toilet construction with waste treatment facilities in rural areas to ensure proper disposal of faecal sludge.

    Mains PYQ 

    Q What are the impediments in disposing the huge quantities of discarded solid wastes which are continuously being generated? How do we remove safely the toxic wastes that have been accumulating in our habitable environment? (UPSC IAS/2018)

  • PREMIUM – Subsidies – Good or Bad for India?

    Why in the News? 

    Issues have been raised by the World Trade Organization (WTO) concerning Agricultural Subsidies in India. Major subsidies in India are on fertilizer, power, credit, output, seed, and export products.

    What is Subsidy?

    • The term subsidy refers to financial assistance in the form of discounts or monetary grants by the Central government to public entities or private institutions. 
    • The objective is to make the products offered by these institutions affordable for public consumption. 
    • The subsidized products are necessary for the larger public good and are a means of supporting the community’s welfare.

     

    Historical Background

    • Post-Independence Era (1947 onwards): The government introduced various subsidies to promote industrialization, agriculture, and social welfare, aiming to reduce poverty and achieve self-sufficiency in key sectors.
    • Green Revolution (1960s): During the 1960s and 1970s, Subsidies on fertilizers, seeds, and credit were provided to farmers to encourage the adoption of new agricultural technologies and boost food production.
    • Liberalization Reforms (1991):  While liberalization led to a reduction in some subsidies and a shift towards market-oriented policies, the government continued to provide support to sectors deemed crucial for social welfare and economic development.

    Types of Subsidies:

    • Food subsidy: The food subsidy’s main objective is to provide essential eatables to a large section of the population living below the poverty line in India. 
      • The major food items supplied to the BPL families (by PDS system) vary as per the region, it includes – Wheat, Rice, Sugar, Milk, Cooking oil, and more.
    • Education subsidy: The Central government extends the education subsidy to eligible students to pursue higher technical and professional education.
    • Export subsidy: To make exports attractive and lend support to the companies, the government offers export subsidies. 
    • Fertilizer subsidy: The fertilizer is provided at a fixed MRP that is below the actual price; the government pays the difference between the actual coat and the MRP.

    (Note: There are various types of subsidies but UPSC usually asks for Agriculture subsidies) 

    Subsidies in Agriculture:

    Direct Subsidies: 

    • Credit Subsidies: Subsidized credit programs offer farmers loans at lower interest rates or with relaxed repayment terms to finance agricultural activities, such as purchasing inputs, machinery, or land.
      • Ex-The Government of India provides interest subvention of 2% and Prompt Repayment Incentive of 3% to the farmers, thus making the credit available at a very subsidized rate of 4% per annum as per Kisan Credit Card.
    • Direct Income Transfers: Governments provide direct cash transfers or income support schemes to farmers to supplement their incomes, improve their financial stability, and alleviate rural poverty. Ex-PM Kisan Samman Nidhi Scheme under which support of Rs.6000/- per year 

    Indirect Subsidies 

    • Fertilizer Subsidies: Governments often provide subsidies on fertilizers to reduce the cost burden on farmers and promote fertilizer use, which enhances crop productivity. Ex- the Union Budget for the fiscal year 2024-25 (FY25) allocated ₹1.64 trillion for fertilizer subsidy.
    • Seed Subsidies: Subsidies on quality seeds help farmers access improved varieties that are disease-resistant, drought-tolerant or have higher yields. Ex- the government provides a subsidy of Rs. 1000/- per quintal or 50% of the cost.
    • Water Subsidies: Subsidized irrigation infrastructure and water supply schemes aim to improve water availability for agricultural purposes, especially in regions facing water scarcity. Ex- Pradhan Mantri Krishi Sinchai Yojana.
    • Minimum Support Prices (MSP): Governments guarantee a minimum price for certain crops to protect farmers from market price fluctuations and ensure stable income. Procurement agencies purchase crops from farmers at MSP, often for staples like wheat, rice, and pulses. Ex- the government of India sets the MSP twice a year for 24 commodities (23 crops + 1 sugarcane).
    • Crop Insurance Subsidies: Subsidies are offered on crop insurance premiums to encourage farmers to enroll in crop insurance schemes, which protect them against yield or revenue losses due to adverse weather, pests, or other risks. Ex- Pradhan Mantri Fasal Bima Yojana (PMFBY)
    • Subsidized Agricultural Machinery: Governments may subsidize the purchase of farm machinery, equipment, and tools to mechanize agricultural operations, increase efficiency, and reduce labor costs. Ex- Sub-mission On Agriculture Mechanization (SMAM scheme)

    Present issues raised by the WTO:

    • Market Distortion: The WTO contends that agricultural subsidies have the potential to disrupt global markets. For instance, subsidies like India’s Minimum Support Price (MSP) may result in the undervaluation of Indian agricultural goods on the international stage. 
    • Trade Barriers: Subsidies can create challenges for foreign producers without subsidies to compete effectively in markets where subsidized goods are sold.
    • Overproduction of certain crops: Subsidies can lead to overproduction of certain crops, which can further distort the market and lead to wastage.
    • Negative Environmental Impact: Overuse of fertilizers and water for irrigation, encouraged by subsidies, can lead to environmental degradation.
    • Inequity: The benefits of subsidies often go to larger farmers rather than small-scale farmers who need them the most.

    Limitations Faced by Indian Agriculture:

    • Subsidies on few crops: Subsidies like MSP, which are applicable for only a few crops, have led to cereal-centric agriculture with distorted cropping patterns, as farmers tend to grow only those crops for which they are given subsidies.
    • Benefiting only wealthy Farmers: As per the Economic Survey 2018, wealthy farmers benefited over small farmers from the farm subsidies. Thus the objective of giving subsidies is not fulfilled. This is the case frequently witnessed in Punjab and Haryana, where affluent farmers enjoy taxpayer money.
    • Fiscal deficit: Also, the subsidies lead to a substantial financial deficit and burden on the financial exchequer.
    • Cause of pollution: Subsidies for agriculture can foster the overloading of croplands, which leads to erosion and compaction of topsoil, pollution from synthetic fertilizers and pesticides, and release of greenhouse gases, among other adverse effects.

    Way Forward:

    • Diversification of Subsidies: Expand subsidy programs to cover a wider range of crops, including fruits, vegetables, pulses, and other diversified agricultural products, to promote crop diversification and mitigate the cereal-centric focus.
    • Targeted Subsidy Programs: Implement targeted subsidy schemes that prioritize support for small and marginalized farmers, ensuring that subsidies reach those who need them most and reducing the disproportionate benefit to wealthy farmers.
    • Price Stabilization Mechanisms: Develop price stabilization mechanisms beyond MSP, such as futures markets, crop insurance, and warehouse receipt systems, to mitigate price volatility and provide income security to farmers without distorting cropping patterns.

    Prelims PYQ

    In India, markets in agricultural products are regulated under the (UPSC IAS/2015)

    a) Essential Commodities Act, 1955

    b) Agricultural Produce Market Committee Act enacted by States

    c) Agricultural Produce (Grading and Marking) Act, 1937

    d) Food Products Order, 1956 and Meat and Food Products Order, 1973

    Mains PYQ 

    Q How do subsidies affect the cropping pattern, crop diversity and economy of farmers? What is the significance of crop insurance, minimum support price and food processing for small and marginal farmers? (UPSC IAS/2017) 

    Q What are the different types of agriculture subsidies given to farmers at the national and at state levels? Critically analyse the agricultural subsidy regime with reference to the distortions created by it (UPSC IAS/2013)

  • An overview of the PMAY-U scheme | Explained

    Why in the News? 

    As the current Union government completes two terms, one of its flagship programs was Housing For All (HfA) by 2022, both in urban and rural areas, planned under the PMAY (Pradhan Mantri Awas Yojana) scheme in 2015.

    About the PMAY scheme:

    The declared objectives of the scheme included rehabilitation of slum dwellers with private developers’ participation; promotion of affordable housing for the weaker sections through Credit Linked Subsidy Schemes (CLSS); affordable housing in partnership with public and private sectors; and subsidy for Beneficiary-led Construction (BLC).

    Issues related to the PMAY Scheme:

    • PMAY-U faltering Performance: The Pradhan Mantri Awas Yojana – Urban (PMAY-U) initiative has been criticized for its faltering performance. Data from the PMAY dashboard suggests a shortfall of around 40 lakh houses from sanctioned and completed segments.
    • ISSR Failure: The in-situ slum redevelopment (ISSR) component, aimed at addressing the largest demand in cities, has been particularly criticized for its failure. Only a small number of houses have been sanctioned under ISSR, falling far short of expectations.
    • The large difference between achievement and need: Despite delivering 80 lakh homes, the PMAY-U program has only addressed about 25.15% of the housing shortage. Even if the remaining sanctioned houses are constructed by the end of 2024, it would only address about 37% of the real need, leaving almost 2.4 crore households without adequate housing.
    • Not fulfilling the promise as per Spending: The housing program, which received significant budgetary allocation (over $29 billion in the last five years), has not been able to fulfill its promise of “Housing for All.” Despite the focus and financial support, the goal remains unfulfilled.

    The reason behind the failure of the PMAY Scheme

    • Challenges in Slum Rehabilitation: Despite efforts, some projects aimed at slum rehabilitation have faced issues, such as vertical growth leading to increased utility costs and unsuitable living spaces, as well as difficulties in acquiring land.
    • Neglecting social housing needs: City development plans, including PMAY, are often influenced by consultants favoring capital-intensive solutions, potentially neglecting social housing needs and community involvement.
    • Less central government’s share: The funding structure of PMAY involves significant contributions from beneficiary households and state governments, with the central government’s share being relatively small.
    • Limited Government Role: The architecture of PMAY places limited responsibility on the government, particularly in providing interest subsidies and cost-sharing with beneficiaries, leading to concerns about addressing the needs of the landless and the poor.

    Way Forward:

    • Reevaluation of Funding Allocation: The central government should consider increasing its share of funding to ensure adequate resources for housing projects. 
    • Enhanced Focus on Slum Rehabilitation: The government should review and enhance the implementation of the in-situ slum redevelopment (ISSR) component. This may involve better planning, community engagement, and addressing challenges such as land acquisition and vertical growth.
    • Community Participation and Needs Assessment: Incorporating community participation in the planning and implementation of housing projects is crucial 

    Mains PYQ 

    Q Pradhan Mantri Jan-Dhan Yojana (PMJDY) is necessary for bringing unbanked to the institutional fiancé fold. Do you agree with this for financial inclusion of the poorer section of the Indian society? Give arguments to justify your opinion (UPSC IAS/2016)

  • How is India planning to boost EV production?

    Why in the News? 

    The Union government approved a policy to promote India as a manufacturing hub for Electric Vehicles (EVs).

    Features of the Electric Vehicles policy:

    • Reduction of Import Duty: Import duty on electric vehicles (EVs) imported as Completely Built Units (CBUs) with a minimum CIF value of $35,000 is reduced from 70%-100% to 15% for five years.  
    • Waiver of Duty: A maximum of 40,000 EV imports in five years, with a duty waiver of ₹6,484 crore or proportional to investment (whichever is lower), requires a minimum $800 million investment.
    • Localization Targets: Manufacturers are required to set up manufacturing facilities in India within three years. They must achieve 25% localization by the third year and 50% localization by the fifth year of incentivized operation.
    • Incentives for Setting Up Manufacturing Facilities: The policy incentivizes manufacturers to establish manufacturing facilities in India by offering reduced import duties and waivers, provided they meet certain investment and localization targets.
    • Encouragement of Global EV Makers: The policy aims to encourage global EV makers like Tesla and Chinese EV maker BYD to enter the Indian market by providing favorable conditions for setting up manufacturing facilities and importing EVs.

    Present concerns raised by Private Players in the Market:

    • Impact on Domestic Industry: Tata Motors opposed the reduction of import duties, fearing it would negatively affect the domestic industry. They argued that lowering duties could harm the investment climate.
    • Competitive Disadvantage: Domestic players are concerned that the policy benefits mainly higher-end Original Equipment Manufacturers (OEMs), potentially placing them at a competitive disadvantage in segments below ₹29 lakh.
    • Favoring Global Players: The policy appears to favor global EV players and Indian joint ventures with such players, potentially making it more challenging for purely domestic players to compete effectively.

    Conclusion: The government should engage in dialogue with stakeholders, including domestic players like Tata Motors, to address their concerns and seek their input in shaping the policy framework. Need to implement measures to support domestic players, including providing incentives and support for technology development, innovation, and capacity building.

    Mains question for practice 

    Q Indian Government has recently approved a policy aimed at promoting the country as a manufacturing hub for Electric Vehicles (EVs). Discuss the key features of this policy. Highlight the concerns raised by private players.

    Mains PYQ 

    Q How is efficient and affordable urban mass transport key to the rapid economic development in India? (UPSC IAS/2019)