PT 360 Economy October 2024: UPSC 2025

ALL INDIA RURAL FINANCIAL INCLUSION SURVEY 2021-22
NABARD's Second All India Rural Financial Inclusion Survey (NAFIS) 2021-22
•    Launch and Purpose:
o    NAFIS, initiated in 2016-17, is a national-level survey designed to provide a detailed analysis of the rural population, focusing on livelihoods and financial inclusion aspects such as loans, insurance, and pensions.
o    The second NAFIS offers critical insights into rural economic and financial developments since 2016-17.
•    Key Survey Highlights:
o    Income Growth: Average monthly household income rose by 57.6%.
o    Consumption Trends: Food expenditure in household consumption declined from 51% to 47%.
o    Kisan Credit Card: Recognized as an effective financial inclusion tool for the rural farming sector.
o    Landholding Trends: Average landholding size reduced from 1.08 hectares to 0.74 hectares.
o    Financial Literacy: Respondents with good financial literacy increased from 33.9% to 51.3%.
o    Institutional Loans: Agricultural households borrowing from institutional sources grew from 60.5% to 75.5%.
•    Factors Driving Rural Income Growth:
o    Government Support: Schemes like MGNREGA provided livelihood security; 5.6 crore households availed employment under the scheme as of January 2023.
o    Female Labour Participation: The rural female labor force participation rate rose from 19.7% in 2018-19 to 27.7% in 2020-21 (Economic Survey 2022-23).
About NABARD
•    NABARD, established in 1982 under an Act of Parliament, is India’s apex development bank.
•    It was formed based on the recommendations of the B. Sivaraman Committee to promote sustainable and equitable rural and agricultural development.
NAFINDEX: Measuring Financial Inclusion
•    Developed using data from NAFIS 2016-17, NAFINDEX assesses financial inclusion across Indian states.
•    The index considers three dimensions: traditional banking products, modern banking products, and payment systems.
ANNUAL SURVEY OF INDUSTRIES (ASI) FOR FY 2022-23
ASI Report Released by MoSPI for FY 2022-23
Key Insights of ASI:
•    Purpose: The Annual Survey of Industries (ASI) analyzes the composition, growth, and structure of the manufacturing sector through key economic indicators.
Highlights:
•    Manufacturing Gross Value Added (GVA):
o    Recorded a 7.3% growth in current prices in 2022-23 compared to 2021-22.
o    Top States by Manufacturing GVA:
•    1st: Maharashtra
•    2nd: Gujarat
•    Economic Parameters:
o    Growth surpasses pre-pandemic levels across key metrics like:
•    Invested capital
•    Manufacturing GVA
•    Employment and wages
•    Sectoral Growth Drivers:
o    Key industries contributing to growth:
•    Basic metals
•    Coke & refined petroleum products
•    Food products
•    Employment:
o    7.4% increase in manufacturing employment over the previous year.
o    Top States for Employment:
•    1st: Tamil Nadu
•    2nd: Maharashtra
About ASI:
•    Conducting Authority: Conducted under the Collection of Statistics Act, 2008, except in Jammu & Kashmir (where it follows the J&K Collection of Statistics Act, 2010).
•    Industries Covered:
o    Factories registered under Sections 2m(i & ii) of the Factories Act, 1948.
o    Bidi and cigar manufacturing units under the Bidi & Cigar Workers (Conditions of Employment) Act, 1966.
o    Electricity undertakings not registered with the Central Electricity Authority (CEA).
o    Units employing 100+ workers and listed in the Business Register of Establishments (BRE) maintained by States.
About GVA (Gross Value Added):
•    GVA measures an industry or sector’s contribution to GDP. It is calculated as:
o    GVA = Gross Output - Intermediate Consumption.
•    Key Feature: Unlike Net Value Added (NVA), GVA includes depreciation of capital.
•    Estimates: Both quarterly and annual GVA are published by the National Statistical Office (NSO).
B READY INDEX 
News Context
The World Bank has introduced the inaugural edition of its Business-Ready (B-Ready) Index.
Key Highlights
•    Launch Phase:
o    The B-Ready Index is being implemented over a three-year period from 2024 to 2026.
o    Currently, it evaluates 50 economies (excluding India) and plans to expand coverage to 180 economies by 2026.
•    Replacement for EoDB Rankings:
o    B-Ready replaces the Ease of Doing Business (EoDB) rankings, which were discontinued in 2021 due to data irregularities and ethical concerns.
•    India's Involvement:
o    The 2024 Business Reform Action Plan rankings by the Department for Promotion of Industry and Internal Trade (DPIIT) will incorporate some indicators from the B-Ready Index.
What is the B-Ready Index?
•    Overview: A new data-driven initiative by the World Bank to evaluate the global business and investment climate, accompanied by an annual report.
•    Objective:
o    To foster private investment, create jobs, and boost productivity for inclusive and sustainable economic growth.
o    Ensures data comparability across economies and accuracy within individual economies.
•    Focus Areas:
o    Reform Advocacy: Promotes policy reform through benchmarks and dialogues among governments, businesses, and the World Bank.
o    Policy Guidance: Provides targeted recommendations based on global best practices.
o    Analysis and Research: Delivers comprehensive data for private sector development studies.
Analytical Framework of the B-Ready Index
•    Lifecycle Approach: Examines critical aspects of private sector development across three stages of a business: opening, operating/expanding, and closing/reorganizing.
•    Cross-Cutting Themes:
o    Digital Adoption: Assesses how governments and businesses use digital technologies.
o    Environmental Sustainability: Evaluates regulatory impacts on business practices concerning the environment.
o    Gender Inclusion: Analyzes gender-disaggregated data to understand the impact of regulations on businesses.
•    Core Structure: Focuses on ten topics with analysis grounded in three foundational pillars.
Topics of the B-Ready Index:
•    Business Entry: Procedures for starting a business.
•    Business Location: Factors influencing site selection and setup.
•    Utility Services: Access to electricity, water, and other essential services.
•    Labor: Workforce availability, regulations, and management.
•    Financial Services: Availability of credit, banking, and investment facilities.
•    International Trade: Policies and processes for cross-border business operations.
•    Taxation: Tax systems and compliance requirements.
•    Dispute Resolution: Mechanisms for resolving business-related conflicts.
•    Market Competition: Dynamics of competition and fair trade practices.
•    Business Insolvency: Framework for addressing financial distress and liquidation.
•    Digital Adoption: Integration of technology in business processes.
•    Environmental Sustainability: Practices ensuring eco-friendly business operations.
•    Gender: Policies fostering gender inclusivity in business environments.
Pillars of the B-Ready Index:
•    Pillar I: Regulatory Framework Focuses on the rules and regulations businesses must adhere to during establishment, operation, and closure.
•    Pillar II: Public Services Examines the support provided through public institutions, infrastructure, and facilities that enable and sustain business activities.
•    Pillar III: Operational Efficiency Assesses the ease of regulatory compliance and the effective utilization of public services critical to business operations.
What is the difference between the Ease of Doing Business and the B-ready index?

CAREEDGE RELEASED ITS INAUGURAL SOVEREIGN CREDIT RATINGS 
CareEdge's Inaugural Report on Sovereign Ratings
•    Launch and Milestone: CareEdge released its first-ever Sovereign Ratings report, analyzing 39 global economies.
•    Significance: This marks CareEdge as the first Indian credit rating agency to enter the global sovereign ratings space.
Key Highlights
•    Top Ratings: Germany, Netherlands, Singapore, and Sweden were assigned an AAA rating.
•    India's Rating: India received a BBB+ rating, reflecting its resilient recovery post-pandemic and focus on infrastructure development.
•    Debt Projection: India's general government debt-to-GDP ratio is expected to decline from 80% currently to 78% by FY30.
About Sovereign Credit Rating (SCR)
•    Credit ratings provide forward-looking assessments of an entity’s ability to meet financial obligations, representing its credit risk or creditworthiness.
o    Domestic credit rating agencies (e.g., CRISIL, ICRA, CARE) are regulated by SEBI.
•    Scope of SCR: Evaluates a country's capability and willingness to repay its debt.
o    Facilitates low-cost borrowing from global capital markets.
o    Boosts investor confidence and attracts foreign investment.
•    Current Dominance: Global sovereign credit ratings are largely controlled by three US-based agencies—S&P, Moody’s, and Fitch.
Concerns with US-based Credit Rating Agencies
•    Transparency Issues: Limited clarity on methodologies used for ratings.
•    Economic Fundamentals: Inadequate reflection of actual economic strength.
•    Bias Against Emerging Economies: Global CRAs often underrate emerging markets, such as India, which, despite being the 5th largest economy and having no history of default, receives relatively low ratings.
CRUISE BHARAT MISSION (CBM) LAUNCHED 
Cruise Bharat Mission: Overview
•    Launched by: Ministry of Ports, Shipping, and Waterways.
•    Objective: Establish India as a global hub for cruise tourism and a leading cruise destination by:
o    Doubling cruise passenger traffic from 4.6 lakh in 2024 to 9.2 lakh by 2029.
o    Increasing cruise calls from 254 in 2024 to 500 by 2030.
Phase-Wise Implementation
•    Phase 1 (2024-2025): Building cruise alliances with neighboring countries.
•    Phase 2 (2025-2027): Developing new cruise terminals and destinations.
•    Phase 3 (2027-2029): Integrating cruise circuits across the Indian subcontinent.
Key Cruise Segments
•    Ocean & Harbour Cruises: Includes ocean, deep-sea, coastal cruises, and harbour-based sailing.
•    River & Inland Cruises: Focuses on waterways like rivers, backwaters, canals, creeks, and lakes.
•    Island Cruises: Highlights inter-island tours and lighthouse expeditions.
Strategic Pillars
•    Sustainable Infrastructure & Capital: Addressing infrastructure challenges.
•    Operations & Technology: Enhancing operational efficiency through technology.
•    Policy Development: Launching a National Cruise Tourism Policy.
•    Promotion & Circuit Integration: Boosting international marketing and investment.
•    Capacity Building & Research: Focusing on skill development and economic research.
CENTRAL SILK BOARD 
•    The platinum jubilee of the Central Silk Board was recently commemorated.
About the Central Silk Board
•    It is a statutory body established in 1948 under an Act of Parliament.
•    Functions under the Ministry of Textiles.
•    Mandate:
o    Provides advice to the government on matters related to sericulture and the silk industry.
o    Oversees the standardization of production processes, among other responsibilities.
•    Headquarters: Bengaluru
Silk Production in India
•    India ranks as the world's second-largest silk producer, contributing 42% of global output (2023).
•    Karnataka is the leading producer, accounting for approximately 32% of the country's total silk production, followed by Andhra Pradesh.
•    Types of Silk Produced: Mulberry, Eri, Tasar, and Muga.
COMMITMENT TO REDUCING INEQUALITY (CRI) INDEX 2024 RELEASED 
Commitment to Reducing Inequality (CRI) Index Overview
•    Published by: Oxfam and Development Finance International.
•    Scope: Evaluates the commitment of 164 countries and regions to address inequality.
o    Link to SDGs: Aligned with SDG 10, which focuses on reducing inequality.
•    Assessment Criteria:
o    Public services spending
o    Progressive taxation
o    Labour rights and wages
Key Highlights of the CRI Index
Ranking
•    Top Performers: Norway, Canada, and Australia.
•    Lowest Performers: South Sudan, Nigeria, etc.
•    India's Position: Ranked 127th.
o    Comparison in South Asia: Nepal (115) and Sri Lanka (118) have outperformed India.
Rising Inequality
•    Global Disparity:
o    The gap between the Global North and South is growing at its fastest pace since World War II.
o    Many people are experiencing severe hardships due to high food prices and hunger.
o    Meanwhile, the number of billionaires has doubled over the past decade.
•    Key Drivers:
o    Conflict
o    Debt crises
o    Climate shocks
o    Reduced spending on essential services: 84% of countries have cut education, health, or social protection budgets.
Recommendations to Combat Inequality
•    Develop and Monitor NIRPs: Implement National Inequality Reduction Plans with realistic, time-bound targets.
•    Increase Budget Allocation:
o    Allocate at least 15% of public spending to health.
o    Reserve 20% of public expenditure for education.
•    Enhance Progressive Taxation: Tax the wealthiest 1% more effectively.
Measures Taken in India to Address Inequality
•    Job Creation: Example: Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
•    Financial Inclusion: Example: Pradhan Mantri Jan Dhan Yojana.
•    Education and Skilling: Example: Right to Education Act, 2009.
•    Other Initiatives: Example: Startup India.
GLOBAL INNOVATION INDEX 2024 AND SOCIAL ENTREPRENEURSHIP 
News Context
The Global Innovation Index (GII) 2024 was recently released by the World Intellectual Property Organization (WIPO), in collaboration with Cornell University and INSEAD Business School.
Key Highlights of GII 2024
Theme:
•    "Unlocking the Promise of Social Entrepreneurship."
Innovation Measurement Criteria:
•    Institutions, human capital, and research.
•    Infrastructure, credit, and investment.
•    Linkages, knowledge creation, absorption, and diffusion.
•    Creative outputs.
Top Rankings:
•    Switzerland secured the top spot, followed by Sweden, the US, and Singapore.
India’s Performance:
•    Ranked 39th among 133 nations, improving from 40th in 2023, with a score of 38.3.
•    Retains the top rank in:
o    Lower middle-income economies.
o    Central and Southern Asia region, excelling in knowledge and technology outputs, creative outputs, institutions, and business sophistication.
•    Bengaluru, Delhi, Chennai, and Mumbai feature among the top 100 S&T clusters globally.
Social Entrepreneurship and Enterprises
•    Social entrepreneurship merges the generation of economic wealth with solutions for pressing issues like poverty, environmental sustainability, and social injustice.
•    It integrates the efficiency, innovation, and resources of profit-driven entrepreneurship with the values, mission, and concerns of non-profit organizations.
Difference between Traditional companies and Social enterprises

India’s Efforts to Promote Social Entrepreneurship
•    Atal Innovation Mission (AIM) and Related Initiatives: Programs like AIM, ASPIRE (A Scheme for Promotion of Innovation, Rural Industries, and Entrepreneurship), and Aatmanirbhar Bharat ARISE-ANIC foster research, innovation, and competitiveness among Indian startups and MSMEs.
•    Corporate Social Responsibility (CSR): The Companies Act, 2013 mandates certain companies to undertake CSR projects focused on social welfare activities.
•    Social Stock Exchange (SSE): Enhances visibility and provides social enterprises with improved access to capital for scaling their initiatives.
•    Social Impact Bonds: Leverages innovative funding methods, reflecting growing investor interest in the social and ecological impacts of their investments. Examples include Green Bonds, Social Bonds, Sustainability Bonds, and Skill Impact Bonds.
o    Example: The SWAMIH Investment Fund, India’s largest social impact fund, supports affordable and mid-income housing.
•    Social Innovation Programme by NASSCOM Foundation: This TechForGood initiative offers a platform for young social innovators to transform their ideas into impactful solutions promoting inclusivity.
World Intellectual Property Organization (WIPO)
•    Introduction:
o    A specialized agency of the United Nations, established in 1967.
o    Headquarters: Geneva, Switzerland.
•    Objective: To promote a fair and accessible international Intellectual Property (IP) system that encourages creativity, drives innovation, and supports economic development.
•    Membership: Comprises 193 member states, including India (joined in 1975).
•    Key Functions:
o    Serves as a platform to develop balanced international IP regulations.
o    Provides global services for cross-border IP protection and dispute resolution.
o    Offers technical infrastructure to integrate IP systems and disseminate knowledge.
o    Implements cooperation and capacity-building initiatives to help nations utilize IP for economic, social, and cultural growth.
o    Acts as a global reference hub for IP-related information.
•    Notable Treaties:
o    Paris Convention for the Protection of Industrial Property (1998).
o    Berne Convention for the Protection of Literary and Artistic Works (1928).
o    Patent Cooperation Treaty (1998).
o    Treaty on Intellectual Property, Genetic Resources, and Associated Traditional Knowledge (2024).
GLOBAL FAMILY FARMING FORUM (GFFF) LAUNCHED
Global Family Farming Forum (GFFF)
•    Launch: Introduced during the Food and Agriculture Organization's (FAO) World Food Forum (WFF).
•    Purpose: Highlights the crucial role of family farmers in fostering sustainable agrifood systems and addressing climate change impacts.
•    Milestone: Coincided with the mid-point of the United Nations Decade of Family Farming (UNDFF) 2019–2028.
o    UNDFF Framework: Declared by the United Nations General Assembly to guide countries in formulating public policies and investments that support family farming.
About Family Farming
•    Definition: Refers to agricultural, forestry, fisheries, pastoral, and aquaculture practices managed and operated by a family, relying primarily on family labor by both women and men.
•    Significance:
o    Food Security: Family farms, exceeding 550 million globally, produce 70–80% of the world's food by value, forming the backbone of food production.
o    Nutritional Diversity: In low- and middle-income nations, family farms cultivate diverse, nutritious crops, enhancing food biodiversity.
o    Sustainability: Family farmers preserve soil health and enhance climate resilience using traditional practices and minimal external inputs.
•    Challenges: Financial constraints, limited access to resources and knowledge, fragmented land holdings, market barriers, climate risks, and a lack of support for generational transitions.
Related Developments
•    Rome Declaration on Water Scarcity in Agriculture: Adopted at WFF by FAO and the Global Framework on Water Scarcity in Agriculture (WASAG).
•    WASAG Initiative:
o    Launch: Introduced at the United Nations Climate Conference in Marrakesh, 2016.
o    Objectives: Promote policies, legal frameworks, financing access, and responsible water governance to address global water scarcity challenges in agriculture.
GOVERNMENT NOTIFIES OFFSHORE AREAS OPERATING RIGHT RULES, 2024 
Rules Under Offshore Areas Mineral (Development and Regulation) Act, 2002
•    The rules aim to regulate mineral exploration and production in designated offshore regions.
•    Significance: The first-ever offshore mineral auction of 10 blocks is being planned. These blocks will include sand, lime mud, and polymetallic nodules.
Key Highlights of the Rules
•    Applicability: Covers all minerals in offshore areas except for mineral oils, hydrocarbons, and specified atomic minerals.
•    Lease Surrender: Allows leaseholders to surrender their lease after 10 years if operations are found to be uneconomical.
•    Priority Access: Grants priority operating rights to government entities for reserved offshore zones.
Offshore Mining and Its Importance
•    Definition: Offshore or deep-sea mining involves extracting mineral deposits from the deep seabed, typically below 200 meters.
•    Significance:
o    Meets rising demand for metals amid shrinking terrestrial deposits.
o    Reduces dependency on imported minerals.
Challenges in Offshore Mining
•    Environmental Concerns: May cause habitat destruction, underwater noise, pollution, and threaten marine biodiversity.
•    Impact on Fishing Communities: Could deplete fish stocks, affecting livelihoods.
•    Technological Gaps: Insufficient R&D and technological advancements for deep-sea mining operations.
Initiatives for Offshore Mining
•    Deep Ocean Mission: Led by the Ministry of Earth Sciences to explore deep-sea minerals, including initiatives like the Samudrayaan Mission and MATSYA 6000.
•    International Seabed Authority (ISA): In 2016, India was allocated 10,000 sq. km in the Indian Ocean for exclusive exploration of polymetallic nodules.
HAND-IN-HAND (HIH) INITIATIVE 
•    The Food and Agriculture Organization (FAO) inaugurated the 2024 Hand-in-Hand (HIH) Investment Forum.
About Hand-in-Hand Initiative (HIH)
•    Launched: 2019 by FAO.
•    Objective: Facilitates nationally driven, ambitious programs to transform agrifood systems with a focus on:
o    Eradicating poverty (SDG 1),
o    Ending hunger and malnutrition (SDG 2),
o    Reducing inequalities (SDG 10).
•    Key Features:
o    Utilizes advanced geospatial modeling and analytics.
o    Employs a strong partnership-building strategy.
•    Focus Areas: Includes developing value chains for priority commodities and establishing agro-industries.
•    Membership: Comprises 72 countries (India is not a member).
HUMSAFAR POLICY 
Union Minister of Road Transport & Highways introduced the Humsafar Policy.
About Humsafar Policy:
•    Objective: To establish a comprehensive framework ensuring commuters have access to standardized, well-maintained, and hygienic amenities along National Highways and Expressways.
•    Key Benefits:
o    Service providers with an average rating of 3 or above can enjoy a renewal fee waiver for access permissions.
o    Assurance of dependable passenger convenience facilities at regular intervals.
INPUT TAX CREDIT 
•    The Supreme Court recently established two key tests, the "functionality test" and the "essentiality test," to determine eligibility for Input Tax Credit (ITC) in construction.
•    The Court clarified that a building may be classified as a "plant" if it is crucial for delivering services such as renting or leasing, as outlined in Schedule 2, clauses 2 and 5 of the CGST Act.
•    The functionality test assesses whether a building meets the criteria to be considered a plant.
About Input Tax Credit (ITC)
•    ITC is a mechanism designed to prevent the cascading effect of taxes, eliminating the "tax on tax" scenario.
•    Under the GST Act, a registered taxpayer engaged in business activities can claim and utilize the ITC credited to their electronic ledger to offset tax liabilities.
INDIA FOREX RESERVE CROSS 700 BILLION DOLLAR 
India’s Foreign Exchange Reserves: Key Highlights
•    India has become the fourth nation globally to surpass $700 billion in foreign reserves, joining China, Japan, and Switzerland.
•    These reserves can cover 11.9 months of imports, significantly exceeding the general benchmark of six months.
Understanding Forex (Foreign Exchange) Reserves
•    A forex reserve consists of assets held by a country’s central bank to support its economic stability.
o    In India, the RBI Act of 1934 empowers the Reserve Bank of India (RBI) to act as the custodian of these reserves and manage them within set objectives.
Components of Forex Reserves (in descending order of value):
•    Foreign Currency Assets (FCA): Represented in currencies other than the Indian Rupee.
•    Gold Reserves: Held as a tangible and stable asset.
•    Special Drawing Rights (SDR): A reserve asset allocated by the International Monetary Fund (IMF), valued based on a basket of five currencies—the US Dollar, Euro, Chinese Renminbi, Japanese Yen, and British Pound Sterling.
•    Reserve Tranche Position (RTP): The difference between a member country's IMF quota and the IMF's holding of the member’s currency.
Factors Driving Growth in Forex Reserves
•    Inflow of Investments: Increased Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI).
•    Remittances: A significant contributor from the Indian diaspora.
Importance of Forex Reserves
•    Maintaining Stability:
o    Ensures foreign currency liquidity during times of crisis.
o    Supports exchange rate stability by enabling interventions in the forex market.
•    Meeting Financial Obligations: Reserves are essential for servicing external debt and financing imports.
•    Boosting Market Confidence: Provides assurance to investors and credit rating agencies about India’s ability to meet external obligations.
•    Other Benefits:
o    Enhances economic resilience against external shocks.
o    Helps stabilize currency fluctuations in volatile markets.
NOBEL PRIZE IN ECONOMICS 
News Context
•    The 2024 Nobel Prize in Economics was awarded to Daron Acemoglu, Simon Johnson, and James A. Robinson for their research on the formation of institutions and their influence on economic prosperity.
•    The research emphasized the critical role societal institutions play in shaping a nation's prosperity.
•    It also illustrated that democracy emerged in various colonies as a response to the masses' revolutionary threats, which could not be mitigated by mere promises of social reforms.
About the Nobel Prize
•    Overview: An international award managed by the Nobel Foundation in Stockholm, Sweden, as per Alfred Nobel's 1895 will.
•    Categories:
o    Physics
o    Chemistry
o    Economics
o    Literature
o    Medicine or Physiology
o    Peace
•    Awarding Bodies:
o    Royal Swedish Academy of Sciences: Physics, Chemistry, and Economics
o    Swedish Academy: Literature
o    Nobel Assembly at Karolinska Institute, Stockholm: Medicine or Physiology
o    Norwegian Nobel Committee: Peace
•    Components of the Award:
o    A Nobel Diploma (a unique artistic creation)
o    A Nobel Medal
o    A monetary prize of 10 million Swedish Kronor
Key Insights from the Research
•    Colonial Influence on Prosperity: Colonization from the 16th century caused a "reversal of fortunes," where historically poor regions became wealthier due to institutional changes introduced by colonizers.
•    Determinants of Institutional Frameworks:
o    Settler Mortality Rates: High mortality in disease-prone equatorial areas influenced colonizers to establish extractive institutions.
o    Population Density: Sparsely populated regions allowed for the creation of inclusive institutions aimed at long-term settlement.
•    Types of Institutions:
o    Extractive Institutions: Designed to exploit local populations and resources for the benefit of colonizers.
    Associated with high risks of property confiscation, discouraging long-term investment and development.
o    Inclusive Institutions: Established in areas suitable for European settlers, fostering political and economic systems that encouraged long-term growth.
    These systems motivated individuals to work, save, and invest by providing stable property rights and opportunities.
    Example: Nogales, divided into northern (USA) and southern (Mexico) regions, illustrates the impact of institutional differences.
    The USA side benefits from secure property rights, economic opportunities, and political freedom.
    The Mexico side struggles with corruption and crime due to less inclusive institutions.
•    Institutional Traps:
o    Some societies remain stuck in extractive systems, hindering development.
o    Change is possible through reforms that introduce democracy, rule of law, and inclusive systems, which can alleviate poverty and foster growth.

About the Sveriges Riksbank Prize in Economic Sciences (Nobel Prize in Economics)
•    Establishment: Instituted in 1968 by Sveriges Riksbank, Sweden's central bank.
o    It is distinct from the original five Nobel Prizes established through Alfred Nobel's will in 1895.
•    First Recipients: Awarded to Ragnar Frisch and Jan Tinbergen in 1969.
o    Amartya Sen became the first Indian laureate in 1998 for his work in welfare economics and social choice theory.
•    Components of the Prize: Includes a medal, a personal diploma, and a monetary award.
NATIONAL ELECTRICITY PLAN (TRANSMISSION) 
National Electricity Plan (Transmission) - Union Ministry of Power
•    Development: The National Electricity Plan (NEP) (Transmission) has been crafted by the Central Electricity Authority (CEA), in line with its responsibilities under the Electricity Act of 2003.
•    Role of Transmission System: Serves as the vital link connecting power generation sources to the distribution networks that deliver electricity to end consumers.
Key Features of the NEP (Transmission)
•    Renewable Energy Goals: Targets transmission capacity for 500 GW of renewable energy by 2030 and over 600 GW by 2032.
•    Demand and Network Expansion: Aims to support a peak demand of 458 GW by 2032, with plans to expand the transmission network from 4.85 lakh ckm in 2024 to 6.48 lakh ckm by 2032.
•    Inter-Regional Capacity: Proposes to increase inter-regional transmission capacity to 168 GW by 2032, up from the current 119 GW.
•    Innovative Integration: Includes integration of advanced elements such as 10 GW offshore wind farms, 47 GW battery energy storage systems, and 30 GW pumped storage plants.
•    Support for Green Initiatives: Focuses on addressing power requirements for Green Hydrogen and Green Ammonia production hubs along coastal areas.
•    Cross-Border Interconnections: Envisions links with neighboring countries like Nepal, Bhutan, Myanmar, Bangladesh, and Sri Lanka, as well as potential connections with Saudi Arabia and UAE.
Challenges in India’s Transmission System
•    Transmission Losses: Significant energy loss during transmission.
•    Renewable Integration: Difficulties in seamlessly integrating renewable energy sources.
•    Technology Obsolescence: Usage of outdated transmission technologies.
•    Regulatory Focus: Disproportionate emphasis on power generation over transmission.
•    Cybersecurity Threats: Vulnerabilities in the transmission infrastructure.
Central Electricity Authority (CEA)
•    Establishment: Originally set up under the now-repealed Electricity (Supply) Act of 1948, and currently governed by the Electricity Act of 2003.
•    Structure: Comprises up to 14 members, including a Chairperson, with a maximum of 6 full-time members appointed by the central government.
•    Functions: Provides advice to the central government on the National Electricity Policy, specifies technical standards for constructing electrical plants, and more.
NATIONAL MISSION ON EDIBLE OILS – OILSEEDS (NMEO-OILSEEDS) 
News Context
The Union Cabinet has approved the National Mission on Edible Oils – Oilseeds (NMEO-Oilseeds) for a seven-year duration, spanning from 2024-25 to 2030-31.
About National Mission on Edible Oils – Oilseeds
•    2030-31 Targets:
o    Boost primary oilseed production to 69.7 million tonnes (up from 39 million tonnes in 2022-23).
o    Increase domestic edible oil production to 25.45 million tonnes, aiming to fulfill approximately 72% of the projected domestic demand, in conjunction with the NMEO-OP (Oil Palm).
o    Add 40 lakh hectares of oilseed cultivation by utilizing rice and potato fallow lands, promoting intercropping, and encouraging crop diversification.
•    Key Focus Areas:
o    Primary Oilseed Crops: Emphasis on increasing the production of Rapeseed-Mustard, Groundnut, Soybean, Sunflower, and Sesamum.
o    Secondary Sources: Improve extraction efficiency from Cottonseed, Rice Bran, and Tree Borne Oils.
Key Features of the Scheme
•    SATHI Portal:
o    The Seed Authentication, Traceability & Holistic Inventory (SATHI) portal will provide an online 5-year rolling seed plan to ensure timely seed availability.
o    Enables states to collaborate in advance with seed-producing agencies, including Farmer Producer Organizations (FPOs), cooperatives, and government/private seed corporations.
•    Value Chain Clusters:
o    Development of 600 Value Chain Clusters across 347 districts, covering over 10 lakh hectares annually.
o    Farmers in these clusters will benefit from:
    High-quality seeds.
    Training on Good Agricultural Practices (GAP).
    Weather and pest management advisories.
•    Additional Features:
o    Adoption of high-yielding, high oil content seed varieties.
o    Use of advanced technologies like genome editing for seed development.
o    Establishment of 65 new seed hubs and 50 seed storage units in the public sector.
o    Launch of an Information, Education, and Communication (IEC) campaign to promote awareness of recommended dietary guidelines for edible oils.
o    Support to FPOs, cooperatives, and industry stakeholders for establishing or upgrading post-harvest processing units.
Atmanirbharta in Edible Oils: A Roadmap to Self-Reliance
Vision for Self-Reliance
•    Goal: Achieve self-reliance in edible oils by enhancing domestic oilseed production.
Key Benefits of NMEO-Oilseeds
Environmental Advantages:
•    Reduced water consumption.
•    Enhanced soil health.
•    Productive use of fallow lands.
Socio-Economic Benefits:
•    Increased income for farmers.
•    Strengthened seed production infrastructure.
Steps Toward Self-Sufficiency in Edible Oils
Major Initiatives:
•    National Food Security Mission - Oilseeds & Oil Palm (NFSM-OS&OP):
o    Launched in 2018–19.
o    Focus areas:
1.    Seed-related activities (breeding, production, distribution).
2.    Production inputs (equipment, chemicals, fertilizers).
3.    Technology dissemination (training, demonstrations).
•    National Mission on Edible Oils - Oil Palm (NMEO-OP):
o    Launched in 2021–22.
o    Goal: Expand oil palm cultivation from 3.7 to 10 lakh hectares by 2025–26, with emphasis on the North East and Andaman & Nicobar Islands.
•    Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA): Ensures Minimum Support Price (MSP) for oilseed farmers via price support and deficiency payment schemes.
•    Rashtriya Krishi Vikas Yojana - RAFTAAR (RKVY-RAFTAAR): Includes provisions for crop production activities related to oilseeds.
Additional Measures:
•    MSP for seven key oilseeds: groundnut, sunflower, soybean, sesame, nigerseed, rapeseed & mustard, safflower.
•    Imposition of a 20% import duty on edible oils to safeguard domestic producers and promote local cultivation.
2024 Budget Highlights:
•    Strategic push for oilseed self-sufficiency, targeting mustard, groundnut, sesame, soybean, and sunflower.
•    Investment in:
o    Advanced research.
o    Modern farming practices.
o    Market linkages.
o    Crop insurance.
Historical Context: Yellow Revolution
•    Launched during 1986–1987 to boost edible oil production, particularly from mustard and sesame seeds.
NATIONAL AGRICULTURE CODE (NAC) 
The Bureau of Indian Standards (BIS) is working on developing a National Agricultural Code (NAC), similar to the National Building Code and National Electrical Code.
About NAC:
•    Structure of the Code:
o    Divided into two parts:
•    General principles applicable to all crops.
•    Crop-specific standards covering paddy, wheat, oilseeds, and pulses.
•    Scope: Encompasses all stages of agricultural practices and post-harvest processes, including crop selection, land preparation, and sowing/transplanting.
Objectives:
•    Develop a comprehensive national agricultural code tailored to agro-climatic zones, crop types, and farming conditions.
•    Provide a detailed guide for farmers to facilitate informed decision-making in agricultural practices.
•    Address cross-cutting aspects of agriculture, such as SMART farming techniques, sustainability, and innovation.
PM GATISHAKTI NATIONAL MASTER PLAN 
News Context
•    The PM GatiShakti National Master Plan (PMGS NMP), launched in 2021, recently marked its third anniversary.
About PM GatiShakti (PMGS)
•    PM GatiShakti Approach:
o    A growth-centric initiative for creating reliable infrastructure through synchronized, holistic, and integrated planning driven by knowledge, technology, and innovation.
o    Focused on 7 key engines: Railways, Roads, Ports, Waterways, Airports, Mass Transport, and Logistics Infrastructure.
•    Key Objectives:
o    Improve ease of living and ease of doing business.
o    Minimize disruptions and delays in project execution.
o    Ensure cost efficiency and timely completion of projects.
PM GatiShakti National Master Plan (PMGS NMP)
•    Development:
o    Built using the Digital Master Planning tool by BISAG-N (Bhaskaracharya National Institute for Space Applications and Geoinformatics) on a GIS platform.
o    Utilizes open-source technology, hosted on Meghraj (Government of India’s cloud), integrating ISRO satellite imagery and Survey of India basemaps.
•    Features: Offers a comprehensive database of current and planned projects across Ministries, such as Bharatmala, Sagarmala, inland waterways, dry/land ports, and UDAN initiatives.
PMGS-NMP Targets and Achievements
Targets
•    Expand the national highway network to 200,000 km.
•    Establish 200 new airports, heliports, and water aerodromes to bolster aviation infrastructure.
•    Increase rail cargo capacity to 1,600 million tons by FY25.
•    Extend the power grid with 454,200 circuit km of transmission lines.
•    Boost renewable energy capacity to 225 GW by FY25 and lay approximately 17,000 km of gas pipelines.
Key Achievements of PM GatiShakti
•    Unified Governance Platform
o    Integration of 44 Central Ministries and 36 States/UTs on a single PMGS portal with over 1,600 data layers.
•    Training and Social Sector Impact
o    Facilitated data-driven planning for essential services like schools, hospitals, and anganwadis.
o    Example: The PMGS portal linked PM Shri Schools with local industries to provide district-specific skill training.
•    State Master Plans (SMPs)
o    All 36 States/UTs developed their portals aligned with the PM GatiShakti National Master Plan.
•    Trade Facilitation
o    Addressed critical infrastructure gaps and reduced logistics costs.
o    Example: Over 8,891 km of roads planned through the National Master Plan (NMP).
•    Sustainable, Data-Driven Development
o    Leveraged GIS tools for efficient infrastructure projects.
o    Example: A 13 GW renewable energy project between Leh (Ladakh) and Kaithal (Haryana) optimized the 'Green Energy Corridor' for inter-state energy transmission.
•    Infrastructure Project Breakthroughs
o    Evaluated 208 key infrastructure projects worth $180 billion, delivering measurable results.
Why Was the PM GatiShakti National Master Plan Needed?
•    Fragmented Planning: Poor coordination among departments leads to repeated excavation for cables, pipelines, and water lines, causing public inconvenience and unnecessary expenses.
•    Underutilized Infrastructure:
o    Inefficient capacity planning results in completed infrastructure being underused, causing revenue losses.
o    Example: Kochi’s LNG terminal has been operating below capacity since 2013 due to delayed pipeline connectivity.
•    Lack of Standardization:
o    Infrastructure projects are treated as unique ventures despite similar requirements, leading to repetitive expenditure.
o    Example: Every Railway Over Bridge (ROB) requires a fresh design and separate approvals from the Ministry of Road Transport & Highways and the Ministry of Railways, delaying progress.
•    Coordination Issues and Approval Delays:
o    Delays in approvals, such as land acquisition or environmental clearances, lead to significant project setbacks.
o    Example: An 11-month delay for a ROB approval on the Delhi-Meerut Expressway hindered its completion despite road construction being finished.
How PM GatiShakti is Removing Infrastructure Barriers
•    Data-Driven Planning: Uses geospatial intelligence through GIS and satellite imagery for real-time insights and smarter planning.
•    Enhanced Logistics Efficiency: Unified Logistics Interface Platform (ULIP) improves coordination, transparency, and efficiency in logistics.
•    Breaking Operational Silos: Network Planning Group (NPG) ensures integrated efforts among ministries for cohesive infrastructure development.
•    Faster Project Planning:
o    Digital surveys streamline and accelerate project preparation.
o    Example: Over 400 railway projects covering 27,000 km were planned within a year by the Ministry of Railways.
•    Multimodal Connectivity: Integrates highways, railways, ports, airports, waterways, and urban transport for seamless goods movement.
•    Streamlined Approvals: Simplified clearance processes, such as the Environment Ministry’s online system, reduced approval times from 600 days to 162 days.
Recommendations for Improving PM GatiShakti Implementation
•    Simplify Processes: Streamline bureaucratic procedures for land acquisition and project approvals, fostering inter-departmental coordination for timely project completion.
•    Address Structural Issues: Tackle land acquisition challenges by leveraging GIS and remote sensing to repurpose degraded or polluted areas for development instead of acquiring new land.
•    Involve Private Sector: Grant private entities access to non-sensitive data to promote collaboration, transparency, and innovation.
•    Expand Locally: Develop district-level master plans to encourage decentralized planning and inclusive regional growth.
POVERTY IN INDIA 
News Context
•    The World Bank recently released its report, "Poverty, Prosperity, and Planet: Pathways out of the Polycrisis," presenting the first post-pandemic assessment of global progress on poverty alleviation, shared prosperity, and environmental sustainability.
Key Findings of the Report
•    Stalled Global Poverty Reduction
o    Over the past five years, the pace of poverty reduction has slowed significantly due to a "polycrisis."
o    Polycrisis: A confluence of multiple crises, including sluggish economic growth, rising fragility, climate risks, and increased uncertainty, which together challenge national development strategies and international cooperation.
•    Missed Targets
o    By 2030, 7.3% of the global population is expected to live in extreme poverty (down from 8.5% in 2024), far exceeding the World Bank's target of 3% and the Sustainable Development Goals' (SDGs) aim of eradicating poverty.
•    Global Prosperity Gap
o    The report highlights stalled progress in inclusive income growth post-pandemic.
o    Prosperity Gap: The average multiplier needed to raise global incomes to the prosperity standard of $25 per person per day.
•    India's Progress
o    Significant reduction in extreme poverty, with the number of Indians living in extreme poverty dropping from 431 million in 1990 to 129 million in 2024.
o    The World Bank defines extreme poverty as living on less than $2.15 per person per day.
Current Status of Poverty in India (NITI Aayog Data)
•    Decline in Poverty Headcount Ratio: Reduced from 29.17% in 2013–14 to 11.28% in 2022–23.
•    Reduction in Multidimensional Poverty:
o    24.82 crore Indians escaped multidimensional poverty over the last nine years.
o    Poorer states, such as Uttar Pradesh, Bihar, Madhya Pradesh, Odisha, and Rajasthan, recorded the fastest declines, reducing regional disparities.
•    Progress on SDG Target 1.2: India is on track to achieve the goal of halving multidimensional poverty well ahead of the 2030 deadline.
History of Poverty Estimation in India
Pre-Independence
•    Key Contributions: Dadabhai Naoroji (book: Poverty and the Un-British Rule in India), National Planning Committee (1938), and the Bombay Plan (1944) played significant roles in early poverty estimation efforts.
Post-Independence
•    Major Initiatives:
o    1962: Planning Commission began poverty estimation.
o    1971: V.M. Dandekar and N. Rath contributed to poverty studies.
o    1979: Alagh Committee worked on defining a poverty line.
o    1993: Lakdawala Committee further refined poverty estimation methods.
Post-2000s
•    Tendulkar Committee (2009):
o    Established to review poverty estimation methodology.
o    Set the national poverty line for 2011-12 at Rs. 816/month (rural) and Rs. 1,000/month (urban).
o    Key recommendations:
    Move away from calorie norms as the sole basis for poverty lines.
    Adopt a uniform all-India Poverty Line Basket (PLB) across rural and urban areas.
    Use Mixed Reference Period (MRP) estimates instead of Uniform Reference Period (URP).
•    Rangarajan Committee (2014):
o    Formed in response to criticisms of the Tendulkar Committee.
o    Reintroduced separate rural and urban poverty line baskets.
o    Derived state-level rural and urban estimates.
o    Note: The government did not adopt the Rangarajan Committee's recommendations.
Key Terminologies Related to Poverty
•    Absolute Poverty:
o    Refers to the minimum cost required to meet basic needs, without considering social norms.
o    Reflects severe deprivation of essentials like food and safe water.
•    Relative Poverty:
o    Defines poverty in comparison to others’ economic status within society.
o    Indicates individuals falling below the standard living conditions in their community.
•    Poverty Rate/Poverty Incidence/Headcount Ratio:
o    The percentage of the population living below the poverty line.
o    Answers the question: "How many are poor?"
•    Intensity of Poverty:
o    Measures the extent of deprivation among the poor.
o    Answers: "How severe is the poverty of those who are poor?"
•    Multidimensional Poverty Index (MPI): A global, comprehensive measure capturing various poverty dimensions beyond income, such as education, health, and living standards.
Initiatives Addressing Poverty
Key Focus Areas
•    Affordable Healthcare
•    Social Security and Empowerment
•    Financial Inclusion and Welfare
•    Employment and Skill Development
•    Entrepreneurship Promotion
Major Schemes and Programs
•    Healthcare and Nutrition
o    Ayushman Bharat Yojana
o    Pradhan Mantri Bharatiya Janaushadhi Pariyojana (PMBJP)
o    Pradhan Mantri Matru Vandana Yojana (PMMVY)
•    Food Security and Basic Amenities
o    Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY)
o    Jal Jeevan Mission
o    PM Awas Yojana (Rural and Urban)
o    PM Ujjwala Yojana
o    Saubhagya Yojana
•    Social Security and Financial Inclusion
o    PM Jan Dhan Yojana
o    Atal Pension Yojana
o    PM Shram Yogi Maandhan Yojana
o    PM Kisan Maandhan Yojana
•    Employment and Skill Development
o    Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)
o    PM Kaushal Vikas Yojana
o    National Apprenticeship Promotion Scheme
•    Entrepreneurship and Livelihood
o    PM MUDRA Yojana
o    PM SVANidhi
o    Deendayal Antyodaya Yojana – National Rural Livelihood Mission (DAY-NRLM)
REMISSION OF DUTIES AND TAXES ON EXPORTED PRODUCTS (RODTEP) SCHEME 
•    Government Approves Amendments to the RoDTEP Scheme
Key Updates:
•    For Domestic Tariff Area (DTA) Units: Extension granted for one year, now valid until 30th September 2025.
•    For Authorisation Holders, Export-Oriented Units (EOUs), and SEZ Units: Applicable only until the end of 2024, excluding deemed exports.
•    Implementation of New Rates: Effective from 10th October 2024, based on recommendations from the RoDTEP Committee.
About the RoDTEP Scheme:
•    Launched: 2021 by the Ministry of Commerce and Industry.
•    Objective: To refund taxes, duties, and levies imposed at the central, state, and local levels on exported products.
•    Replaced: The Merchandise Exports from India Scheme (MEIS), which faced challenges at the World Trade Organization.
RESPONSIBLE CAPITALISM 
Emphasis on Responsible Capitalism by the Union Finance Minister
•    Union Finance Minister's Statement: Speaking at the Tech Leaders Roundtable in Mexico, the Finance Minister highlighted the importance of responsible capitalism. She noted that large economies face a dual challenge: fostering economic growth while reducing inequality and creating inclusive opportunities.
Understanding Responsible Capitalism
•    Responsible capitalism is an economic philosophy that incorporates ethical principles into business practices.
•    Core Elements:
o    Balancing profitability with social responsibility.
o    Fostering societal well-being and fairness.
o    Ensuring environmental sustainability.
o    Shifting focus from shareholder profits to broader stakeholder benefits.
Importance of Responsible Capitalism
•    Addressing Global Issues: Tackles pressing challenges like inequality, social exclusion, and environmental sustainability.
•    Long-term Viability: Moves beyond short-term profit models to ensure adaptability in a changing technological landscape (e.g., AI disruptions).
•    Promoting Ethical Governance: Encourages fairness, legal compliance, and just treatment of all stakeholders.
Steps Taken to Promote Responsible Capitalism in India
•    Corporate Social Responsibility (CSR): CSR compliance mandated under Section 135 of the Companies Act, 2013.
•    Environmental Regulations:
o    Implementation of the Plastic Waste Management Rules.
o    Adoption of BS-VI emission norms for vehicles.
•    Labor Reforms: Enactment of the Code on Wages and the Occupational Safety, Health, and Working Conditions Code, 2020.
•    Financial Sector Initiatives:
o    Priority Sector Lending norms by RBI.
o    SEBI’s Green Bond guidelines for sustainable finance.
 
RBI RELEASED REPORT OF THE COMMITTEE ON MIBOR BENCHMARK 
Recent Developments on MIBOR
•    The Reserve Bank of India (RBI) has recently released a report recommending significant changes in the methodology used to calculate the Mumbai Interbank Outright Rate (MIBOR). The report also suggests transitioning to a new secured money market benchmark for widely used financial derivatives.
What is MIBOR?
•    Introduced by the National Stock Exchange (NSE) in 1998, MIBOR serves as the benchmark interest rate at which banks borrow unsecured funds from one another in India’s interbank market.
•    It is computed and published daily by Financial Benchmarks India Pvt. Ltd. (FBIL).
•    Currently, MIBOR is calculated based on trades conducted during the first hour on the Negotiated Dealing System (NDS) or NDS-Call platform.
•    Key issues with the current MIBOR methodology:
o    It relies on a limited trading volume, accounting for just 1% of the daily money market transactions.
o    The thin volumes in the call money market make MIBOR prone to volatility and less reliable.
Key Recommendations of the RBI Report
•    Revised methodology for MIBOR computation: Expand the calculation window to include trades from the first three hours instead of just the initial hour. This aims to better reflect market activity and enhance the reliability of MIBOR.
•    Introduction of a secured money market benchmark: FBIL should develop and publish a benchmark based on secured money market transactions, derived from trades in the first three hours of the basket repo and TREP (tri-party repo) segments.
Overview of Call Money Market and TREP
•    Call Money Market: A short-term financial market where banks and financial institutions borrow and lend funds to meet immediate liquidity needs.
•    TREP (Tri-Party Repo): A repurchase agreement facilitated by a third-party intermediary, which manages collateral selection, payment, settlement, custody, and transaction management throughout the process.
RBI STUDY ON MONETARY POLICY TRANSMISSION 
Reserve Bank of India (RBI) Study on Monetary Policy Transmission (MPT) and Labour Markets in India
•    Objective: The study examines the influence of labor market informality on inflation stabilization and monetary policy, offering fresh perspectives on MPT.
Monetary Policy (MP)
•    A framework of actions implemented by a central bank (RBI in India) to sustain economic growth and ensure price stability through money supply regulation.
•    Legal Basis: Governed by the RBI Act, 1934 (amended in 2016).
•    Framework:
o    Inflation targets, based on the Consumer Price Index (CPI), are set every 5 years by the Central Government in consultation with the RBI.
o    Flexible Inflation Targeting: Currently, the target is 4% (±2%), effective until March 2026.
•    Tools: Includes direct and indirect instruments such as Repo Rate, Reverse Repo Rate, etc.
•    Types:
o    Expansionary: Reduces interest rates to boost economic activity.
o    Contractionary: Raises interest rates to slow down activity and curb inflation.
Key Findings of the Study
•    Monetary Policy Transmission: Becomes more effective as labor markets transition towards greater formality.
•    Unemployment Impact: Contractionary Monetary Policy (CMP) increases unemployment in both formal and informal labor sectors.
•    Macroeconomic Impact: CMP results in reduced aggregate consumption, inflation, investment, output, and capital stock.
Monetary Policy Committee (MPC)
•    Purpose: Formed by the Central Government to determine key policy rates (e.g., Repo Rate) for inflation targeting.
•    Composition:
o    6 Members: Governor of RBI (ex-officio chairperson), 2 RBI officials, and 3 members appointed by the Government.
o    Each member has one vote, with the Governor holding a casting vote in case of a tie.
•    Meetings:
o    Conducted at least four times annually.
o    A quorum of 4 members is required for proceedings.
SCALING OF INDIA’S SMALL COMPANIES 
News Context
A recent study has drawn attention to the increasing prevalence of the multi-plant phenomenon in India's manufacturing sector.
About Multi-Plant Phenomenon
•    The multi-plant phenomenon refers to the practice of manufacturing firms distributing their workforce across multiple factories or plants within the same state rather than expanding a single large facility.
•    Key Insights:
o    Indian firms are increasingly adopting this model, with a significant rise in the number of plants within individual states.
o    This phenomenon accounts for 25.16% of total employment across all plants and 35.48% of employment in large plants.
•    Context:
o    Challenges such as the missing middle phenomenon and firm dwarfism, which hinder the growth of the manufacturing sector and job creation, are well-documented.
o    The multi-plant approach underscores additional challenges faced by Indian firms in achieving effective scale.
How Multi-Plant Phenomenon Differs from Dwarf Firms and Missing Middle
•    Dwarf Firms: These are firms that remain small and fail to scale with time. In contrast, firms in the multi-plant phenomenon are large but operate through multiple small plants.
•    Missing Middle: Refers to the underrepresentation of mid-sized firms in India’s manufacturing landscape, where the sector predominantly consists of small and large firms.
•    Definition of Small Firms: According to the Companies (Specification of Definitions) Amendment Rules, 2022, a small company is defined as having paid-up capital up to ₹4 crore and turnover up to ₹40 crore.
Implications of Small Firm and Plant Sizes
•    Lower Productivity:
o    Larger, single plants are more productive due to economies of scale.
o    As per the Economic Survey 2018-19, dwarf firms contribute only 8% to productivity, despite forming over half of all organized firms.
•    Reduced Export Competitiveness: Smaller plants struggle to compete globally due to lower productivity.
•    Job Creation Challenges: Dwarf firms contribute merely 14% to employment, with small firms unable to sustain quality job creation.
•    Employment Quality: Larger firms tend to generate more permanent and stable employment opportunities compared to small firms.
Initiatives to Promote Large Firms
•    Production Linked Incentive (PLI) Schemes: Designed to boost economies of scale in the manufacturing sector and enhance global competitiveness.
•    National Industrial Corridor Development Programme: Focused on developing modern industrial cities to position India as a premier manufacturing and investment hub.
•    Raising and Accelerating MSME Performance (RAMP) Scheme: Aims to expand MSME operations and enhance the impact of existing schemes with assistance from the World Bank.
•    Codification of Labour Laws: Consolidation of 29 labour laws into 4 labour codes to improve the ease of doing business and simplify compliance for enterprises.
UPI 123 AND UPI LITE 
•    To promote the broader use of the Unified Payments Interface (UPI), the RBI has increased transaction limits for UPI123Pay and UPI Lite.
UPI123Pay
•    Launched in March 2022 to facilitate UPI access for feature-phone users.
•    Supports 12 languages for wider accessibility.
•    Offers technology options like IVR numbers, app-based functionality, missed calls, and sound-based proximity payments.
•    The per-transaction limit has been raised from ₹5,000 to ₹10,000.
UPI Lite
•    Enables low-value transactions without requiring a UPI PIN.
•    The per-transaction limit has been increased from ₹500 to ₹1,000.
•    The wallet limit has been expanded from ₹2,000 to ₹5,000.
10 YEARS OF MAKE IN INDIA 
News Context
The "Make in India" initiative, launched on September 25, 2014, recently marked its 10-year milestone.
About ‘Make in India’
•    Aim: Introduced under the ‘Vocal for Local’ approach, it seeks to position India as a global hub for design and manufacturing.
•    Objectives:
o    Achieve an annual industrial growth rate of 12–14%.
o    Generate 100 million industrial jobs by 2022.
o    Expand the manufacturing sector’s share in GDP to 25% by 2025 (original target was 2022).
•    Focus Sectors: The revamped "Make in India 2.0" (launched in 2021) emphasizes 27 sectors, with implementation involving multiple Ministries, Departments, and state governments.
•    Core Pillars:
o    New Processes: Promote entrepreneurship with a focus on ease of doing business.
o    New Infrastructure: Build industrial corridors and smart cities equipped with advanced technology and high-speed communication.
o    New Sectors: Open Foreign Direct Investment (FDI) in sectors like defense, insurance, medical devices, construction, and railways.
o    New Mindset: Shift government’s role from regulator to facilitator.
Key Achievements of ‘Make in India’
•    Strengthened Manufacturing Capability:
o    India became the world’s second-largest mobile manufacturer, producing 99% of its smartphones domestically.
o    Emerged as the 4th largest producer of renewable energy.
o    Annual production of 400 million toys reflects India's new industrial capacity.
•    Enhanced Ease of Doing Business:
o    Policy reforms like the Insolvency and Bankruptcy Code, GST, and Jan Vishwas Act contributed to India’s rise in the World Bank’s Doing Business rankings from 142nd (2014) to 63rd (2020).
o    Over 40,000 compliances reduced and 3,800 laws decriminalized to simplify processes.
•    Boosted Manufacturing Competitiveness:
o    Asia’s lowest corporate tax rates established.
o    National Single Window System facilitated over 75,000 approvals for investors.
•    Resource Mobilization: FDI inflows increased from ~$45 billion in 2015 to a record ~$85 billion in 2022.
•    Merchandise and High-Value Exports:
o    Merchandise exports reached ~$437 billion in 2024.
o    Notable exports include pharmaceuticals ($27 billion), with India supplying nearly 60% of global vaccines.
o    Defense platforms like the Dhanush Artillery Gun, MBT Arjun, LCA Tejas, and submarines are now being exported.
•    R&D and Innovation: India climbed 42 spots in the Global Innovation Index since 2015, now ranked 39th.
•    Sustainability Initiatives: The National Green Hydrogen Mission is expected to create 6 lakh jobs and save ₹1 lakh crore by reducing dependence on imported natural gas and ammonia.
Key Initiatives Driving the "Make in India" Campaign
•    Production Linked Incentive (PLI) Schemes: Introduced to strengthen manufacturing capabilities across 14 sectors and boost exports, with an investment of ₹1.97 lakh crore.
•    PM GatiShakti: Aimed at achieving Aatmanirbhar Bharat and a $5 trillion economy by 2025 through integrated multimodal infrastructure and efficient last-mile connectivity.
•    Semiconductor Ecosystem Development: The Semicon India programme (2021) was launched with a ₹76,000 crore outlay to establish a robust and sustainable semiconductor and display ecosystem.
•    National Logistics Policy (2022): Focused on creating an integrated, efficient, and sustainable logistics framework by leveraging advanced technologies and process improvements to enhance economic growth and competitiveness.
•    Startup India: Designed to empower entrepreneurs, nurture a vibrant startup ecosystem, and transition India into a hub of job creators.
•    Tax Reforms: Introduction of GST streamlined India's tax structure, reducing production costs and boosting efficiency and productivity.
•    Unified Payments Interface (UPI): Positioned India as a global leader in digital payments, accounting for an impressive 46% of worldwide real-time payment transactions.
•    National Industrial Corridor Programme: Targeted development of competitive greenfield industrial regions and nodes under 11 approved industrial corridors, encompassing 32 projects.
Factors Hindering the Success of Make in India
•    Over-reliance on Foreign Capital and Markets: Excessive dependence on external capital and export markets makes domestic industries susceptible to global economic fluctuations.
•    Policy Unpredictability: Frequent policy changes hinder the consistent growth of external markets, limiting economies of scale for Indian manufacturers.
•    Inadequate Supply Chain Integration: Weak backward and forward linkages reduce efficiency and hinder seamless integration into global value chains.
•    Dominance of the Unorganized Sector: A significant share of manufacturing remains informal, impacting access to credit, technological upgrades, and supply chain integration.
•    Global Economic Challenges: Factors such as rising trade protectionism, fluctuating global demand, and economic uncertainties further compound the challenges.
Z-MORH PROJECT 
Militants recently attacked the Z-Morh Project site in Jammu and Kashmir.
About the Z-Morh Project:
•    Overview: A 6.4-km tunnel on the Srinagar-Sonamarg highway, located at an altitude of 8,500 feet, designed to ensure all-weather connectivity to Sonamarg, a renowned tourist destination.
•    Name Origin: Named after a Z-shaped stretch of road at the tunnel's construction site.
Strategic Importance:
•    Integral to the Zojila tunnel project, which aims to establish all-weather connectivity between Srinagar and Ladakh, ensuring year-round access.
•    Connects key regions such as Srinagar, Dras, Kargil, and Leh, while significantly reducing the Army's dependence on air transport for logistics.

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