3.

ECONOMY
3.1. MUTUAL CREDIT GUARANTEE SCHEME FOR MSMES
Why in the News?
Government approved Mutual Credit Guarantee Scheme to Strengthen MSME Manufacturing Sector, fulfilling the
budget announcement of 2024-25.
Key Features of Mutual Credit Guarantee scheme for MSMEs
• Guarantee Coverage: Offers 60% guarantee coverage by National Credit Guarantee Trustee Company Limited
(NCGTC) (a wholly owned company of Department of Financial Services) to MLIs for loans sanctioned under MCGS-
MSME.
o Member Lending Institutions (MLIs) are Financial Institutions such as Commercial Banks, NBFCs registered
with NCGTC under the Scheme.
• Eligible Borrower: MSME with valid Udyam Registration; Not a Non-Performing Asset with any lender;
Minimum 75% of project cost for equipment/machinery.
• Duration of the Scheme: Available for 4 years or until Rs 7 lakh crore in guarantees are issued, whichever is earlier.
• Repayment Terms:
o Loans up to ₹50 crore: Repayment period of up to 8 years, with a moratorium of up to 2 years on principal
installments.
o Loans above ₹50 crore: Longer repayment schedules & moratorium periods can be considered.
Other Key Measures Announced for MSMEs in Union Budget 2025-26
• Revised the classification
for MSMEs: The new
thresholds set at 2.5 times
the current investment and
twice the turnover
limits (refer infographic).
• Enhanced Credit
Availability: The credit
guarantee cover will be
enhanced -
o For Micro and Small
Enterprises, from 5
crore to 10 crore, leading to additional credit of 1.5 lakh crore in the next 5 years.
o For Startups, from 10 crore to 20 crore, with the guarantee fee being moderated to 1 per cent for loans in 27
focus sectors important for Atmanirbhar Bharat.
o For well-run exporter MSMEs, for term loans up to 20 crores.
• Customised Credit Card Scheme: It will provide ₹5 lakh in credit to micro enterprises registered on Udyam
portal, with 10 lakh cards set to be issued in first year.
• A new Fund of Funds with ₹10,000 crore will be established to expand support for startups.
• A scheme for 5 lakh first-time women, Scheduled Caste, and Scheduled Tribe entrepreneurs will provide term
loans up to ₹2 crore over five years.

Significance of MSMEs for India

• Contribution to GDP: MSMEs contributes approximately 30 % of the country’s GDP, 36 % to the country’s
manufacturing output.
• Employment: India has over 1 crore registered MSMEs, employing nearly 7.5 crore people.
• Foreign Currency: MSMEs contribute ~45% of India’s total exports.

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• Reduces Disguised Unemployment: Absorbing the surplus agricultural labour, they help to reduce the problem
of disguised unemployment in rural areas.
o Disguised unemployment is a situation where more people are employed than are required for a job or role. It's
also known as hidden unemployment or labor hoarding.
• Rural Development: Around 50% of the total MSMEs operate in rural areas and provide 45 % of total employment.
Challenges Faced by MSMEs
• Finance issues: Informal nature of MSMEs, credit assessment difficulties due to information gaps, absence of
collateral etc. make it difficult for MSMEs to secure loans.
• Infrastructure Bottlenecks: Poor roads, unreliable power supply, and inadequate digital infrastructure hinder
business operations.
• Delayed Payments: A large number of MSMEs are cater to the needs of large industries, both in public and private
sector. But they face delayed payments, impacting cash flow and working capital.
• Regulatory & Compliance Burden: Complex taxation, labor laws, and frequent policy changes increase operational
difficulties.
• Limited Integration of Technology: Affects productivity and competitiveness.
• Export issues: Inadequate infrastructure, Lack of Environmental, social and governance (ESG) reports by Indian
MSMEs impacts exports competitiveness.

Initiatives Undertaken for MSMEs

• Trade Enablement & Marketing (TEAM) Initiative: To enable and assist micro and small enterprises to onboard
e-commerce platforms by assisting in catalogue preparation, account management, logistics and packaging.
• PM VISHWAKARMA: Provide end-to-end support to artisans and craftspeople of 18 trades who work with their
hands and tools.
• Self-Reliant India Fund Scheme: Launched by Ministry of MSME, provides equity funding to those MSMEs which
have the potential and viability to grow and become large units.
• Public Procurement Policy: It mandates 25% of annual procurement by Central Ministries from Micro and
Small Enterprises.
• RAMP Scheme: It is a World Bank supported Central Sector Scheme aimed at improving access of MSMEs to
market, finance and technology upgradation.
• Udyam Assist Platform (2023): Launched to bring the Informal Micro Enterprises under the formal ambit for
availing the benefit under Priority Sector Lending.
• National Institute for Micro, Small and Medium Enterprises (Ni-MSME): For enterprise promotion and
entrepreneurship development.

Way Forward
• Policy Support: Consistent and supportive government policies that address the specific needs of MSMEs,
including tax incentives and infrastructure development.
o Assist MSMEs embrace best business practices in line with the fast-changing business environment.
• Addressing Credit Gaps: Assess credit worthiness of MSMEs by utilising unexplored data sources like digital
transaction trails & data generated through e-commerce sites to expedite lending.
• Technological Adoption and Digitalization: Providing training and resources for digital literacy, promoting e-
commerce platforms, and encouraging the adoption of Industry 4.0 technologies.
• Market Access and Expansion: Facilitating participation in trade fairs and exhibitions, promoting exports, and
creating platforms for B2B networking.
• Simplification of Regulatory Framework: Reducing bureaucratic hurdles, streamlining compliance procedures,
and creating a business-friendly environment.
• Integration with Global Value Chains (GVC): Being part of GVC would enable MSMEs to produce quality goods and
services which will have greater acceptability in the global market.
• Promoting the formation of MSME clusters: To enhance collaboration, resource sharing, and collective bargaining
power.

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3.2. NATIONAL CRITICAL MINERAL MISSION (NCMM)
Why in the News?
The Union Cabinet has approved the launch of the National Critical Mineral Mission (NCMM).
About NCMM
• Genesis: In Budget for 2024-25, establishment of Critical Mineral Mission was announced.
• Key Objective: To secure India's critical mineral supply chain by ensuring mineral availability from domestic and
foreign sources.
• Coverage: It will encompass all stages of the value chain, including mineral exploration, mining, beneficiation,
processing, and recovery from end-of-life products.
• Key Features:
o It will offer financial incentives for critical mineral exploration and promote the recovery of these minerals
from overburden and tailings.
o It aims to create a fast track regulatory approval process for critical mineral mining projects.
o It will encourage Indian PSUs and private sector companies to acquire critical mineral assets abroad and
enhance trade with resource-rich countries.
o It proposes development of stockpile of critical minerals within the country.
o It includes provisions for setting up of mineral processing parks.
o Mining in offshore areas (Polymetallic nodules contain minerals like Cobalt, REE, etc.)
• Governance Framework:
o Activities will be coordinated by the Empowered Committee on Critical Minerals.
o Ministry of Mines will be the administrative Ministry.

Note: The Mission will follow a whole-of-government approach which means it will work closely with relevant
ministries, PSUs, private companies, and research institutions to achieve its objectives.

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About Critical Minerals
• Definition: Critical minerals are minerals which are essential for economic development and national security of any
country. The lack of availability or concentration of existence, extraction or processing of these minerals in few
geographical locations may lead to supply chain vulnerability and disruption.
Economic Importance+Supply Risk= Criticality of Minerals
• India has released a list of 30 critical minerals for India including Bismuth, Cobalt, Copper, Phosphorous, Potash,
Rare Earth Elements (REE), Silicon, Tin, Titanium, etc.
• Currently, India has heavy reliance on imports of critical minerals.
Information about important critical mineral such as their reserve in India, largest producer in world, etc. is given in the
Appendix-1.

Significance of Critical Minerals

Environment National Security Economic & Electronic
• Crucial for renewable energy • Essential for India's defense • Shift to electric vehicles (EVs)
technologies such as solar sector, including missile requires lithium-ion batteries.
panels, wind turbines, and systems, aerospace, and • Essential for semiconductor chips
semiconductors. communication technologies. in smartphones, computers, and
• Also, crucial for Battery Energy communication devices.
Storage Systems (BESS).
Roadblocks to India's Critical Mineral Security
• Limited Domestic Reserves: India does not have many critical mineral reserves, or its requirements may be higher
than the availability.
o E.g., currently, there are no working mining leases for cobalt, nickel, lithium, and neodymium for production
purposes.
• Challenges in Exploration: Many critical minerals are deep-seated, requiring high-risk investments in exploration
and advanced mining technologies.
o E.g. Presence of 5.9 million tonnes lithium deposits in Jammu and Kashmir.
• Supply chain Disruptions: Production and processing of many critical minerals are geographically concentrated,
making global supply vulnerable to several risks.
o China controls 60% of rare earth production, 60% of critical minerals production and 80% of the processing
worldwide.
 In 2024, China banned exports of gallium, germanium, antimony, and other key materials to US
(weaponising critical mineral exports).
o Democratic Republic of Congo supplies ~70% of the world's cobalt, but political instability has led to supply
disruptions.
• Environmental Concerns: Mining and processing of critical minerals often have significant environmental footprint
resulting in protests from local population and environmental groups.
o E.g., An estimated 54% of critical materials lie near indigenous people’s land. (International Renewable
Energy Agency (IRENA))
• Inadequate recycling infrastructure: Recycling of critical minerals from e-waste is underdeveloped, with the sector
remaining largely unorganized and inefficient.

Other Initiatives taken for critical Minerals

Policy and Regulatory Framework
• Mines and Minerals (Development and Regulation) Amendment Act, 2023: It enables exploration and mining of
critical minerals.
• National Mineral Policy, 2019: It promotes sustainable mining and exploration of critical minerals.
• Elimination of customs duties on majority of the critical minerals in Union budget 2024-25

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 Exploration and Domestic Production
• Geological Survey of India (GSI): Conducting extensive exploration for lithium, rare earths, and other critical
minerals.
• Lithium Reserves Discovery (2023): Significant lithium deposits found in Reasi, Jammu & Kashmir.
• Strategic Mineral Reserves: Plans to establish reserves for critical minerals like lithium and cobalt.
International Collaborations & Trade Agreements
• Khanij Bidesh India Limited (KABIL), 2019: A joint venture company of Ministry of Mines to acquire critical
minerals globally.
o KABIL has engagements with countries like Argentina, Australia etc.
• Minerals Security Partnership (MSP): India joined the US-led initiative to ensure a stable critical minerals supply
chain in 2023.

What strategies can India adopt for long-term critical mineral security?
• Strengthening Domestic Critical Mineral Production:
o Exploring alternative allocation mechanisms to attract more private investment, such as granting exploration
companies the right to mine the minerals they discover.
o Increase public and private investment in geological surveys, exploration technologies, etc.
• Developing Domestic Processing Capabilities: Provide financial incentives, tax breaks, and other policy support
to encourage private and public sector companies to invest in processing facilities.
o Special Economic Zones (SEZs) focused on critical mineral processing can be established.
• Need for Robust Global Cooperation: Strengthening bilateral and multilateral partnerships with mineral-rich
countries and other key stakeholders to secure access to critical mineral supplies.
• Develop a Comprehensive Critical Minerals Strategy (CMS): It can help focus on priority concerns in supply risks,
domestic policy regimes, and sustainability.
o Conduct periodic detailed assessments of India’s critical mineral needs across various sectors.
o Setting up state-of-the-art e-waste recycling facility, introducing a nationwide "Recycle for Resources"
campaign to increase public awareness and participation in e-waste recycling, etc.
o Diversifying import sources from various countries.
• Role of State Government: Infrastructure Development- Develop transportation, power, and storage infrastructure
near Critical Mineral mining areas, etc.
Conclusion
Securing critical minerals is crucial for India's economic growth, energy transition, and national security. Strengthening
domestic mining, refining, and recycling, along with a robust National Critical Minerals Strategy, will help reduce import
dependence and ensure long-term supply stability.

To know more about Minerals Security Partnership, refer to Article 3.8. Minerals Security Partnership Finance Network in
September 2024 Monthly Current Affairs Magazine.

3.2.1. MAJOR AND MINOR MINERALS

Why in the news?
The Ministry of Mines has reclassified Barytes, Felspar, Mica, and Quartz from minor minerals to major minerals.
More on the news
• This move follows the recent approval of the National Critical Mineral Mission by the Union Cabinet.
• Reclassification is based on recommendations from an Inter-Ministerial Committee led by Dr. V. K. Saraswat.
Reason for Reclassification
• The decision to shift these minerals to the major minerals category is based on their association with critical
minerals and their importance in various high-tech industries.

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 o Critical minerals are those minerals that are essential for economic development and national
security (Ministry of Mines).
• Quartz, Felspar, and Mica in Pegmatite Rocks
o These minerals are found in pegmatite rocks, which also contain essential critical minerals like Beryl, Lithium,
Niobium, Tantalum, Molybdenum, Tin, Titanium, and Tungsten.
o Earlier, when these minerals were leased as minor minerals, leaseholders did not report or extract the critical
minerals present.
• Baryte and its Industrial Significance
o Baryte often occurs in concretions and vein fillings in limestone and dolostone, alongside ores of Antimony,
Cobalt, Copper, Lead, Manganese, and Silver.
o It has extensive industrial applications in oil and gas drilling, electronics, TV screens, rubber, glass,
ceramics, paint, radiation shielding, and medical applications.

About Major and Minor Minerals

• A mineral is a natural substance of organic or inorganic origin with definite chemical and physical properties,
forming the building blocks of rocks and ores.
• Under the Mines and Minerals (Development and Regulation) (MMDR) Act, 1957, minerals are broadly classified
in two categories, i.e. major minerals and minor minerals.
• Minor minerals means building stones, gravel, ordinary clay, ordinary sand other than sand used for prescribed
purposes and any other mineral which the Central Government may declare to be a minor mineral.
• Major minerals include all minerals other than minor minerals. E.g. Coal, Iron, Zinc, Limestone etc.
• Framework for Governance:
o Legal Framework for Mineral Regulation: The MMDR Act, 1957 is the primary law governing the mining sector,
except for petroleum and natural gas.
o The GoI has framed additional rules for mineral management:
 Mineral Concession (MC) Rules, 1960: Regulates permits, licenses, and leases for all minerals except
Atomic and Minor Minerals.
 Mineral Conservation and Development (MCD) Rules, 1988: Ensures conservation and systematic
development of minerals.
o Role of State Governments in Mineral Regulation:
 Section 15 of MMDR Act, 1957: Gives State Governments the power to make rules for minor minerals.
 Section 23C of MMDR Act, 1957: Empowers State Governments to prevent illegal mining, transportation,
and storage of minerals.
 Section 9 (b) of the MMDR Act as amended in 2015: Mandates the State Government to establish District
Mineral Foundation Trust in every district affected by the mining operation.

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3.3. PRIME MINISTER DHAN DHAANYA KRISHI YOJANA
Why in the news?
Aspirational Districts Programme (ADP)
Finance Minister announced the launch of
• It is initiated by the NITI Aayog in collaboration with the state
the Prime Minister Dhan-Dhaanya Krishi
governments.
Yojana (PMDKY) in the Union Budget 2025.
• Aim: To quickly and effectively transform 112 of the most under-
About Prime Minister Dhan-Dhaanya developed districts across India, based on 3 Cs
Krishi Yojana (PMDKY) o Convergence (of Central and State schemes),
• Coverage: It will cover 100 districts o Collaboration (of Central and State level nodal officers, and
based on 3 broad parameters: low District Collectors), and
productivity, moderate crop intensity, o Competition (among districts through monthly delta ranking).
and below-average credit parameters. • It focuses on the strength of each district, identifying low-hanging
o Cropping intensity is a measure of fruits for immediate improvement and measuring progress by
how efficiently land is used, and it is ranking districts on a monthly basis.
defined as number of crops grown on • The ranking is based on the incremental progress made across 49
the same field during a given Key Performance Indicators under 5 broad socio-economic
agricultural year. themes.
o At the all India level, the cropping o Health & Nutrition, Education, Agriculture & Water Resources,
intensity was recorded at 155% in Financial Inclusion & Skill Development, and Infrastructure.
2021-22 (Ministry of Agriculture).
• Inspired by ADP: It will be on the line of Aspirational Districts
Programme (ADP), which was launched in 2018.
• Outlay: Budget documents do not provide a separate allocation for
the scheme.
• Implementation Strategy: The program will be executed in
partnership with state governments, focusing on the convergence of
existing schemes.

Agriculture in India
• Backbone of India's economy: Agriculture plays a pivotal role in ensuring food security, providing employment, and
contributing to overall economic development.
• Agricultural production and yield: Despite high level of production i.e 329.7 million tonnes for FY23, agricultural
yield is found to be lower in most crops compared to other countries like China, Brazil & US.

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 o Example: India's rice yield stands at 2,191 kg per hectare, compared to the global average of 3,026 kg per
hectare. Wheat yield in India is 2,750 kg per hectare, lower than world average of 3,289 kg per hectare.
Key Reasons for Low Agricultural Productivity
• Small and Fragmented Landholdings: The average farm size in India is only 0.74 hectares in 2021-22 (NABARD),
leading to inefficiencies in farming operations.
o Fragmentation makes mechanization and irrigation difficult, reducing overall productivity.
• Dependence on Monsoons: Nearly 51% of India’s farmland depends on rainfall rather than irrigation.
• Poor Irrigation: Percentage of net un-irrigated area over net area sown in the country is estimated to be about
48.65%.
o It is estimated that 40% of the net sown area is expected to remain rainfed even after attainment of full irrigation
potential of the country.
• Low Use of Modern Technology: Limited access to high-yield seeds, fertilizers, and advanced machinery restricts
productivity.
• Soil Degradation & Overuse of Chemicals: Soil erosion, salinity, and loss of organic matter reduce agricultural
output.
• Lack of Credit and Investment: Hardly 20% of the 12.56 crore small and marginal farmers have access to
institutional credit.
Recent Initiatives to Increase Productivity of Agriculture
• National Food Security Mission (NFSM): Launched in 2007-08 to increase the production of rice, wheat, pulses,
coarse cereals, and nutri-cereals sustainably.
• Pradhan Mantri Krishi Sinchayee Yojana (2015): For extending the coverage of irrigation ‘Har Khet ko pani’ &
improving water use efficiency ‘More crop per drop' in a focused manner.
• PM-KISAN (Pradhan Mantri Kisan Samman Nidhi): Launched in 2019, it is a Central Sector scheme
providing ₹6000 per year in 3 equal installments to farmers as an income support.
• Agriculture Infrastructure Fund (2020-21): To mobilize a medium to long term debt financing facility for investment
in viable projects for post-harvest management infrastructure and community farming assets.
• MSP Enhancement: Government has increased the MSP for all mandated Kharif, Rabi and other commercial crops
with a return of at least 50% over all India weighted average cost of production from 2018-19.
• Kisan Credit Card Scheme: To provide farmers with easy access to affordable credit.
o In 2019, KCC scheme was expanded to include animal husbandry, dairying, & fisheries.
• Pradhan Mantri Fasal Bima Yojana (2016): Aims to provide insurance coverage to farmers for crop failure, stabilise
farmers’ income, and encourage farmers to adopt modern agricultural practices, etc.
• Nutrient based subsidy policy (2010): The policy was formulated with the objective of promoting a balanced use of
N, P and K fertilizers.
Conclusion
Enhancing agricultural productivity is crucial for ensuring food security, rural development, and economic growth in
India. By promoting modern irrigation, mechanization, high-yield seeds, and sustainable farming practices, India
can bridge the productivity gap with global standards. Making markets easier to access, giving financial support, and
educating farmers will further increase crop yields. A multi-dimensional approach, combining policy support,
innovation, and rural infrastructure development, is essential for achieving higher yields, and a more resilient farming
ecosystem in India.

3.4. MAKHANA
Why in the News?
Union Budget 2025-26 announced constitution of Makhana Board in Bihar under ‘Agriculture as the first engine’ for
India’s development journey.

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More on the News
• Board will be established to improve production, processing, value addition, and marketing of makhana.
• Board will also provide handholding and training support to makhana farmers and will also work to ensure they
receive the benefits of all relevant Government schemes.
• Budget Allocation: Rupee 100 crores.
• To streamline operations and improve collective bargaining
power, people engaged in these activities will be organized into
Farmer Producer Organizations (FPOs).
About Makhana
• Foxnut, commonly known as Makhana, is an important aquatic
flowering crop with botanical name Euryale ferox (prickly
water lily).
• It is a plant of tropical and subtropical climate.
• It is also referred to as the ‘Black Diamond’ due to its dark outer
layer.
• It is grown in stagnant perennial water bodies like ponds, land depressions, oxbow lakes, swamps and ditches with
water depths of 4-6 feet.
• Makhana is now being recognized as a super food.
• Preferred Climatic conditions
o Temperature: 200C to 350 C
o Relative humidity: 50% to 90%
o Annual rainfall: 100 cm to 250 cm
o Soil: Smooth loamy soil
• Makhana plant is considered as native of South-East Asia and China.
• Major Producing Regions
o Domestic:
 Bihar in India is the leading state accounting for ~90% of India’s makhana production.
 Other states: West Bengal, Manipur, Tripura, Assam, Jammu & Kashmir, Odisha, Rajasthan, Madhya
Pradesh & Uttar Pradesh but commercially produced in few states only.
o International: Makhana is also grown in Nepal, Bangladesh, China, Japan, Russia and Korea.

Other initiatives taken to promote Makhana Cultivation

• National Research Centre for Makhana, Darbhanga: Established under the Indian Councuil Agricultural
Research in 2001.
• National Institute of Food Technology: Provides a strong fillip to makhana processing activities.

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 • One District One Product (ODOP): Makhana recognize under ODOP for the districts of Darbhanga and
Muzaffarpur from Bihar.
• GI Tag: In 2022, ‘Mithila Makhana’ was conferred a GI tag.
Challenges in Makhana Cultivation
• Low productivity: Traditional farming methods result in lower yields, with farmers achieving only 1.7–1.9 tonnes per
hectare compared to the potential 3–3.5 tonnes per hectare using modern techniques.
• Lack of processing infrastructure: Due to inadequate food processing units, raw makhana is often sold at lower
prices to companies outside Bihar, reducing local farmers’ earnings.
• Export barriers: Strict global quality standards like food safety and hygiene certifications have limited exports, with
only 2 percent of Bihar’s makhana meeting international requirements.
• Market inefficiencies: The absence of an organized marketing chain means farmers often receive lower prices due
to the dominance of intermediaries.
• Limited awareness among farmers: Many makhana farmers lack awareness about government schemes, financial
incentives, and modern agricultural practices.
• Others: Proper weed management in water bodies, better quality equipment and related accessories, better cold
storage facilities etc.
Conclusion
The establishment of the Makhana Board marks a significant step towards the organized promotion, research, and
commercialization of makhana cultivation in India. By addressing challenges like traditional farming inefficiencies, post-
harvest losses, and limited global reach, the board can play a pivotal role in making makhana a globally competitive
superfood. Sustainable cultivation practices, coupled with government initiatives, will not only boost rural livelihoods
but also position makhana as a key player in India's agri-export sector.

3.5. MISSION FOR COTTON PRODUCTIVITY

Why in the News? About Staple Cotton Fibre
The ‘Mission for Cotton Productivity’ was announced A staple is an individual cotton fibre. Based on the length
during Budget 2025-26. of the staple, cotton is classified as:
• Very short-staple cotton: ≤21 mm
Mission for Cotton Productivity
• Short staple cotton: >22mm and ˂25 mm
• It is a five-year mission to facilitate improvements • Medium Staple cotton: >26 mm and ˂ 28 mm
in productivity and sustainability of cotton • Long staple cotton: >29mm and ˂ 34 mm
farming, and promote extra-long staple (ELS) • Extra-long staple cotton: ≥34.925 mm
cotton varieties. o It is a premium cotton variety cultivated in
• Ministry: Ministry of Textiles about 10% of the cotton area, contributing 4% of
o It will provide science & technology support to global production.
cotton growing farmers. o Major ELS Producing states in India: Karnataka,
• Aligned with the Government’s integrated 5F vision Tamil Nadu, Madhya Pradesh etc.
for the textile sector, the mission will help in
increasing incomes of the farmers as well as ensure a steady supply of quality cotton for rejuvenating India’s
traditional textile sector.
• It will aid in reducing import dependence and enhance the global competitiveness of India’s textile sector, where
80% of capacity is driven by MSMEs.
Need for the Mission:
• Stagnant Productivity: Challenges of stagnant cotton productivity. For instance, in 2023-24 the cotton yield was
435kg/hectare which is similar to 2024-25’s yield of 447kg/hectare.
• Rainfed Crop: Majority cotton area is rainfed, mainly in the Central and Southern States.
o Approximately 67% of India’s cotton is produced on rain-fed areas and 33% on irrigated lands.
• Pests Menace: Cotton crop is highly prone to pests and diseases. E.g. Pink Bollworm, Whitefly etc.
• Unstable Prices: Wide fluctuation in cotton prices, inadequate market infrastructure and cotton export policy.

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 Cotton Production, Productivity and Consumption in India
• Production: India ranks 1st in cotton acreage with around 40% of the world area under cotton.
• Major Cotton Producing Zones in India:
o Northern Zone - Punjab, Haryana and Rajasthan
o Central Zone - Gujarat, Maharashtra and Madhya Pradesh
o Southern Zone - Telangana, Andhra Pradesh and Karnataka.
• India ranks 2nd in cotton production with estimated production of 343.47 lakh bales (5.84 MMT) in 2022-23 i.e.
23.83% of world cotton production.
• Productivity: India ranks 39th in overall cotton yield which is lower than countries like USA, China, Brazil etc.
• Consumption: India is the 2nd largest consumer of cotton in the world with 22.24% of world cotton
consumption (2023).
o Less than 10% of the total consumption of cotton in India is imported by the textile industry (2023).
Significance of Cotton in India
• Economic Significance: It is a commercial/cash crop also called ‘White Gold’ due to its economic importance
in India.
• Contributes to Forex Reserves: It is one of the largest contributors to India’s net foreign exchange by way of
exports.
• Export Potential: India exported an estimated 30 lakh bales i.e. 6% of world export in 2022-23.
• Livelihood Provider: It helps in sustaining the livelihood of an estimated 6 million cotton farmers and 40-50
million people engaged in related activity such as cotton processing & trade.
o The cotton textiles industry is the second largest employer in the country after agriculture.
Cotton (Scientific name: Gossypium spp)
• Cotton is a soft, fluffy staple fiber that grows in a boll (protective case) around its seeds.
• It is a shrub (semi-xerophyte) native to tropical and subtropical regions around the world, including the Americas,
Africa, Egypt and India.
• Four species of cotton are G. Arboreum & G. Herbaceum (Asian cotton), G. Barbadense (Egyptian cotton) and G.
Hirsutum (American Upland cotton).
o India is reportedly the only country which grows all four species of cotton.
o G. Hirsutum represents 90% of the hybrid cotton production in India and all the current Bt cotton hybrids are G.
Hirsutuim.

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 Bt Cotton
• Genetically Modified (GM) cotton, also known as Bt cotton, is developed by incorporating a gene from the
bacterium Bacillus thuringiensis (Bt) making it resistant against pests like bollworm.
• It is the only GM crop approved in 2002 by the Genetic Engineering Appraisal Committee (GEAC)
of the Ministry of Environment, Forest and Climate Change for commercial cultivation.
• Bollgard I and II technologies are famous for developing Bt Cotton.
• Recently, CSIR-National Botanical Research Institute (NBRI) has developed the world's First Pink Bollworm-
Resistant GM Cotton.
o CSIR-NBRI engineered a novel insecticidal gene demonstrating superior resistance against Pink bollworm
compared to Bollgard II cotton.
o It also protects against other pests like the cotton leafworm and fall armyworm.
• Climate & Soil Requirement
o Temperature:
 At germination stage, minimum temperature required is 15°C whereas in vegetative growth the optimum
temperature is 21-27°C.
 It can tolerate temperature to the extent of 43°C but temperature below 21°C is detrimental to the crop.
 It requires at least 210 frost-free days and 50 to 100 cm of rainfall for its growth.
 Warm days of cool nights with large diurnal variations during the period of fruiting are conducive to good
boll & fibre development.
o Soil: Cotton is grown on a variety of soils like well drained deep alluvial soils in the north, black clayey soils of
varying depth in central region and black and mixed black and red soils in south zone.
 Cotton is semi-tolerant to salinity and sensitive to water logging and thus prefers light well drained soils
capable of retaining moisture.
o Crop Season: April-May in northern India and is delayed as we proceed down south (monsoon based in southern
zone).
Other Steps taken for development of cotton sector:
• Minimum Support Price (MSP) for Cotton: Cotton is procured by Government at MSP through Cotton Corporation
of India (CCI).
o There is no maximum quantity limit of purchase of produced cotton from farmers.
o Based on the recommendations of CACP, Ministry of Agriculture declares MSP for two basic varieties of Fair
Average Quality (FAQ) cotton viz. Medium Staple length and long staple length.
• Branding of Indian Cotton: Brand “KASTURI Cotton India” launched to attain the objective of making India
Atmanirbhar and vocal for local in the field of cotton.
o E.g. Encourage self-regulation by industries by owning complete responsibility of Traceability, Certification and
Branding of KASTURI Cotton India.
• Mobile App “Cott-Ally”: A farmer-friendly app to increase awareness about MSP of cotton, best farm practices and
nearest procurement centres of CCI in regional languages.
• Technological Interventions: High Density Planting System (HDPS), scientific assessment of quality, processing
of cotton in modernized Ginning & Pressing factories, Extension services etc.
Conclusion
There is a need to improve processing of cotton beyond yarn and weaving to production of finished products. The role of
MSMEs is primary in promotion of the cotton textile industry. The Mission promotes production of quality cotton to help
cotton farmers increase their income along with promoting exports. It is vital for the growth of Brand India and making
India self-reliant.

3.6. URBAN CHALLENGE FUND (UCF)

Why in the News?
Budget 2025-26 announced the creation of Urban Challenge Fund (UCF).

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What is the Urban Challenge Fund (UCF)?
• Urban Challenge Fund (UCF) of Rs 1 lakh crore aims to encourage states to think innovatively towards attaining
sustainable urbanisation and redevelopment goals in existing cities.
o Fund is to implement the proposals for ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’ and
‘Water & Sanitation’
• Financing Mechanism: Fund will finance up to 25% of the cost of bankable projects with a stipulation that at least
50% of the cost is funded from bonds, bank loans, and PPPs.
o An allocation of Rs. 10,000 crore is proposed for 2025-26.
What is the need for the UCF?
• Cater to rising Urban Population: India’s urban population increased from 27.7% in 2001 to 31.1% (377.1 million)
in 2011, at a rate of 2.76% per year. (Census 2011).
• Ensure Sustainability: Cities in India face the risk of looming water crisis, are prone to disasters like earthquakes,
face severe pollution leading to urban heat island effect.
o E.g., Delhi is located in Seismic zone IV and is also one of the polluted cities in the world.
• Support Developmental Projects: Focus on integrated development covering critical infrastructure components
in Transport and Logistics, Energy, Water and Sanitation, etc.
• Ensure absorption of the available funds: Ensuring ability to divert the available money properly into bankable,
needs-based projects with effective delivery mechanisms.
• Address issues with Urban Planning: Land parcels of high urban densities are sub-optimally utilized due to
fragmented and poorly recorded ownership of land.
o Urban Planning is a state subject as per the 12th Schedule of the Constitution.
• Address Deficit of Human Resources: It is a major bottleneck as the State machinery lacks qualified urban
planners responsible for urban planning and design.

Urbanisation in India
• Urbanisation: It is an index
of transformation from
traditional rural economies
to modern industrial one.
o It is a long term
process and a cycle
through which a nation
pass as they evolve
from agrarian to
industrial society.
• As per Census 2011, an
urban unit in India is
referred to as:
o All administrative units that have been defined by statute as urban like Municipal Corporation, Municipality,
Cantonment Board, Notified Town Area Committee, Town Panchayat, Nagar Palika etc. are known as
Statutory Town. Further, Statutory Towns with population of 1,00,000 and above are categorized as cities.
o All other places which satisfied the following criteria:
 A minimum population of 5,000 persons;
 75% and above of the male main working population being engaged in non-agricultural pursuits; and;
 A density of population of at least 400 persons per sq. km. (1,000 per sq. mile)
• Key Characteristics of Urbanisation in India
o Poverty Driven: It is largely driven by economic distress, with both rural-to-urban and urban-to-urban
migration.
 This is different from Western countries where urbanisation followed industrialisation creating jobs for
rural labour.

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 o Slow Progress: India’s urbanisation has progressed slowly due to slow process of reclassification of rural
areas as urban when compared to other countries.
 The lack of ‘urban’ status poses an institutional challenge in terms of planning and management of these
settlements.
o Spatial Variations: While India’s level of urbanisation as a whole appears to be low, it varies significantly
across the States and UTs.
 Economically diverse states such as Goa, Kerala, Maharashtra, etc., have greater urbanisation.
o Obsolete Definition: Definition of ‘urban’ is based on the criteria formulated in 1961.
 Currently, socio-economic landscapes in India have changed with cities emerging as the loci of
economic growth.
o Paradox of exclusion: India’s urban infrastructure is fraught with issues like growing influx, proliferation of
slums, overburdening public services leading to social alienation.
What more can be done to improve the situation of urban areas in India?
• Re-engineering and Strengthening of Urban Governance Structures: It can be done based on the 2nd
Administrative Reform Commission (ARC) recommendations suggesting clear division of roles and
responsibilities among various authorities.
• City Master Plan: It should be statutorily backed as it is essential for socio-economic development, better liveability,
inclusion, citizen engagement, environmental sustainability, etc.
o About 52% of statutory towns in India lack any kind of master plan. (NITI Ayog, 2020)
• Town Planning Professionals: An All India Urban Planning Service similar to other civil services like Indian
Information Service, etc., should be set up to have qualified planners. [High Level Committee (HLC) on Urban
Planning under the Ministry of Housing and Urban Affairs (MoHUA)].
o NITI Ayog recommends constitution of National Council of Town and Country Planners as a statutory body.
• Integrated Capacity Building Programme: MoHUA is funding capacity-building events for town planners and urban
functionaries which should be strengthened.
o Further, capacity building institutions should be rejuvenated by strengthening centres of excellence
established by MoHUA.
• Reviewing existing legislations: States should undertake a regular review of planning legislations (including town
and country planning or urban and regional development acts, etc.).
• Involvement of Citizens: Technocratic planning without adequate citizen participation is the reason for the
disconnect between plan preparation and its acceptance on ground.
• Strengthen the role of Private Sector: This should be enhanced by creating gainful employment opportunities,
adopting of fair processes for procuring technical consultancy services, etc.

Measures taken for reforming Urban Areas

India
• Swachh Bharat Mission focuses on safe sanitation, waste management with focus on door to door
collection/segregation, waste processing etc.
• Smart Cities Mission promotes cities that provide core infrastructure, clean and sustainable environment and
decent quality of life through the application of ‘smart solutions’.
• National Urban Livelihood Mission (NULM) aims to reduce poverty and vulnerability of the urban poor
households by enabling them to access gainful self-employment and skilled wage employment.
• PM SVANidhi scheme, special micro-credit facility of the Ministry of Housing and Urban Affairs for providing
affordable loans to street vendors.
• Pradhan Mantri Awas Yojana (Urban) (PMAY-U) intends to provide housing in urban areas among Economically
Weaker Sections/Low-Income Groups and Middle Income Groups.
• Atal Mission for Rejuvenation and Urban Transformation (AMRUT) focuses on development of basic
infrastructure, in the selected cities and towns, in the sectors of water supply, sewerage, etc.
• Incentives to states under schemes like Scheme for Special Assistance to States for Capital Investment 2022-
23 – Part – VI (Urban Planning Reforms), etc.

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 Global
• Sustainable Development Goal-11 aims to make cities and human settlements inclusive, safe, resilient and
sustainable.
• United Nations Human Settlements Programme (UN-Habitat) is the focal point for all urbanization and human
settlement matters within the UN system.
• Other Initiatives like Global Alliance for Buildings & Construction (Global ABC), the UrbanShift initiative, or the
Cool Coalition by United Nations Environment Programme (UNEP) to reduce climate impacts in urban
environments.

3.7. URBAN COOPERATIVE BANKS

Why in the news?
The RBI has imposed a six-month moratorium on New India Co-operative Bank Limited, restricting loans, deposits,
and withdrawals.
More on the news
• According to the RBI, these measures have been taken due to concerns over the bank’s financial stability and
liquidity situation.
• The RBI also superseded its Board of Directors for 12 months, citing “poor governance standards”.

About Urban Cooperative Banks

• Urban Cooperative Banks (UCBs) are a subset of cooperative banks in India that operate primarily in urban and
semi-urban areas.
• History: The Cooperative Credit Societies Act of 1904 (during Lord Curzon’s tenure) and its 1912 amendment laid
the legal foundation for these institutions.
o The first urban cooperative credit society was established in 1889 in Baroda (Anyonya Sahakari Mandali).

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• Currently, they are registered as cooperative societies under the respective State Cooperative Societies Acts (for
single-state operations) or the Multi-State Cooperative Societies Act, 2002 (for operations across multiple states).
• Control and Regulation: UCBs function under a dual regulatory framework:
o Banking Regulation Act, 1949: Since 1966, RBI has been supervising UCBs regarding licensing, capital
adequacy, loan policies, and financial stability.
 The Banking Regulation (Amendment) Act, 2020 has given RBI more control over UCBs, allowing it to
intervene in their management and governance.
o Registrar of Cooperative Societies (RCS): The respective state governments or the central government control
administrative functions through the RCS.

Significance of UCBs
• Financial Inclusion: UCBs primarily cater to small borrowers, micro-businesses, and lower-income groups in urban
and semi-urban areas.
• Local Focus: UCBs operate within specific communities, allowing them to understand local needs and provide
tailored financial services.
• Priority Sector Lending: UCBs have to allocate 65% to PSL in FY 2024-25 but increasing it to 75% by March 2026.
• Developmental Support: UCBs are catering the needs of the non-agricultural sector, particularly small borrowers
in urban and semi-urban areas.
o UCBs, till 1996, were allowed to lend money only for non-agricultural purposes. This distinction does not hold
today.
Challenges Faced by UCBs
• Weak Governance and Fraud Risks: Many UCBs suffer from political interference, nepotism, and financial
mismanagement, leading to fraud and operational inefficiencies.
o During 2023-24, licenses of 24 UCBs were cancelled.
• Competition from Commercial Banks and Fintechs: UCBs share in the banking sector declined to 2.5% of total
banking assets in March 2024, down from 3.8% in 2017.

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• High Non-Performing Assets (NPAs): High levels of NPAs erode profitability and weaken the financial health of
UCBs.
o Gross NPAs of UCBs were 8.8 per cent at the end of March 2024.
• Capital Adequacy Shortfalls: Limited access to capital markets restricts their ability to meet regulatory capital
requirements and expand operations.
• Regulatory Non-Compliance: Dual regulation by RBI and state cooperative bodies leads to compliance challenges
and operational inefficiencies.
• Technological Obsolescence: Many UCBs lag in adopting digital banking technologies, impacting efficiency and
customer experience.

Recent measures taken

• Banking Regulation Amendment Act,
2020: The amendment empowered the
RBI to supersede boards, restructure
managements and formulate resolution
plans.
• Revised Prompt Corrective Action
(PCA) Framework: In 2024, the RBI
extended the PCA framework to UCBs,
setting thresholds for capital adequacy,
asset quality, and profitability.
o PCA is a mechanism that allows the
RBI to intervene early when a bank
shows signs of financial distress.
• Liquidity Support via Umbrella Organization (UO): Established National Urban Co-operative Finance and
Development Corporation as UO for UCBs.
• Tiered Regulatory Framework: The RBI introduced a four-tiered regulatory framework for UCBs based on deposit
size to tailor regulatory approaches effectively.
• Other steps
o UCBs can now open new branches up to 10% (maximum 5 branches) of the existing number of branches in
the previous financial year without prior approval of RBI.
o UCBs have been allowed by RBI to offer doorstep services to their customers.
o Cooperative banks have been allowed to make one-time settlement of outstanding loans, like Commercial
Banks.
Way forward
• Strengthening Governance and Supervision: Mandate professionalization of UCB boards by requiring at least
50% of directors to have expertise in banking, finance, or law.
• Consolidation and Mergers: Encourage voluntary mergers of weak UCBs with stronger ones to create financially
resilient entities.
• ⁠Independent Audits: Conduct regular audits by autonomous bodies for all UCBs to ensure financial discipline.
• ⁠Technology Adoption: Cooperative banks are encouraged to adopt modern technology for efficient operations
and better customer service.
• Social Audits: Enable stakeholder-led audits to assess policies and fund allocation.

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3.8. RESTRUCTURED SKILL INDIA PROGRAMME
Why in the News?
Union Cabinet approves continuation and restructuring of Skill India Programme (SIP).
More on the News

• It has been extended till 2026 with an outlay of Rs.8,800 crore from the period 2022-23 to 2025-26.
• The scheme is restructured by combining 3 key components, namely, Pradhan Mantri Kaushal Vikas Yojana 4.0
(PMKVY 4.0), Pradhan Mantri National Apprenticeship Promotion Scheme (PM-NAPS) and Jan Shikshan Sansthan
(JSS) Scheme.

Skill India Mission

• Launched in 2015 as a Centre Sector Scheme under Ministry of Skill Development and Entrepreneurship
(MSDE).
• Aim: To provide a strong institutional framework to implement and scale up skill development and to impart
training to 1 crore youth every year.
• Skill Development through:
o Short-term training: Pradhan Mantri Kaushal Vikas Yojana (PMKVY) and Jan Shikshan Sansthan (JSS)
o Long-term training: Craftsmen Training Scheme through Industrial Training Institutes (ITIs)
• Other Schemes
o Pradhan Mantri Kaushal Kendras (PMKK) to standardize quality training.
o Pradhan Mantri YUVA Yojana promotes entrepreneurship.
o PM Vishwakarma Yojana supports traditional artisans by modernizing their skills.
o SANKALP (Skills Acquisition and Knowledge Awareness for Livelihood Promotion)

About the Restructured Schemes

Restructured Skill India Pradhan Mantri Kaushal Vikas Yojana 4.0 (PMKVY 4.0)
Programme • Provides NSQF-aligned demand-driven skill training through Short-Term
• It is a composite Central Training (STT) and reskilling and upskilling through Recognition of Prior
Sector Scheme under MSDE. Learning (RPL).
• Aim: To provide structured • Target beneficiary: 15-59 years
skill development, on-the- • Future Skills: 400+ new courses on emerging technologies like AI, 5G
job training, and technology, Cybersecurity, Green Hydrogen, Drone Technology etc.
community-based learning • Skill Hubs: Established across premier academic institutions like IITs, NITs,
ensuring access to high- Jawahar Navodaya Vidyalayas (JNVs), CIPET etc.
quality vocational education. • International Mobility Initiatives: Equipping Indian workers with globally
• Formal recognition of skills: recognized skills through Mobility Partnership Agreements (MMPAs),
All certifications are mapped sectorial skill gap studies and training in domain skills, soft skills etc.
to the National Skills o India has signed MMPAs with 10 countries. E.g. France, Germany, Israel
Qualification Framework etc.
(NSQF) and seamlessly o 30 Skill India International Centers to be set up to cater to the demand
integrated with DigiLocker for skilled workers for foreign countries.
and the National Credit • Whole-of-government approach: Inter-ministerial convergence and "Ease
Framework (NCrF). of Doing Business" approach for seamless execution of skilling initiatives.
o E.g. collaboration with PM Vishwakarma, PM Surya Ghar: Muft Bijli Yojana,
National Green Hydrogen Mission, NAL JAL Mitra etc.

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 Jan Shikshan Sansthan (JSS) Pradhan Mantri National Apprenticeship Promotion Scheme (PM-NAPS)
Scheme
• Aimed at fostering apprenticeship training across India, ensuring
• Objective: Community- apprentices gain industry-specific skills in both manufacturing and
centric skilling initiative to services through real-world exposure.
provide vocational training o This is in accordance with the Apprenticeship Act, 1961.
to non-literates, neo-literates • Target Beneficiary: 14-35 years
as well as school drop-outs in • Financial incentives to industries for engaging apprentices
rural regions by identifying o 25% of the stipend, up to Rs.1,500 per month per apprentice, will be
relevant skills in that region. provided by the Central Government through Direct Benefit Transfer
• Target Beneficiary: 15-45 (DBT).
years • Future Skills: Apprenticeship opportunities in emerging fields such as AI,
• Inclusivity: Focus on women, Industry 4.0 technologies etc.
rural youth, and economically • Inclusivity: Promotes enrolment of apprentices in small establishments like
disadvantaged groups. MSMEs and underserved areas such as aspirational districts and North-East
o JSS is linked with Region.
initiatives like PM
JANMAN, Understanding
of Lifelong Learning for All
in Society (ULLAS), etc. to
promote inclusive
skilling.
Need for Restructuring Skill India Mission
• In-silos approach: Low impact of schemes like PM-NAPS, PMKVY, and JSS due to lack of convergence in impact on
skilling of population.
• Industry-academia linkage: Lack of industry-specific skilling leading to low employability.
o E.g. Under PMKVY while 3,155,984 are enrolled, only 1,445,166 are certified and fewer are employed. (March
2025)
• Others: Mismatch between demand and supply at the sectoral and spatial levels, limited mobility between skill
and higher education programmes and vocational education and very low coverage of apprenticeship
programmes.
Other Challenges to skilling
• Fast-changing job market: The dynamics of the employment market require constant upskilling and reskilling which
is not effectively available for all.

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• Lack of quality skilling: Lack of quality faculty, curriculum, lack of application-oriented learning methods etc.
impact the quality of skilling.
o This also limits the opportunities of international employment.
• Governance issues: Multiplicity of assessment and certification leading to inconsistent outcomes and confusion
among employers, and lack of assured wage premium for skilled workers.
• Lack of Quality Infrastructure: Inadequate maintenance and lack of resources in skilling institutions.
• Gender inequality: Low participation of women compared to men in skilling as well as labour force.
Way Forward
• Evidence-based interventions: Improve mapping of skills to understand the job market and design programmes
catering to the evolving needs of the employment market.
o E.g. 36 Sector Skill Councils (SSCs), led by industry leaders set up by NSDC to identify the skill development
needs of sectors and to determine skill competency standards.
• Promote experiential learning: Strengthening vocational education and expanding apprenticeship opportunities.
o Strengthen the National Council for Vocational Education and Training (NCVET)
• Private sector participation: Encourage active involvement of industries and civil society in skilling through
awareness generation, providing apprenticeship opportunities etc.
• Learning from Global Best Practises:
o Technical and Vocational Vouchers Program (TVVP), Kenya: To increase access to vocational education by
stimulating supply of vocational training through vouchers.
o Apprenticeship Levy, United Kingdom: To incentivise employers to recruit apprentices, the levy on employers
is used to fund apprenticeship training.

3.9. NEWS IN SHORTS

3.9.1. GROSS DOMESTIC KNOWLEDGE PRODUCT
Recently, Union Ministry of Statistics and Programme Implementation (MoSPI) organised a session on “Conceptual
Framework of Gross Domestic Knowledge Product (GDKP) Measurement”.
• Previously, GDKP was discussed earlier in 2021 when NITI Aayog made a presentation on the concept note.
• Gross Domestic Knowledge Product (GDKP) captures the contributions of knowledge-driven sectors,
innovation, and intellectual assets to India’s economic growth.
o It evaluates the impact of knowledge on economic and social life in the country.
• MoSPI will form a technical committee to evaluate the proposal and provide guidance on measuring the knowledge
economy.
Need of GDKP
• Enhancing Economic Metrics: Better measure knowledge sectors, innovation, and intellectual assets driving India's
economic growth.
• Supplementing the GDP measure: GDKP would supplement the Gross Domestic Product measure.
• Sync with global standards: Advanced economies are adopting indicators for intangible assets, digital innovation,
and intellectual capital. India plans to align its framework with global standards.
• Guiding Policy Innovation for Key Sectors: A clear GDKP framework can assist the government in shaping effective
policies for education, research, technology, and entrepreneurship development.

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3.9.2. DEPOSIT INSURANCE
Government is considering increasing the bank deposit insurance cover above current limit of ₹ 5 lakh.
About Deposit insurance
About Deposit Insurance and Credit Guarantee
• It is a measure of protection to depositors, particularly Corporation (DICGC)
small depositors, from the risk of loss of their savings
• Established on January 01, 1962 under the DICGC
arising from bank failures.
Act, 1961.
• Background: Deposit insurance was introduced in India
• It is a wholly owned subsidiary of the Reserve
in 1962 under the Deposit Insurance and Credit
Bank of India.
Guarantee Corporation (DICGC) Act, 1961.
• Head Office: Mumbai
o India was the second country (after the US in 1933)
in the world to provide for such provision.
• Coverage: The insurance protection extends to ₹ 5 lakh per depositor, which covers the aggregate of all accounts
maintained by that depositor across all branches of the insured bank.
o However, if the deposits are held with more than one bank, deposit insurance coverage limit is applied
separately to the deposits in each bank.
• Covered Bank: Insures all commercial banks, including branches of foreign banks functioning in India, local area
banks, regional rural banks, and cooperative banks.
o Deposit insurance scheme is compulsory and no bank can withdraw from it.
o Exceptions: Land development banks, Non-Banking Financial Company’s (NBFCs) etc.
• Insures: Savings, fixed, current, and recurring deposits are insured.
o Exceptions: Does not provide insurance for deposits by foreign, central, and state governments, and for inter-
bank deposits.
• It insures both the principal and interest amount held by a depositor in a bank.
• Through amendment in 2021, Section 18A amendment to the DICGC Act allowed depositors to receive time-bound
(within 90 days) interim payments up to the insured amount when the RBI imposes restrictions on banks.
• Deposit insurance premium is borne entirely by the insured bank.
o DICGC collects premiums from member banks at flat or risk-based differentiated rates.

3.9.3. NEW HARMONISED SYSTEM CODES FOR GI TAGGED RICE

India reportedly introduces New Harmonised System (HS) Codes for GI Tagged Rice.
• An amendment to the Customs Tariff Act (1975) was introduced to provide an HS (Harmonised System) code for
GI-recognised rice varieties.
• The amendment will make it possible for the exports of GI-tagged rice without any problem or special notification
from the Ministry of Finance.

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About HS
• Definition: HS is a global product classification system
developed by the World Customs Organization (WCO).
• Classification Structure:
o HS assigns specific six-digit codes for varying
classifications and commodities.
o Countries are allowed to add longer codes to the first
six digits for further classification.
• Governance and Updates
o HS is governed by "The International Convention on the
Harmonized Commodity Description and Coding
System".
o HS Committee, made up of member countries, oversees
the HS classification system and also updates HS every
5 – 6 years.
• Widespread adoption
o Classifies approximately 98% of international trade
o Encompasses over 5,000 commodity groups
o Implemented by more than 200 countries
• Benefits of HS
o Common coding method helps countries organize and track products in global trade.
o Extensively used by governments, international organizations and private organisations for internal taxes, trade
policies, etc.
o Reduces international trade costs and supports economic research.
To know more about GI Tags, refer to Article 8.2. Geographical Indication (GI) tag in January 2025 Monthly Current Affairs
Magazine.

3.9.4. ‘AI FOR ENTREPRENEURSHIP’ MICRO-LEARNING MODULE

Ministry of Skill Development and Entrepreneurship launched the ‘AI for Entrepreneurship’ micro-learning module.
‘AI for Entrepreneurship’ Micro-learning Module
• Launched in collaboration with National Skill Development Corporation (NSDC) and Intel India
• Purpose: To simplify AI concepts and encourage entrepreneurial thinking among young innovators across India.
• Target: To empower 1 lakh youth by 2025 by equipping them with essential skills to thrive in a technology-driven
economy.

3.9.5. E-SHRAM MICROSITES & OCCUPATIONAL SHORTAGE INDEX (OSI)

Union Minister for Labour & Employment launched the State and Union Territory Microsites under the e-Shram
initiative and the Occupational Shortage Index (OSI).
About e-Shram Microsites
• State-specific digital platforms seamlessly integrated with the National e-Shram database.
• Benefits
o For States/UTs: Ready-to-use digital infrastructure, real time data analytics dashboard, etc.
o For Workers: Seamless registration process, multilingual facility, etc.
About OSI
• Purpose: Identify workforce demand-supply gaps using ILO methodology and PLFS data.
• Key Functions: Tracks job shortages in high-demand sectors, Supports workforce planning and skill development
etc.

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3.9.6. TIME USE SURVEY (TUS)
Recently, National Statistics Office (NSO) released the 2nd Time Use Survey (TUS) for the year 2024.
About Time Use Survey (TUS)
• Purpose: It provides a framework for measuring time dispositions by the population on different activities.
• Objective: To measure the participation of men and women in paid and unpaid activities.
• Key findings
o Increase in women participation in employment related activities (paid activities).
o There is increased acknowledgement of caregiving activities regardless of gender within Indian families.
o Time spent in Culture, leisure, mass-media and sports practices has increased in both men and women.

3.9.7. FDI LIMIT HIKED IN INSURANCE SECTOR

Finance Minister announced proposal to raise FDI limit in Insurance sector from 74% to 100%.
• This enhanced limit will be available for those companies which invest entire premium in India.
• To enhance FDI limit, government will have to bring amendments to Insurance Act 1938, Life Insurance
Corporation Act 1956, and Insurance Regulatory and Development Authority Act, 1999.
Significance of 100% FDI in insurance sector
• Higher Investment: More foreign capital for growth and
expansion.
• Enhanced Competition: Better products, improved
services, and competitive pricing.
• Technological Advancements: Adoption of advanced tech
and innovative products.
• Improved Penetration: More people brought under
insurance coverage and help achieve the target of 'Insurance
for All' by 2047.
Status of India’s Insurance sector (Economic Survey 2024-25)
• Total insurance premium grew 7.7% in FY24, reaching Rs.11.2 lakh crore.
• Insurance penetration declined from 4% in FY23 to 3.7% in FY24.
• Insurance Density rose from USD 92 in FY23 to USD 95 in FY24.
o Insurance penetration is measured as percentage of insurance premium to GDP whereas insurance density
is calculated as ratio of premium to population (per capita premium).
Challenges Faced by Insurance Sector in India
• Absence of top companies: Out of 25 world’s top insurance firms, 20 are not present in India now.
• Economic Constraints: Affordability issues restrict insurance adoption.
• Cultural Preferences: Preference for traditional financial practices over insurance.
To know more about IRDAI, refer to Article 3.13. Insurance Regulatory and Development Authority of India (IRDAI) in April
2024 Monthly Current Affairs Magazine.

3.9.8. ENHANCED CERTIFICATE OF ORIGIN (ECOO) 2.0 SYSTEM

The Directorate General of Foreign Trade (DGFT) has launched the enhanced Certificate of Origin (eCoO) 2.0 System.
About eCoO 2.0
• It is a significant upgrade to simplify the certification process for exporters and enhance trade efficiency.
• Offers several user-friendly features, such as multi-user access, which enables exporters to authorize multiple
users under a single Importer Exporter Code (IEC).
• Supports Aadhaar-based e-signing alongside digital signature tokens, providing greater flexibility.

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About Certificate of Origin:
• It is a document used in international trade to certify that the goods being exported originated in a specific
country.

3.9.9. TONNAGE TAX SCHEME

The Budget 2025-26 has expanded the tonnage tax scheme.
Tonnage Tax Scheme
• The Scheme was previously available to sea going ships.
• Now it is available to inland vessels registered under the Indian Vessels Act, 2021 to promote water transport.
o Inland Vessels Act, 2021 aims to promote safe, economical inland water transport, ensure legal uniformity and
vessel procedures.
• Ministry: Ministry of Shipping (now part of the Ministry of Ports, Shipping, and Waterways).
• Genesis: Introduced in 2004 under the Indian Finance Act, 2004.
• Significance: Encourage more cargo movement; will further incentivises shipping companies to invest in inland
waterways vessels.

3.9.10. RBI CUT REPO RATE

Monetary Policy Committee (MPC) of RBI has cut repo rate by
25 bps to 6.25%.
• MPC has cut policy repo rate under the liquidity
adjustment facility (LAF) nearly after a five-year gap.
Other important decisions
• To continue a 'neutral' monetary policy stance.
o A neutral stance indicates that the RBI maintains
flexibility in adjusting policy rates based on
prevailing economic conditions.
• GDP growth for FY '26 projected at 6.7%.
• Food inflation pressures are likely to see significant
"softening", Core inflation expected to rise but remain
moderate.
Rationale for MPC decisions
• Inflation has declined and growth is expected to recover from the low of Q2:2024-25.
• Excessive volatility in global financial markets and
• Continued uncertainties about global trade policies coupled with adverse weather events.
About Liquidity Adjustment Facility (LAF)
• It is a monetary policy tool used by central banks to manage liquidity in the banking system. It includes repo and
reverse repo rates.
o The repo rate is the interest rate at which the central bank lends money to banks, while the reverse repo rate is
the rate at which banks can park their surplus funds with the central bank.

3.9.11. REGULATION OF PAYMENT SYSTEMS IN INDIA

Reserve Bank of India (RBI) released ‘Payment System Report, December 2024’.
• It is a bi-annual report which analyses the trends in payment transactions carried out using different payment
systems in the last 5 calendar years (CY) up to CY-2024.

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Key findings:
• Digital payment transactions: In 2013 there were 222
crore digital transactions valued at Rs 772 lakh crore, it
has increased 94 times in volume and more than 3.5
times in value in CY-2024.
• Unified Payment Interface (UPI): Volume of UPI
transactions reflects a CAGR of 74.03 %, value of the
transactions represented a CAGR of 68.14% in last 5
years.
• Credit cards & Debit cards: Number of credit cards has
more than doubled in five years whereas debit cards
have remained relatively stable in last 5 years.
• Global trends: India joined Project Nexus, facilitating
multilateral linkage of fast payment systems (FPS) of four
ASEAN Nations (Malaysia, Philippines, Singapore and
Thailand) and India.
o Project Nexus, conceptualized by Bank for
International Settlements (BIS), enables instant
cross-border retail payments by interlinking
domestic FPSs.
Payment Systems in India
• Payment systems are mechanisms established to facilitate the clearing and settlement of monetary and other
financial transactions.

3.9.12. DIGITAL PAYMENTS INDEX (DPI)

Recently, RBI published the Reserve Bank of India–Digital Payments Index (RBI-DPI).
About RBI-DPI
• Objective: capture the extent of digitisation of payments systems & measure the adoption of online transactions
• Released frequency: Semi-annual (March & September).
• Base Period: March 2018.
• Parameters involved:
o Payment Enablers
o Payment Infrastructure (demand-side factors)
o Payment Infrastructure (supply-side factors)
o Payment Performance and
o Consumer Centricity.

3.9.13. MARKET INFRASTRUCTURE INSTITUTIONS (MIIS)

The SEBI issues guidelines for the evaluation of the performance of statutory committees of market infrastructure
institutions (MIIs).
• Under the guidelines, MIIs are required to appoint an independent external agency to evaluate their performance
and the functioning of their statutory committees.
• This needs to be done once every three years.

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About Market Infrastructure Institutions (MIIs)
• These are organizations that provide the infrastructure for trading securities & are regulated by SEBI.
• It includes stock exchanges, depositories, and clearing corporations.
• Purpose: Enabling trading, securing investor holding, transaction settlement etc.

3.9.14. ALGORITHMIC TRADING

SEBI proposed Retail Algo Trading Framework.
• Algo trading automates buy/sell orders using preset conditions for precise execution.
• Erstwhile, only institutional investors were allowed to use it via Direct Market Access (DMA).
Key highlights of Regulatory Framework
• Categorization of Algorithms
o White-box: Logic is disclosed and replicable i.e. Execution Algos
o Black-box: Algos where the logic is not known to the user and is not replicable
• Trading Limits for Retail Traders: Retail traders must follow exchange-set limits (yet to be decided).
• Registration of Algo Providers: Algo providers are not regulated by SEBI, but must register with exchanges and
partner with a broker to sell algos.

3.9.15. POTASH
Government will explore Potash Mining in Punjab’s
Fazilka and Sri Muktsar Sahib Districts.
• Geological Survey of India (GSI) surveys have also
identified potash reserves in Rajasthan, highlighting
potential to reduce India’s import reliance.
About Potash
• Definition: Potash is an impure combination of
potassium carbonate & potassium (K) salts.
• Principal ore: Sylvinite.
• Uses of Potash:
o Agriculture: Over 90% of potash is utilized as
fertilizer, making it one of the three primary
nutrients in agriculture, alongside nitrogen and
phosphorus, collectively known as N-P-K.
 The ideal nutrient ratio for optimal plant
growth is 4:2:1 (N:P: K).
o Purification of water: Potash alum removes
hardness of water & has anti-bacterial
properties.
o Other industrial Uses: Manufacturing of Glass
ceramics, Soaps and detergents, Explosives
etc.
• Common Types of Potash Fertilizers: Sulphate of
Potash (SOP) & Muriate of Potash (MOP).
• Potash Derived from Molasses (PDM): It is 100% indigenous fertilizer under the Nutrient Based
Subsidy (NBS) scheme.
o NBS: Provides fertilizer subsidies to farmers based on actual nutrient content (Nitrogen, Phosphorus,
Potassium).
• Potash classified as Critical Mineral: Under “The Mines & Minerals (Development and Regulation) Amendment
(MMDR) Act, 2023”.

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Economic Status of Potash in India
• Deposits: Rajasthan (89%), Madhya Pradesh (5%) and Uttar Pradesh (4%).
• Import: India meets 100% of its Potash requirement through imports (Indian Mineral yearbook 2022).

3.9.16. ELECTRONICS MANUFACTURING

After China, India has become the World's 2nd largest mobile manufacturing country and is followed by Vietnam.
• Presently, 99.2% of all mobile phones sold in India are made in India.
• Mobile phones constitute 43% of India’s total electronics production.
Electronic manufacturing sector status
• Total valuation: India’s electronics sector has experienced rapid growth, reaching USD 155 billion in FY23.
• Production: Production nearly doubled from USD 48 billion in FY17 to USD 101 billion in FY23.
• Exports: Electronics has become the country's fifth largest export commodity, but India represents less than 1% of
global share.

3.9.17. UNION BUDGET 2025: DEVELOPING 50 TOP TOURIST DESTINATIONS IN

'CHALLENGE MODE'
These destinations will be developed in partnership with states to elevate tourism infrastructure, improve ease of
travel, and strengthen connectivity to key sites.
• States will be required to provide land for critical infrastructure, which will be classified under the Infrastructure
Harmonized Master List (HML).
Key Focus of Budget
• Employment-Led Growth: Skill development programs, MUDRA loans for homestays, improved travel and
connectivity to tourist spots.
• Spiritual Tourism: Focus on pilgrimage and heritage tourism, especially Buddhist sites.
• Medical Tourism: Promote "Heal in India" initiative to boost India’s global healthcare position.
• Gyan Bharatam Mission: Documentation and
conservation of India’s manuscript heritage.
Contribution of Tourism Sector:
• Accounted for 5% of GDP in FY23. The sector also created
7.6 crore jobs during the same period.
• India received 1.8 per cent of world tourism receipts
and attained a rank of 14th worldwide in world tourism
receipts during 2023.
Measures taken by government
• Infrastructure Development: Swadesh Darshan 2.0,
PRASHAD Scheme, RCS-UDAN for regional connectivity.
• Policy & Legal: National Tourism Policy, E-Visa for multiple categories.
• Thematic Tourism: Promoting wellness, culinary, rural, and eco-tourism.
• NIDHI (National Integrated Database of Hospitality Industry): Digital system for ease of business in hospitality &
tourism.

3.9.18. RUTAGE SMART VILLAGE CENTER (RSVC)

Rural Technology Action Group (RuTAGe) Smart Village Center (RSVC) launched in Mandaura, Haryana.
• RSVC was developed under aegis of Office of Principal Scientific Adviser (PSA).

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• It aims to integrate cutting-edge technologies with rural
needs, enhancing quality of life and empowering
communities through sustainable solutions.
• PSA conceptualized RuTAGe in 2003-04.
Key Features of RSVC Model
• Physical Presence: Offers long-term tech support at
Panchayat level, assisting 15-20 villages with 12
technology tracks, including Agriculture & Waste
Management etc.
• Market Access: Emphasizes collaboration with platforms
like ONDC, Amazon, and Market Mirchi to connect rural
producers with larger markets.
• Scalability: Plans to expand with 20 new centers and
empower women entrepreneurs through Techpreneurs
program to ensure sustainability.
Role of Technology in Rural Growth
• Agricultural Innovation: Platforms like e-NAM connect
farmers to markets, offering better prices and transparent
trade.
• Entrepreneurship: E-commerce and 3D printing support small businesses, allowing them to access global markets
and reduce dependency on imports.
• Education: Programs like PM e-VIDYA and SWAYAM offer online education, improving access to quality learning
and bridging digital divide.
• Financial Inclusion: DBT program and PM Jan Dhan Yojana facilitate direct, cashless transfers, reducing fraud and
increasing transparency.
• Water Management: National Program on Aquifer Mapping and Management uses technology to manage
groundwater resources, ensuring efficient water use in agriculture.

3.9.19. GLOBAL CAPABILITY CENTERS

Madhya Pradesh has become the first state in the country to bring a dedicated Global Capability Centre (GCC) policy.
About GCCs

• GCCs are designed to leverage global talent pools and technological advancements to enhance organizational
capabilities and drive business transformation.
• India’s GCC are emerging as strategic hubs reshaping the Indian corporate landscape while influencing global
business dynamics.
• Present Scenario: Number of GCCs in India has grown from ~1430 (FY 2019) to >1700(FY 2024) in FY24.
o As of FY24, GCCs in India employ nearly 1.9 million professionals.

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3.9.20. SWARAIL APPLICATION
The Ministry of Railways has introduced the ‘SwaRail’ SuperApp, a one-stop solution to streamline various railway
services.
About SwaRail
• Offers services like Reserved Ticket Bookings, Unreserved Ticket & Platform Ticket Bookings, etc.
o A key focus of the App is enhancing user experience with a seamless and clean user interface (UI).
• Developed by Centre for Railway Information Systems (CRIS).

3.9. ERRATA
• In the Monthly Current Affairs Magazine (January 2025), under the Article 3.1 titled ‘Rupee Depreciation’, it was
incorrectly mentioned that “Currently, India follows Floating Exchange Rate with occasional RBI interventions, when
necessary. “
o The correct information is – Currently, India follows Managed Floating Exchange Rate, in the sense that there
is a currency market and the exchange rate is not visibly administratively determined. However, RBI actively
trades on the market, with the stated goal of “containing volatility”, and influencing the exchange rate.

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