India's Economic Growth and Inflation

India's economic growth is expected to rebound with strengthening domestic demand, although food inflation remains a concern. The Reserve Bank of India's (RBI) State of the Economy report highlights these key aspects:

Economic Growth Outlook

• India's GDP growth declined to a seven-quarter low of 5.4% in the July-September period of the current financial year.
• For FY25, GDP growth is projected to slow to a four-year low of 6.4%, according to the NSO.
• Public capital expenditure on infrastructure is expected to stimulate growth in key sectors.
• Potential risks include rising input costs, weather-related challenges, and global economic headwinds.

Factors Influencing Growth

• Rural demand is gaining momentum due to brighter agricultural prospects.
• NSO confirms India as the fastest-growing major economy, despite a slowdown in the second half of the financial year.
• Localized excess rainfall, lack of visible private capital expenditure, and moderation in government capital expenditure are cited for sluggish growth.
• Agriculture and allied sectors performed well, supported by a record kharif harvest and higher rabi sowing.

Inflation Concerns

• Headline inflation eased to a four-month low of 5.2% in December, while food inflation decelerated to 7.7%.
• High food inflation remains concerning, necessitating careful monitoring for second-order effects.

Monetary Policy and Liquidity Conditions

• The Monetary Policy Committee (MPC) has kept the policy repo rate unchanged after a 250 basis point increase from May 2022 to February 2023.
• Tighter liquidity conditions in the banking system are noted, with banks reluctant to lend in the money market.
• Banks' placement of funds under the Standing Deposit Facility (SDF) averaged Rs 83,000 crore in December 2024 to January 2025.

Corporate and Private Consumption

• Early indications suggest better corporate revenue and earnings growth in the third quarter compared to the first half of FY25.
• Private final consumption, driven by e-commerce and q-commerce, is a bright spot in the economy.
• The report suggests rekindling 'animal spirits' through consumption boosts could stimulate economic activity.

Microfinance Sector Stress and State Bank of India's Role

The microfinance sector is experiencing a cyclical rise in stress, significantly impacting the State Bank of India (SBI). The amount of bad loans in SBI's Rs 10,000 crore portfolio has escalated from Rs 100 crore to Rs 700 crore.

Temporary Challenges and Future Outlook

• SBI expects conditions to improve in the current quarter (Q4Fy25) and the first quarter of the next financial year (Q1Fy26).
• The bank is actively supporting microfinance institutions (MFIs) during this difficult phase.

SBI's Financing Approaches

• Co-lending: Collaborating with MFIs to provide loans.
• Pool Purchase: Acquiring MFI loans through direct assignment.
• Term Credit: Providing credit to firms for on-lending purposes.

Increase in Delinquencies

• As per CRIF-Highmark data, delinquencies across all Days Past Dues (DPD) bands increased in the quarter ending September 2024 (Q2Fy25).
• The 31-180 days DPD levels rose from 2.2% in September 2023 to 4.8%.
• All lender types, including universal banks, small finance banks, and non-banking finance companies acting as MFIs, experienced increased delinquencies.

Future Expectations and Challenges

• Non-bank finance companies (NBFC)-MFIs may continue to face asset quality stress due to tight funding from lenders.
• Normalization of delinquencies is anticipated by the second half of the next financial year (2HFy26), as industry efforts begin to show positive results.

Internal vs. External Factors

• Current stress in the microfinance sector is attributed to internal factors, unlike during the COVID period when external factors were responsible.
• Improving governance, risk management, corporate governance, and compliance are crucial for addressing these internal challenges.

Economic Growth Projections for India

The First Advance Estimates (FAE) for the fiscal year 2024-25 indicate a real GDP growth of 6.4% and a nominal GDP growth of 9.7%. This is slightly below the Reserve Bank of India's (RBI) revised estimates and the Union Budget projections.

Comparison with Previous Estimates

• The RBI’s revised growth estimates were 6.6% for real GDP and 10.5% for nominal GDP.
• The growth for the first half of 2024-25 is expected to be 6%, improving to 6.7% in the second half.
• The 2023-24 growth was notably higher at 8.2% for GDP and 7.2% for Gross Value Added (GVA).

Sectoral Analysis

• Manufacturing sector growth fell sharply from 9.9% in 2023-24 to 5.3% in 2024-25.
• The Gross Fixed Capital Formation rate has stabilized around 33.4% during 2021-22 to 2024-25.

Investment and Government Expenditure

• Investment growth is crucial, with government investment slowing down significantly at (-)12.3% eight months into 2024-25.
• The Government of India’s capital expenditure in the first eight months was 46.2% of the budget target, reaching ₹5.14 lakh crore.
• There is a need to accelerate capital expenditure growth to at least 20% for 2025-26.

Future Growth Prospects

• India's real GDP growth is projected to stabilize at 6.5% over the next five years, according to the International Monetary Fund (IMF).
• Nominal GDP growth is anticipated in the range of 10.5%-11% with an implicit price deflator (IPD)-based inflation of about 4%.
• Achieving a developed country status would require sustained real GDP growth of 6.5% with nominal growth of 10.5%-11% over the long run.

Challenges

Maintaining a growth rate of 6.5% may be challenging as the economic base expands. Early years will require higher growth rates, but the potential growth rate remains at 6.5%.

The article concludes by emphasizing that a 6.4% growth rate in 2024-25, while below the previous year, aligns with India's potential growth rate. 

UPI Expansion and Future Prospects

To bring an additional 200-300 million users onto the Unified Payments Interface (UPI) platform, substantial support is required from the Reserve Bank of India (RBI), government, and the financial ecosystem.

Current State of UPI

• Approximately 450 million users are engaged with the UPI, with 200 million being daily active users.
• The UPI currently handles nearly 17 billion transactions.

Potential for Growth

• The UPI platform has the potential to grow by 10 times its current base.
• NPCI has extended the compliance deadline for UPI providers regarding the 30% market share cap until December 31, 2026.

Factors Influencing UPI Growth

• Growth is driven by the ecosystem's diversity and the entry of new fintech players.
• Cybersecurity is emphasized as a crucial area, with a directive for fintech startups to prioritize it.

RuPay Credit Cards

• RuPay is highlighted as one of the largest domestic card networks with international acceptance.
• Currently, RuPay accounts for about 16-17% of the total credit spending in India.

Supreme Court's Guidance on Abetment to Suicide

The Supreme Court of India has advised investigating agencies and trial courts to avoid applying the charge of abetment to suicide under Section 306 of the Indian Penal Code or Section 108 of the Bharatiya Nyaya Sanhita without careful consideration.

Key Observations

• The provision should not be used merely to comfort the grieving family of the deceased.
• Interactions between the accused and the deceased should be evaluated pragmatically.
• Exaggerated interpretations of hyperbolic exchanges as incitement should be avoided.

Advice to Investigating Agencies and Courts

• Agencies should be aware of the legal standards set by the Supreme Court regarding abetment to suicide.
• Trial courts are advised not to frame charges thoughtlessly, especially when the investigation does not uncover the necessary elements of the offense.

Implementation Guidelines

• Individuals genuinely involved where the legal threshold is met should not escape legal consequences.
• The behavior and interactions of the accused and the deceased should be understood in the context of everyday life.
• Casual and hyperbolic language should not be inflated to imply an instigation to suicide.

Campus Placement Pressure in India

Each year, many of India's top students enter higher education with aspirations of success, but often graduate feeling burnt out and anxious due to the immense pressure of campus placements. This pressure prioritizes high-paying job offers and institutional rankings over personal growth and well-being.

Statistics and Survey Findings

• According to a 2022 survey by the National Institute of Mental Health and Neurosciences (Nimhans), nearly 80% of students experience stress during the placement season.

Challenges in the Current Placement System

• Mismatched Expectations: Many students take jobs driven by societal pressures rather than their interests, compromising their long-term goals.
• Institutional Incentives: Colleges focus on placement statistics to improve rankings, neglecting career satisfaction.
• Employer Challenges: Companies face difficulties in finding and retaining talent due to suboptimal matches from the high-pressure environment.

Strategies for Improvement

• Redefine Success:
  • Institutions should focus on job satisfaction and alignment with personal values instead of high salaries.
  • Career counseling should help students identify roles that fit their strengths and aspirations.
• Bridge the Gap:
  • Educational institutions should align curricula with market needs and promote internships as opportunities for exploration.
  • Programs like the Pradhan Mantri Internship Scheme can help reduce skills mismatch.
• Normalize Alternative Careers:
  • Students should be encouraged to pursue unconventional career paths such as entrepreneurship and creative arts.
  • Placement cells can promote diverse career pathways through alumni success stories and resources.
• Prioritize Mental Health:
  • Colleges must provide accessible, year-round mental health services and integrate stress management workshops into curricula.
  • Alumni mentorship programs can offer emotional and professional guidance.
• Revamp Hiring Processes:
  • Holistic evaluation processes should be developed, including behavioral assessments and problem-solving exercises.

Vision for the Future

Reforming campus placements is essential not only for reducing student stress but also to create a system that values human potential over numerical achievements. A collaborative effort between institutions and employers can design a placement ecosystem that nurtures creativity and long-term success, preparing students for meaningful careers.

Overview of India’s Edtech Market

India's education technology (edtech) market is expected to witness substantial growth, with projections reaching $29 billion by 2030, an increase from its current valuation of $7.5 billion.

Growth Drivers

• Rising Aspirations: Middle-class families' increasing aspirations drive the demand for alternative learning methods.
• Digital Infrastructure: Expansion of digital networks supports online learning platforms.
• Cultural Shift: There is a notable shift towards embracing online education.
• Competitive Job Market: The need for skills aligning with global education standards encourages the use of edtech solutions.

Sector Contributions

• By 2029, the edtech sector is projected to contribute 0.4% to India’s GDP, up from 0.1% in 2020.
• Key emphasis areas include hybrid learning models, regional content adaptation, and skill development.

Funding Trends

• Funding in edtech nearly tripled to $608 million in 2024 compared to $207 million in the previous year.
• Despite the rise, funding levels remain below the $2.1 billion seen in 2022.
• The decline is attributed to macroeconomic challenges and cautious investor behavior.

Challenges and Opportunities

• High GST rates increase the cost of edtech services, affecting affordability.
• Edtech companies are expanding into tier-II and III cities, offering tailored content to reach rural areas.
• After significant disruptions, 2025 is seen as a pivotal year for the sector to adopt sustainable business practices.

Public Perception

• 86% of respondents consider edtech platforms economically viable, underscoring their role as an affordable alternative to traditional education.

Reduction in Reserve Price of FCI Rice under OMSS

The Centre has reduced the reserve price of Food Corporation of India (FCI) rice under the Open Market Sale Scheme (OMSS) by Rs 550 per quintal. This adjustment lowers the price to Rs 2,250 per quintal specifically for states and ethanol producers.

Key Details of the Scheme

• Eligibility and Quotas:
  • State governments and state-run corporations can purchase up to 12 lakh tonnes.
  • Ethanol distilleries are allowed to procure up to 24 lakh tonnes at the reduced rate.
• Previous and Current Prices:
  • The previous reserve price was Rs 2,800 per quintal for both states and ethanol producers.
  • Private traders and cooperatives will continue paying Rs 2,800 per quintal.
  • Central cooperatives like Nafed, NCCF, and Kendriya Bhandar will pay Rs 2,400 per quintal under the 'Bharat' brand.

Implementation and Duration

The revised policy will be effective until June 30, 2025, and managed through weekly e-auctions. The measure is designed to support food security and bolster ethanol production.

Additional Provisions

• Preference for ethanol production will be given to old rice stocks wherever feasible.
• Rice sales to states under OMSS are restricted to non-surplus regions requiring additional supplies.
• Sales under the 'Bharat' brand are not permitted to private millers but can be made to hostels, religious institutions, hospitals, and charitable organizations.

Government's Goal

This policy aims to enhance food security, stabilize prices in the open market, and ensure efficient rice distribution to various stakeholders. It reflects the government's commitment to aiding states in fulfilling welfare scheme obligations and promoting ethanol production.

Context and Impact

The revision comes in response to relatively low rice sales compared to wheat under the same scheme, intending to boost availability and stabilize market prices.

Satellite-based Communication Services

Satellite-based communication services are rapidly evolving and are crucial for enhancing digital connectivity. This was highlighted by Chairman of the Telecom Regulatory Authority of India (TRAI).

Key Aspects of Satellite Communications

• Geo and Non-geostationary Systems: These systems are pivotal in expanding digital connectivity coverage.
• Digital Public Infrastructure (DPI):
  • India's DPI, under the JAM (Jan Dhan, Aadhaar, and mobile) trinity, plays a crucial role in financial inclusivity.
  • This infrastructure is gaining traction globally, with deployment in 12 countries, enhancing digital payments through real-time user identification.

Technological Innovations and Recommendations

• Embedded SIM for M2M Communication: Encouraging the development of a homegrown M2M eSIM ecosystem.
• Terahertz Spectrum: Proposed framework for experimental use and licence-exempt use of the 77 to 81 GHz band for automotive radars. This could foster innovative technologies enhancing road safety.

Indigenous Manufacturing and Economic Opportunities

• Make in India Initiative:
  • Focus on enhancing value addition, expanding markets, and promoting startups in sectors like telecom, data economy, and smart cities.

Innovations in Lithium-Ion Battery Technology

Researchers at the National Institute of Technology Rourkela (NIT Rourkela) have made strides in making lithium-ion batteries for electric vehicles (EVs) more affordable and efficient. They have introduced a new class of cathode materials utilizing magnesium as an alternative to the traditional cobalt-based designs.

Key Challenges with Cobalt-Based Cathodes

• Cost and Price Volatility:
  • Cobalt is expensive and subject to price fluctuations.
• Limited Availability:
  • Major sources are concentrated in countries such as Cuba, Madagascar, and Papua New Guinea.
• Ethical Concerns:
  • Issues surrounding the extraction processes and their impact on the environment and communities.

Need for Alternative Materials

With the growing demand for EVs and lithium-ion batteries, the reliance on cobalt presents significant issues. It is projected that by 2050, the global cobalt supply might fall short of meeting demand, highlighting the necessity for developing alternative materials.

Comprehensive Strategic Partnership Between Russia and Iran

Russia and Iran signed a comprehensive strategic partnership treaty, enhancing cooperation amid Western sanctions.

Key Areas of Cooperation

• Trade and Economic Ties: The treaty aims to expand trade and economic cooperation, addressing bureaucratic and technical obstacles.
• Military Collaboration: The agreement includes military cooperation, with Iran seeking advanced Russian military technology.
• Scientific, Educational, and Cultural Exchange: The partnership extends to multiple domains, fostering broader bilateral ties.

Geopolitical Context and Implications

• Iran's need for Russian support grows given Middle East tensions and potential U.S. policy shifts under new US President.
• Both countries face scrutiny, with allegations of Iran supplying drones to Russia for use in Ukraine denied by both parties.

Historical and Diplomatic Background

• Post-Soviet Russia has become a crucial partner for Iran, supplying technology and supporting its nuclear ambitions.
• The strategic partnership reflects a legacy of collaboration, including joint efforts in Syria and against Western policies.

Future Prospects and Challenges

• The partnership's success depends on overcoming geopolitical pressures and fostering regional self-reliance.
• Iran's strategic needs, including defense capabilities, could drive further reliance on Russian cooperation.

Overview of the Kuka Martyrs’ Day Commemoration

Punjab Chief Minister paid tribute to the Kuka martyrs on January 17, at the Namdhari Shaheed Smarak in Malerkotla, marking the anniversary of the Namdhari Sikhs' execution in 1872.

Background on the Namdharis

Origin and Beliefs

• The Namdharis, also known as Kukas, are a Sikh sect founded by Satguru Ram Singh on April 12, 1857, in Ludhiana.
• They are known for their high-pitched recitation style of the Gurbani, with "kook" in Punjabi meaning "screaming" or "crying".
• Ram Singh opposed various social vices, including alcohol and meat consumption, and initiated a movement akin to the Swadeshi and Non-Cooperation Movements.

Rebellion Against British Rule

• The Namdhari movement featured localized rebellions against the British post the 1857 Rebellion, advocating for the boycott of foreign goods and British services.
• By the 1870s, tensions between the Namdharis and British erupted into violence.

Events of January 1872

Conflict and Clashes

• On January 13, 1872, around 200 Namdharis, led by Kuka Hira Singh and Lehna Singh, arrived in Malerkotla, protesting against cow slaughter.
• Clashes occurred between Namdharis and government officials on January 15, where both sides reported injuries.
• A 150-strong Kuka group also attacked the Malaudh Fort in Ludhiana, which was under British loyalists.

British Retribution

• Deputy Commissioner John Lambert Cowan ordered the execution of 66 Namdharis over January 17 and 18, 1872, by cannon fire.
• A notable martyr was 12-year-old Bishan Singh, who refused to renounce his sect, resulting in his brutal execution.
• Waryam Singh, a courageous Kuka, exemplified bravery by making himself a target for cannon fire.

Legacy of the Namdharis

Post-Revolt Developments

• Satguru Ram Singh and his chiefs were exiled to Rangoon (present-day Burma), never to return.
• The Namdharis believe Ram Singh is still alive and will return, commemorating him by wearing white.
• The sect has approximately two lakh followers in Punjab today but has experienced a schism since the death of Satguru Jagjit Singh in 2012.
• Followers are divided between Thakur Dilip Singh in Sirsa, Haryana, and Sangrur Uday Singh in Bhaini Sahib, Ludhiana.

SVAMITVA Programme Overview

The Union government has undertaken a comprehensive survey of rural land as part of the SVAMITVA programme, initiated by the Panchayati Raj Department.

Survey Details

• The survey covers an area of 67,000 sq km of rural land, valued at ₹132 lakh crore.
• Drones are used for the survey, offering an accuracy of up to five centimetres.
• So far, 92% of the drone mapping is complete, covering 3.17 lakh villages.
• The target is to cover more than 3.44 lakh villages by 2026.

State Participation

• 31 States and Union Territories have joined the scheme.
• Sikkim, Telangana, and Tamil Nadu participated only in the pilot phase.
• Telangana and Bihar have developed their own versions of this scheme.

Benefits of the SVAMITVA Programme

• Helps landowners monetise their land parcels.
• Property cards will be accepted by banks for loan applications.
• Aims to resolve long-standing land disputes.
• Provides clarity on land quantum available with panchayats.
• Enables panchayats to raise money via leasing or build infrastructure like community halls.

Rethinking Anaemia's Causes in India

A recent study challenges the conventional belief that iron deficiency is the primary cause of anaemia in India. Conducted by multiple institutions and published in the European Journal of Clinical Nutrition, it suggests that factors like Vitamin B12 deficiency and air pollution also play significant roles.

Anaemia Overview

• Anaemia is characterized by symptoms like weakness, fatigue, and paleness.
• Caused by a lack of red blood cells (RBC) or haemoglobin, which carry oxygen to cells.
• Traditionally attributed to iron deficiency due to its role in RBC production.

Implications for Policy

• The study suggests a need for policy interventions beyond iron supplementation.
• Highlighted the importance of diverse diets, including more fruits, milk, and vegetables, to improve nutrient absorption.
• Calls for economic changes to make high-quality diets more accessible to the wider population.

Anaemia Mukt Bharat Initiative

• Includes six interventions: prophylactic iron folic acid supplementation, periodic de-worming, behavior change communication, anaemia testing using digital hemoglobinometers, and provision of fortified foods.

Fast Track Immigration – Trusted Traveller Programme (FTI-TTP)

Introduction

Union Home Minister will inaugurate the FTI-TTP at various major airports including Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad, Cochin, and Ahmedabad.

The programme was initially launched at Indira Gandhi International Airport, New Delhi, aimed at facilitating easy and secure international travel with world-class immigration facilities.

Launch and Objective

• First Deployment: June 2024 at Terminal 3 of IGI Airport, New Delhi.
• Objective: Enhance international mobility with faster, smoother, and secure immigration for Indian Nationals and OCI (Overseas Citizens of India).
• Cost: Free of cost initially for Indian nationals and OCI cardholders.
• Nodal Agency: Bureau of Immigration under the Ministry of Home Affairs.

How FTI-TTP Works

• Implemented through an online portal: https://ftittp.mha.gov.in.
• Applicants register online, providing details and documents.
• A white list of ‘Trusted Travellers’ is generated post-verification.
• Biometrics are captured at the Foreigners Registration Office (FRRO) or during airport passage.
• Registration is valid till passport validity or five years, whichever is earlier.
• Process:
  1. Scan boarding pass at e-gates.
  2. Scan passport for biometrics authentication.
  3. Upon authentication, e-gate opens for immigration clearance.

Document Requirements

• Photograph: Passport-size, meeting Indian standards, simple white background, no older than six months.
• Passport: Scanned copy with at least six months validity, including the front and back pages.
• OCI Cardholders: Scanned copies of both biographic and family/address details pages.

Implementation Phases

• Phase 1: Includes Indian citizens and OCI cardholders.
• Phase 2: Foreign travellers will be included.
• Total implementation at 21 major airports in the country.

India's Future Job Market

India ranks second in preparedness for future jobs, including artificial intelligence (AI) and green skills, according to the QS World Future Skills Index 2025. However, in economic transformation and workforce readiness, India ranks 40th and 37th, respectively.

QS World Future Skills Index

• Overall Ranking: India is 25th, labeled a "future skills contender".
• Top Countries: The United States, United Kingdom, Germany, Australia, and Canada are "future skills pioneers".

Prime Minister Narendra Modi finds the ranking "heartening", emphasizing efforts to equip youth with self-reliance and innovation skills.

Indicators Assessed by QS Survey

• Skills Fit: Evaluates alignment of graduate skills with employer needs.
• Future of Work: Assesses readiness for skills needed in future jobs.
• Academic Readiness: Evaluates preparation for future work.
• Economic Transformation: Assesses readiness to support work and skills growth.

India's Performance on Indicators

1. Future of Work:
   • India ranks 2nd, focusing on digital, AI, and green skills.
   • Derived from analysis of over 280 million global job postings.
2. Skills Fit:
   • India ranks last among 30 countries, scoring 59.1.
   • Highlights a significant gap in meeting employer demands.
3. Innovation in Sustainability:
   • India scores 15.6 out of 100, lowest in future-oriented sustainability innovation.
   • G7 countries score 68.3, and EU countries score 59.
4. Economic Transformation:
   • India ranks 40th with a score of 58.3.
   • Challenges include investment and innovation capacity.
5. Academic Readiness:
   • India ranks 26th, with a score of 89.9.

Report Insights on India's Education System and Policy

The report notes that Indian graduates struggle to adapt to changing skill requirements, with a notable gap in entrepreneurial and innovative mindsets. Employers highlight a mismatch between workforce skills and economic needs, challenging the higher education system.

Recommendations include embedding creativity and problem-solving in curricula and fostering collaborations with industry. Continuous reskilling programs are also suggested to maintain workforce relevance and productivity.