1 February 2025 : Daily Current Affairs
1. Economy’s fundamentals robust amid ‘strong downsides’: Survey
(Source – The Hindu, International Edition – Page No. – 1)
| Topic: GS3 – Indian Economy |
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Economic Growth Projections
- India’s economy is expected to grow between 6.3% and 6.8% in 2025-26, slightly higher than the estimated 6.4% this year.
- The Economic Survey acknowledges strong economic fundamentals but also highlights external risks affecting investment and output.
- Private sector investment growth has been subdued due to political uncertainties, global challenges, and overcapacity in some industries.
Challenges in Achieving ‘Viksit Bharat’
- India aims to become a developed nation (Viksit Bharat) by 2047, but achieving this requires a consistent 8% GDP growth for at least a decade.
- The investment rate must increase from the current 31% of GDP to 35% of GDP to sustain high growth.
Focus on Domestic Growth Drivers
- With global trade slowing due to geopolitical tensions, India must rely more on domestic economic drivers.
- The Survey suggests that deregulation is crucial for boosting investment and economic expansion.
Reducing Government Control
- The government should reduce excessive regulations and micromanagement to create a business-friendly environment.
- Simplifying compliance processes and reducing bureaucratic delays will help businesses focus on growth.
Building Trust in the Economy
- The Survey emphasizes the need to bridge the trust gap between government authorities, businesses, and citizens.
- Excessive regulations often favor big businesses, creating unfair competition and harming overall economic progress.
- The government must trust businesses and individuals to drive economic activities effectively.
2. Higher profit share, stagnant wage growth slowing economy: Survey
(Source – The Hindu, International Edition – Page No. – 6)
| Topic: GS3 – Indian Economy |
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Growth in Corporate Profits vs. Wage Growth
- The Economic Survey highlights that corporate profits must grow in tandem with wages to boost the economy.
- Disparities between profits and wages risk curbing demand, which can slow economic growth.
Concerns About Income Inequality
- A slight rise in the labour share of GVA (Gross Value Added) is noted, but large corporate profits are a growing concern.
- High corporate profits and stagnant wages can decrease consumer spending, limiting economic demand.
Economic Growth and Employment Incomes
- Sustained growth depends on increasing employment incomes to drive consumer spending and investment in production.
- A fair distribution of income between capital and labour is essential for long-term stability.
Profit Growth and Employment
- Corporate profitability reached a 15-year peak in FY 2023-24, largely driven by the financial, energy, and automobile sectors.
- Profits rose by 22.3%, but employment grew only by 1.5%.
- Wage growth has slowed, with employee expenses rising just 13% in FY24.
Improved Labour Market Indicators
- Post-pandemic recovery and formalisation have improved labour market indicators in India.
- Unemployment has decreased, and labour force participation has increased.
- Sectors like the digital economy and renewable energy offer potential for job creation.
3. Excessive financialisation can hurt India’s economy, cautions Survey
(Source – The Hindu, International Edition – Page No. – 6)
| Topic: GS3 – Indian Economy |
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Financialisation Risks for India
- The Economic Survey warns against excessive financialisation, as rising household savings in the stock market can harm the economy, especially in low-middle-income countries like India.
- Financialisation can lead to over-reliance on financial markets, increasing public and private sector debt, and causing economic growth to depend on rising asset prices.
- This can worsen inequality and influence policy-making.
Need for Balance
- India must maintain a balance between financial sector development and financialisation.
- This requires understanding the country’s context, including household financial savings, investment needs, and financial literacy.
- Policies must align incentives in the financial sector with the nation’s growth goals.
Financial Markets and Banking Sector Coordination
- While financial markets are becoming a significant funding source, they must work alongside the banking sector to meet capital needs.
Regulatory Readiness
- India must prepare for vulnerabilities arising from financialisation with appropriate regulatory measures and government interventions when necessary.
- Banks need to adapt to the digital economy and new-age household demands while continuing their role in credit creation.
4. ‘Indigenisation an urgent task for India’s electric mobility transition’
(Source – The Hindu, International Edition – Page No. – 6)
| Topic: GS3 – Indian Economy |
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Indigenisation of Technology and Raw Materials
- India needs to focus on indigenising technology and raw materials for electric mobility to reduce reliance on imports.
- The Economic Survey emphasizes the urgency of this task, particularly given global efforts to reduce dependence on China.
- India’s import intensity in electric vehicle (EV) production is high, especially from countries with which it has significant trade deficits.
Challenges in Mineral Sourcing
- Many minerals needed for EV manufacturing are scarce or not processed in India.
- China dominates the global production and processing of critical minerals such as nickel, cobalt, lithium, and rare earth minerals.
- China accounts for 65% of nickel production, 68% of cobalt, 60% of lithium, and 90% of rare earth processing.
- The demand for lithium-ion batteries, essential for EVs, is expected to grow at 23% annually until 2030, reinforcing China’s dominance.
Supply Risks and Public Transportation Focus
- India’s Ministry of Mines identified 24 out of 33 critical minerals at high risk of supply disruptions.
- The government advocates for improving public transportation systems to achieve electric mobility goals and reduce import dependence.
- Investing in efficient, reliable, and accessible public transport will help India achieve Net Zero targets and lessen reliance on imports.
5. India should not shut coal plants without ‘alternatives’: Survey
(Source – The Hindu, International Edition – Page No. – 6)
| Topic: GS3 – Indian Economy |
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India’s Path to Development and Low-Carbon Future
- India aims to become a developed nation by 2047 while focusing on a low-carbon pathway.
- To achieve this, it must leverage its best resources, advanced technologies, and expertise.
- However, coal-fired plants should not be shut down without reliable alternatives to avoid disruptions.
Energy Transitions Driven by Commercial Interests
- Historically, energy transitions were driven more by commercial interests than by efforts to reduce emissions.
- Energy security and commercial interests remain the most significant factors in shaping the transition to cleaner energy.
- Developed and developing nations alike are influenced by these considerations when making energy choices.
| Global Examples of Energy Transition |
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Challenges for Developing Nations
- Developed nations continue to depend on fossil fuels even as they urge developing countries to adopt costlier and less efficient energy solutions.
- For India, shutting down coal plants would lead to the underutilization of significant investments made in the 2010s.
India’s Net-Zero Emissions Goal
- India’s goal of achieving net-zero emissions by 2070 must remain a priority.
- The country should focus on innovation and investment in renewable energy, battery storage, grid infrastructure, and critical minerals.
- Transitioning to renewable energy faces challenges like higher electricity prices and the complexity of managing both fossil fuels and renewables.
6. ‘Regulatory framework holding back MSMEs, limiting growth, innovation’
(Source – The Hindu, International Edition – Page No. – 7)
| Topic: GS3 – Indian Economy |
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Challenges Faced by MSMEs
- Micro, Small, and Medium Enterprises (MSMEs) employ 23.24 crore people in India but face challenges in the regulatory environment.
- Regulatory compliance burdens hinder formalization, reduce labor productivity, limit employment growth, stifle innovation, and depress overall growth.
Importance of MSMEs
- MSMEs play a crucial role in the economy, second only to agriculture, by creating jobs at low capital costs.
- They drive economic growth, employment, and innovation but often stay small to avoid regulatory scrutiny.
- Remaining small limits their access to capital, skilled labor, technology, and formal supply chains, contributing to low labor productivity and an informal economy.
Government Efforts to Support MSMEs
- The government has focused on improving MSMEs’ access to finance, enhancing technological capabilities, providing market linkages, and addressing structural challenges.
- In 2023, the Udyam Assist Platform (UAP) was launched in collaboration with SIDBI to formalize informal micro-enterprises.
- Over 2.39 crore informal micro-enterprises were formalized through the platform.
- The TReDS platform aims to help MSMEs receive payments in a timely manner with lower financing costs.
Funding and Development Programs
The Micro and Small Enterprises-Cluster Development Programme (MSE-CDP) focuses on improving technology, skills, and quality through Common Facility Centres (CFCs).
The government launched the Self-Reliant India (SRI) Fund with ₹50,000 crore to provide equity funding to MSMEs with scaling potential.
7. Economic Survey 2024-25: Stability Amid Global Uncertainty, Calls for Deregulation to Boost Growth
(Source – Indian Express, Section – Explained – Page No. – 21)
| Topic: GS3 – Indian Economy |
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Analysis of the news:
Global Economic Challenges
- The Economic Survey highlights two key concerns in the global economy: increasing trade protectionism and China’s manufacturing dominance.
- Trade and investment growth have slowed, reflecting a shift away from globalization.
- Rising uncertainty and economic fragmentation indicate signs of “secular stagnation.”
- Additionally, China’s outsized role in global production, accounting for one-third of global manufacturing, poses challenges.
- However, disruptions in global supply chains may lead to a reset, providing opportunities for economies like India.
India’s Economic Performance
- Despite global challenges, India’s economy remains stable.
- Real GDP growth for FY25 is projected at 6.4%, with an estimated range of 6.3%-6.8% for FY26.
- Private final consumption expenditure, a key driver of demand, is set to rise to 61.8% of GDP, the highest since FY03.
- On the supply side, Gross Value Added (GVA) has surpassed pre-pandemic levels and aligns with the decadal average, indicating a steady economic trajectory.
Inflation and Employment Trends
- The Survey notes that core inflation is moderating, but food inflation has risen from 7.5% in FY24 to 8.4% due to supply disruptions and weather-related factors.
- However, experts argue that inflation, excluding a few volatile food items, is close to the target.
- Employment indicators have improved, supported by post-pandemic recovery and increased job formalization.
- Key metrics such as the unemployment rate and labour force participation show positive trends.
Policy Recommendations: Deregulation for Growth
- The Survey emphasizes the need to deregulate the economy to boost employment, income generation, and consumer demand.
- The CEA advocates for reducing regulatory hurdles, particularly for small businesses, to lower operational costs and encourage hiring.
- Citing the Business Reform Action Plan (BRAP), the Survey suggests that enterprise-friendly policies can drive industrial growth, particularly in aspiring and emerging states.
Shifting Tone in the Economic Survey
- While the Survey acknowledges India’s post-pandemic recovery, it also raises concerns about limitations in domestic production capacity.
- The CEA warns that excessive regulation could lead to stagnation.
- This cautious outlook contrasts with the optimism expressed in the 2023 Survey, which had predicted strong growth momentum post-pandemic.
- The shift in tone suggests a recognition of structural challenges that need urgent policy action to sustain long-term economic expansion.
| Practice Question: The Economic Survey 2024-25 highlights India’s economic resilience amidst global uncertainties. Discuss the key challenges and recommendations outlined in the Survey and their implications for India’s long-term economic growth. (250 Words /15 marks) |
8. CLIMATE CHANGE ADAPTATION, BUILDING RESILIENCE DEMAND TARGETED POLICY MEASURES: ECONOMIC SURVEY 2024-25
(Source – https://pib.gov.in/PressReleseDetail.aspx?PRID=2097862®=3&lang=1 )
| Topic: GS3 – Indian Economy |
| Context |
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India’s net-zero ambition by 2070
- India aims to achieve net-zero emissions by 2070. To reach this target, significant investment is needed in upgrading grid infrastructure and ensuring a secure supply of critical minerals required for the transition.
- The Economic Survey highlights the limited climate finance mobilized under the New Collective Quantified Goal (NCQG) at COP29.
- The target of USD 300 billion annually by 2035 is far below the estimated USD 5.1-6.8 trillion needed by 2030, placing the burden on developing countries.
Sustainable urban development
- Vertical gardens, or living walls, are proposed as a solution to mitigate the urban heat island effect, reduce carbon emissions, and improve air quality.
- These gardens also enhance the aesthetic value of buildings and promote biodiversity in urban spaces.
- The Economic Survey suggests enhancing the Energy Conservation and Sustainable Building Code (ECSBC) by introducing explicit guidelines for vertical gardens.
- This will further improve urban sustainability and help in combating heat islands.
Energy transition and reliable power sources
- Nuclear energy is recognized as a low-emission, reliable alternative to fossil fuels.
- The Economic Survey emphasizes the need for forward-thinking strategies to facilitate a smooth transition to nuclear energy.
- The Survey also stresses the importance of using advanced technologies like super-critical and Advanced Ultra Super Critical (AUSC) power plants in coal-based thermal power plants.
- These technologies help reduce the emission intensity and contribute to a greener energy transition.
Mission LiFE and public engagement
- The Lifestyle for Environment (LiFE) movement focuses on promoting sustainable practices such as resource conservation, waste management, and recycling. It encourages a shift toward a circular economy.
- The Economic Survey advocates for a nationwide awareness campaign to turn Mission LiFE into a widespread public movement.
- This includes integrating environmental education into school curricula and supporting initiatives like the Green Credit Rules.
Renewable energy capacity
- As of November 2024, 46.8% of India’s total electricity generation capacity comes from renewable sources.
- The country is on track to meet the updated goal of 50% by 2030.
| Practice Question: Discuss the key challenges and strategies for India’s transition towards net-zero emissions by 2070. (150 Words /10 marks) |
9. SERVICE SECTOR’S CONTRIBUTION TO TOTAL GVA RISES FROM 50.6% IN FY14 TO 55.3% IN FY25: ECONOMIC SURVEY 2024-25
(Source – https://pib.gov.in/PressReleseDetail.aspx?PRID=2098048®=3&lang=1 )
| Topic: GS3 – Indian Economy |
| Context |
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Service Sector Growth and Contribution
- The service sector has been a major contributor to India’s economic growth, with a steady increase in its share of the Gross Value Added (GVA), from 50.6% in FY14 to around 55% in FY25.
- From FY23 to FY25, the service sector grew at an average rate of 8.3%, boosting the overall GDP.
- Services provide jobs to about 30% of the workforce and are increasingly supporting manufacturing through the ‘servicification’ of production processes.
Global Services Exports and Trade Performance
- India ranks 7th globally in services exports, contributing 4.3% to global exports.
- Services export growth surged by 12.8% in FY25 (April-November), with computer and business services making up around 70% of the exports.
- The services sector has also seen a rise in imports, which grew by 13.9% during the same period.
- FDI equity inflows to the services sector were USD 5.7 billion from April-September FY25, with insurance and financial services receiving the most significant share.
Key Sectors for Service Sector Growth
- NITI Aayog has classified services into four categories: defend, accelerate, transform, and untapped, based on their contribution to GDP, exports, and employment.
- Logistics, tourism, and real estate sectors have been performing well. Railways, road transport, and air transport have seen significant growth, while inland water transport and river cruise tourism hold potential for further expansion.
Information Technology and Telecom Growth
- The IT sector continues to be a significant contributor to exports, with revenues of USD 254 billion in FY24, growing by 3.8%.
- India’s telecom sector is expanding with an increasing number of smartphone users and rising data consumption, averaging 19.3 GB per user monthly in FY24.
Global Capability Centres and Skilling
- India’s Global Capability Centres (GCCs) employed nearly 1.9 million professionals in FY24 and have become a key part of the global business landscape.
- The Economic Survey emphasizes the need for skilled labor to drive growth in both manufacturing and service sectors.
| Practice Question: Discuss the role of the service sector in India’s economic growth. Analyze its contribution to GDP, employment, and global exports in the context of the Economic Survey 2024-25. (250 Words /15 marks) |
Prelims Facts
1. 40-million-year-old whale fossil stolen in Meghalaya; hope to retrieve it soon: CM
(Source – The Hindu, International Edition – Page No. – 2)
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Analysis of the news:
- The fossil is believed to be around 40 million years old and belongs to an ancestor of modern whales.
- It was discovered in a cave in Tolegre village, located in Meghalaya’s South Garo Hills district.
- The fossil is thought to belong to either Rodhocetus or Ambulocetus, both genera of Palaeogene whales.
- The discovery was announced in February 2024 by three speleologists from Core Geo Expeditions.
- It represents an important palaeontological find, shedding light on the evolution of whales.
- The Meghalaya government aims to protect and study the fossil with Geological Survey of India (GSI) specialists.
- The fossil was stolen in January 2024, leading to a police investigation.
2. ‘India’s tiger population rose 30% over two decades’
(Source – The Hindu, International Edition – Page No. – 3)
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Analysis of the news:
- A new study found that India’s tiger population has increased by 30% over the past two decades.
- Despite high human densities and economic challenges, India achieved remarkable success in tiger conservation.
- Protected areas and land-sparing strategies have allowed 85% of breeding populations to thrive.
- Tigers now coexist with over 66 million people, demonstrating successful coexistence.
- Legislative frameworks like the Wildlife Protection Act, Forest Conservation Act, and National Tiger Conservation Authority contributed to the recovery.
- Economic prosperity and cultural values have influenced tiger persistence, with lower poverty regions seeing better recolonization rates.
- Naxal-affected areas in Chhattisgarh and Jharkhand have experienced declining tiger populations.
| Tiger Population in India |
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3. FDA Approves Non-Addictive Painkiller Suzetrigine, Offering Hope in the Fight Against Opioid Crisis
(Source – Indian Express, Section – Explained- Page No. – 21)
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Analysis of the news:
What Are Opioids?
- Opioids are pain-relieving drugs derived from or mimicking natural substances in the opium poppy plant.
- Common examples include oxycodone, morphine, codeine, heroin, and fentanyl.
- These drugs work by binding to opioid receptors in the brain, blocking pain signals and producing a sense of pleasure or euphoria.
- This euphoric effect makes opioids highly addictive, often leading to dependence and misuse.
How Suzetrigine Works
- Suzetrigine targets pain signals before they reach the brain, unlike opioids, which alter pain perception in the brain.
- It interrupts the pain pathway at the nerve level, preventing the brain from recognizing pain even when tissue damage exists.
- Because it does not create euphoria, experts believe it has no addiction potential.
- Suzetrigine is taken in 50-milligram doses every 12 hours, with an initial 100-milligram starter dose.
Significance of the Approval
- The opioid crisis remains a major public health issue in the U.S., with 82,000 opioid-related overdose deaths in 2022.
- The country consumes 30 times more opioid painkillers than needed, leading to widespread addiction and illegal drug trade.
- Former President Donald Trump declared opioids a national emergency in 2017, and has since threatened tariffs on Canada, Mexico, and China to curb fentanyl imports.
- Suzetrigine’s approval offers a promising alternative that could help reduce opioid dependence and overdose deaths.
4. Building blocks of life found in samples from asteroid Bennu
(Source – Indian Express, Section – Explained- Page No. – 21)
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Analysis of the news:
About OSIRIS – REx
- The OSIRIS-REx name is an acronym of the mission objectives, which are:
- Origins: Return and analyze a pristine carbon-rich asteroid sample
- Spectral Interpretation: Provide ground truth or direct observations for telescopic data of the entire asteroid population
- Resource Identification: Map the chemistry and mineralogy of a primitive carbon-rich asteroid
- Security: Measure the effect of sunlight on the orbit of a small asteroid, known as the Yarkovsky effect—the slight push created when the asteroid absorbs sunlight and re-emits that energy as heat
- Regolith Explorer: Document the regolith (layer of loose, outer material) at the sampling site at scales down to the sub-centimeter
About Asteroid Bennu:
- Bennu is a B-type Near-Earth Asteroid.
- B-type asteroids are a relatively uncommon type of carbonaceous asteroid.
- Because of its high carbon content, the asteroid reflects about four per cent of the light that hits it, which is very low.
- Earth reflects about 30 per cent of the light.
- There is a slight possibility that Bennu might strike the Earth in the next century, between the years 2175 and 2199.
Organic Compounds and Prebiotic Chemistry
- Two studies, published in Nature Astronomy and Nature, confirm the presence of a diverse mix of organic compounds, including 14 amino acids and all five nucleobases—essential components of DNA and RNA.
- Additionally, minerals formed from evaporated brine were identified, indicating that Bennu’s parent body once had liquid water, a crucial factor for prebiotic chemical reactions.
Implications for the Origin of Life
- The discovery supports the hypothesis that asteroids delivered water and organic molecules to Earth, creating conditions for life to emerge.
- The presence of these compounds in space increases the likelihood of life originating beyond Earth.
- Unlike meteorites that may be contaminated upon landing, the Bennu samples are pristine, strengthening their reliability.
Formation and Evolution of Bennu
- Bennu’s parent body, an icy celestial object possibly 100 km in diameter, formed in the outer solar system and was later destroyed.
- Its fragments, including Bennu, became “rubble pile” asteroids.
- Briny environments within this body might have facilitated the formation of complex prebiotic molecules, though no evidence of DNA or RNA was found.
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