1. Decoding GDP
(Source: Editorial Page, The Indian Express)

Topic: GS3: Indian Economy, Growth, Agriculture & Industry

Context

India’s GDP growth for Q4 of FY 2024–25 came in at 7.4%, beating most analyst expectations. However, a closer look reveals significant sectoral imbalances, a weak manufacturing base, and a concerning nominal growth trend, pointing to a fragile recovery.

GDP Numbers at a Glance

• Q4 (Jan–Mar 2025) GDP growth: 7.4%

• Full-year (2024–25) GDP growth: 6.5%, moderately strong

• Nominal GDP growth: Below 10%, indicating weaker pricing power and deflationary trends

Real GDP looks promising, but nominal GDP, which matters for tax revenues and wages, is lagging—indicating underlying economic stress.

Strong Performance by Agriculture

• Agriculture grew at 5.4% in Q4 and 4.6% for the full year, which is above the long-term average.

• Driven by:

  • Good monsoons

  • Timely MSP hikes

  • Favorable weather for rabi crops

• Positive impact on rural income and consumption demand, but not strong enough to offset weakness elsewhere.

Manufacturing Weakness

• Manufacturing growth in 2024–25: 4.5%, significantly lower than 12.3% the previous year.

• Indicates:

  • Persistent issues with investment revival

  • Low capacity utilization

  • Sluggish private sector demand and exports

Manufacturing continues to drag India’s Make in India narrative and employment goals.

Construction as a Bright Spot

• Construction grew robustly due to:

  • Public infrastructure push

  • Housing demand recovery

  • Government’s capital expenditure programs

This suggests that public-led growth is holding up sectors that are otherwise demand-constrained.

Worrying Signs in Nominal Growth

• Nominal GDP: Below 10%, compared to 16–18% in a typical growth year.

• This limits:

  • Tax revenue growth

  • Corporate profitability

  • Wage and income expansion

• Weak nominal growth also complicates fiscal consolidation, making debt-GDP targets harder to meet.

Consumption and Private Investment Still Weak

• Private consumption is yet to fully rebound.

• High inflation in food and fuel may have eroded purchasing power.

• Investment revival remains elusive, with limited capacity expansion in private manufacturing.

Way Forward:

• Boost Manufacturing
  Improve logistics, input costs, and PLI coverage to revive factory output and job creation.

• Revive Private Investment
  Ensure policy stability, streamline approvals, and promote PPPs to crowd-in private capital.

• Support Rural Demand
  Strengthen schemes like PM-KISAN and MNREGA to boost rural income and consumption.

• Align Nominal Growth with Revenue
  Expand the tax base and reform GST for stable fiscal health amid low nominal GDP growth.

• Ensure Balanced Development
  Target underdeveloped states with focused investment in health, education, and infrastructure.

Practice Question: India’s real GDP growth hides sectoral weaknesses and structural fragility. Critically examine the 2024–25 GDP trends in light of nominal growth slowdown and manufacturing stress. (GS3, 250 Words, 15 Marks)

 

2. End of a Bromance

(Source: Editorial Page, The Indian Express)

Topic: GS2: International Relations, GS1: Post-Cold War World Order

Context

The editorial reflects on the shifting dynamics between India and Russia, marking a potential decline in their traditional closeness. While historic ties existed between New Delhi and Moscow, recent geopolitical developments like India’s growing proximity to the US and Russia’s increasing alignment with China have weakened the earlier warmth of the bilateral relationship.

Background of India-Russia Relations

• India and Russia (formerly Soviet Union) shared a strong strategic and defense partnership since the Cold War era.

• The Indo-Soviet Treaty of Peace and Friendship (1971) symbolized deep cooperation.

• Russia has remained a major arms supplier to India and has supported India in forums like the UN.

Key India–Russia Relations: Overview Table

Area	Details
Defence Cooperation	Over 60% of India’s defense equipment is of Russian origin. Projects like BrahMos, S-400 deal.
Nuclear Energy	Russia helped set up Kudankulam Nuclear Power Plant. Ongoing civilian nuclear collaboration.
Space Cooperation	Russia aiding in India’s Gaganyaan mission; long history of ISRO–Roscosmos partnership.
Strategic Forums	Both nations are members of BRICS, SCO, RIC, and G20.
Trade & Energy	India imports discounted Russian oil post-Ukraine war. Bilateral trade still below potential.
Cultural Links	Indian cinema popular in Russia; longstanding educational exchanges.

Recent Divergences

• India–US Proximity: India’s stronger strategic engagement with the US (QUAD, Indo-Pacific initiatives, etc.) is seen as drifting away from Russia.

• Russia–China Nexus: Moscow’s increasing alignment with Beijing, especially post-Ukraine war, is perceived unfavorably by Indian analysts.

• Ukraine War Stance: India maintained a neutral position, refusing to condemn Russia, yet did not overtly support Moscow either—unlike the earlier unquestioning backing.

Key Concerns

• Diminishing Trust: India is wary of Russia’s growing dependence on China, which is India’s primary geopolitical rival.

• Defence Diversification: India is increasingly diversifying its arms imports—buying from France, Israel, and the US—reducing dependency on Russia.

• Economic Cooperation Weakening: Bilateral trade remains below potential, and energy ties are tactical rather than strategic.

Strategic Relevance Still Exists

• Nuclear & Space Cooperation: Russia continues to be an essential partner in India’s nuclear energy and Gaganyaan mission.

• Multilateral Forums: Russia and India continue collaboration through BRICS, SCO, and G20.

• Balancing Act: India seeks to maintain autonomy in foreign policy by balancing relations with both Western and Eurasian blocs.

Conclusion/Way Forward:

• India must pursue a pragmatic engagement with Russia while deepening ties with the West.
• Realignment of global powers requires India to insulate its interests from great power conflicts.
• India must push for a multipolar world where it plays a central balancing role, without overcommitting to any singular bloc.

Practice Question: “India’s evolving foreign policy is leading to a redefinition of its traditional ties with Russia.” Discuss the strategic implications of the recent shifts in Indo-Russian relations. (GS2, 10 marks, 150 words)

 

Read more – 30 May 2025 : Indian Express Editorial Analysis