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04 February 2025 : The Hindu Editorial Analysis

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1. Some wind behind the sails of India’s shipping industry

(Source – The Hindu, International Edition – Page No. – 8)

Topic: GS3 – Indian Economy
Context
● The Indian government has made significant investments in the maritime sector through the Sagarmala Programme, but Indian shipping remains stagnant and faces various challenges.

● The 2025 Budget has introduced reforms, but key tax disparities persist, affecting competitiveness.

 Government’s Commitment to Maritime Development

  • The government has prioritized the development of the maritime sector through the Sagarmala Programme, which aims to complete 839 projects with a total investment of ₹5.8 lakh crore by 2035.
  • Investment allocation within Sagarmala:
    • ₹2.91 lakh crore (50%) for port modernization.
    • ₹2.06 lakh crore (35%) for port connectivity.
    • ₹55.8 thousand crore (10%) for port-led industrialization.
    • The remaining 5% for coastal community development, infrastructure for coastal shipping, and inland water transport.
 India’s Economic and Trade Growth
● India’s GDP grew from ₹153 trillion in 2016-17 to ₹272 trillion in 2022-23, achieving a 7% CAGR despite COVID-19.

● The economy is projected to reach $3.7 trillion in 2024, $5 trillion by 2027, and $7 trillion by 2030.

● India’s EXIM trade increased from $66 billion in 2016-17 to $116 billion in 2022, reflecting a 12.83% annual growth rate.

● India aims to boost exports to $2 trillion by 2030 to strengthen global trade.

 Challenges in the Indian Shipping Industry

  • Capital Constraints – High borrowing costs, short loan tenures, and rigid collateral requirements make financing difficult for shipowners and shipbuilders.
  • Tax Disparities – Indian-flagged vessels face higher taxation, including IGST on ship purchases and TDS on seafarer salaries, making them less competitive than foreign-flagged ships.
  • Aging Fleet – Despite recent improvements, many Indian vessels remain outdated, affecting efficiency and global competitiveness.
  • Shipbuilding Challenges – Limited infrastructure for large vessel construction, high input costs, and weak ancillary industries increase dependency on imports.
  • Regulatory Hurdles – Stringent regulatory requirements and delays in fund repatriation for ship acquisitions hinder sectoral growth.
  • Competition from Foreign Ships – Foreign-flagged vessels benefit from easier access to capital, lower costs, and lenient regulations, reducing the market share of Indian shipping.
  • Lack of Domestic Cargo Preference – Indian shipping struggles to compete with rail and road transport for domestic cargo movement.
  • Slow Implementation of Reforms – While policies like the Maritime Development Fund (MDF) and infrastructure status for large vessels have been introduced, their effectiveness depends on proper execution and funding clarity.

Government Initiatives for Maritime Growth

  • The Union Budget 2025 announced several measures to support the industry:
    • ₹25,000 crore Maritime Development Fund (MDF) (49% from the government, rest from major ports).
    • Infrastructure status for large vessels.
    • Facilitation of shipbuilding clusters and a 10-year extension of customs duty exemption on shipbuilding spares.
    • Revamped financial assistance policy for shipbuilding and credit incentives for shipbreaking.
    • Tonnage tax scheme extended to inland vessels.
  • However, the industry remains concerned:
    • The ₹25,000 crore MDF funding mechanism remains unclear—whether it will be allocated in one year or multiple years.
    • The aging fleet requires urgent replacement to meet green technology goals and emission reduction targets.
    • Long-term financing with lower interest rates and 7-10 year repayment tenures is crucial.

Need for Further Reforms

  • The Maritime Development Fund (MDF) should be strategically used to attract low-cost external commercial borrowings (ECBs).
  • Additional investments are needed for modernization of shipyards and building large vessels.
  • The tax disparities affecting Indian shipping competitiveness remain unaddressed.
  • The government’s efforts are a positive step, but more decisive action is needed to ensure real growth in the shipping industry.
Practice Question:  Despite heavy investments in port infrastructure under the Sagarmala Programme, India’s shipping industry remains stagnant. Discuss the key challenges faced by the sector and suggest policy measures to enhance its global competitiveness. (250 Words /15 marks)

 

2.The kind of jobs needed for the ‘Viksit Bharat’ goal

(Source – The Hindu, International Edition – Page No. – 8)

Topic: GS3 – Indian Economy – Issues relating to development and employment.
Context
● India’s Union Budget 2024 emphasizes long-term job creation, focusing on climate resilience, AI resilience, and aspiration-centric employment to drive sustainable economic growth and inclusivity.

 Introduction

  • The Union Budget 2024 has been presented, making it the right time to discuss the types of jobs India should focus on creating.
  • Beyond short-term urban consumption revival, long-term job creation and real wage growth are essential.
  • The Employment Linked Incentives (ELI) scheme, part of the Prime Minister’s five-scheme initiative, aims to create over four crore jobs over five years with a ₹2 lakh crore budget.
  • While the Prime Minister’s Internship Scheme received 6.21 lakh applications for 1.27 lakh opportunities, the implementation of the other four schemes remains uncertain.
  • A well-defined strategy for job creation is needed for India’s vision of becoming a developed nation.
  1. Climate-Resilient Jobs
  • India was the seventh most climate-affected country in 2019, losing $159 billion in 2021 due to climate-related damages.
  • The Reserve Bank of India estimates that India will need nearly $1 trillion for climate adaptation by 2030.
  • Climate change negatively impacts agriculture, labor productivity, and livelihoods, requiring higher investment in adaptation measures.
  • Jobs should be designed to support climate goals and maximize “co-benefits” as per the IPCC.
  • Possible job-creation strategies:
    • Providing 3-4 state-subsidized e-rickshaws in 6,00,000 villages to create two million jobs, especially for women.
    • Encouraging private investment in compressed biogas plants, addressing the gap of only 82 plants being set up against the target of 5,000 for FY23-24.
    • Accelerating the 500GW non-fossil energy capacity target to create over one million jobs.
    • Supporting decentralized and rooftop solar projects, which are seven times more labor-intensive.
  1. AI-Resilient Jobs
  • With the rise of generative AI, many jobs face a 50% automation risk.
  • McKinsey Global Institute predicts that India could reach 50% automation adoption within ten years.
  • IT and business services, which contribute over 70% of India’s service exports, may struggle in the AI era due to rising labor costs.
  • New job strategies should focus on creativity and physical engagement, which AI cannot replace.
  • Solutions for AI-resilient job creation:
    • Increasing education and health budgets to address shortages of teachers and healthcare professionals.
    • Strengthening financing for the National Rural Livelihood Mission to help rural artisans and farmers access global and urban markets.
  1. Aspiration-Centric Jobs
  • Rural youth have low confidence due to poor foundational education and limited resources.
  • Many remain dependent on government jobs and coaching centers, struggling to secure employment.
  • As youth aspirations evolve, non-farm job creation must align with their needs.
  • Key measures to create aspiration-centric jobs:
    • Developing around 70,000 integrated pack-houses to address infrastructure gaps and create over two million jobs.
    • Enhancing productivity and value addition in high-import/export items and agri-input manufacturing.
    • Promoting the National Mission on Edible Oils – Oilseeds to reduce India’s 57% import dependence on edible oil.
    • Revitalizing rural processing of native oilseeds like soybean and sunflower.
    • Using technology, social media, and rebranding rural jobs to attract youth to off-farm employment.
    • Encouraging public-private partnerships to support large-scale rural businesses.

Conclusion

  • While tax relief may temporarily boost urban demand, long-term job creation requires structural reforms.
  • The government must focus on climate-resilient, AI-resilient, and aspiration-centric jobs to ensure sustainable growth.
  • By utilizing these opportunities, India can move towards its vision of Viksit Bharat and provide stable employment for its workforce.
PYQ: Can the strategy of regional-resource based manufacturing help in promoting employment in India? (150 words/10m) (UPSC CSE (M) GS-1 2019)
Practice Question:  Discuss the importance of climate-resilient, AI-resilient, and aspiration-centric job creation in India’s economic growth. Suggest policy measures to enhance employment generation in these sectors. (150 Words /10 marks)

check more… 03 February 2025 : The Hindu Editorial Analysis

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