March 2025 Top Current Affairs: Economy
10,000 Farmer Producer Organizations (FPOs) Formed Under Government’s Flagship Scheme
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Scheme Details:
- Launched: February 29, 2020
- Ministry: Ministry of Agriculture & Farmers Welfare
- Aspirational Districts Focus: At least one FPO per block using the One District One Product (ODOP) model.
- Support Duration: 5 years of handholding with Rs.18 lakh financial assistance per FPO for management costs (3 years).
- Credit Accessibility: Credit guarantee facility up to Rs. 2 crore per FPO for project loans.
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Advantages of the Scheme:
- Market Benefits: Reduced post-harvest losses via joint storage & value addition.
- Financial Gains: Better price realization, reduced distress sales.
- Tech & Knowledge Access: Modern technology, extension services.
- Improved Communication: Easier price updates, market trends, advisory services.
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Key Initiatives:
- Credit Guarantee Fund: Ensures loan accessibility for FPOs.
- ONDC Integration: 5,000 FPOs onboarded on Open Network for Digital Commerce.
- CSCs Conversion: Plan to convert 10,000 FPOs into Common Service Centers (CSCs) for citizen-centric services via Digital Seva Portal.
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India’s Poverty Measurement Framework Needs Urgent Revision
A new study comparing 2022-24 Household Consumer Expenditure Survey data with 2011-12 highlights significant shifts in poverty and inequality.
Key Findings
Decline in Poverty
- Poverty Headcount Ratio (HCR) at the $1.90 PPP poverty line fell from ~12% in 2011-12 to 1% in 2023-24.
- The poorest households saw higher growth in consumption than wealthier groups.
Outdated Poverty Metrics
- Existing poverty lines (Tendulkar, Rangarajan) no longer reflect current economic conditions.
Proposed New Poverty Measures
1. Relative Poverty Based on Consumption
- Defines poverty using the bottom 33% of the population’s spending instead of a fixed threshold.
2. Relative Poverty Based on Income
- Aligns with European standards where poverty is 60% of the median income.
- Using this method, 16.5% of Indians fell below this threshold in 2023-24.
Why This Matters
- Adapts to economic growth and changing consumption patterns.
- Provides a realistic measure of poverty in today’s India.
From Borrowers to Builders: Women’s Role in India’s Financial Growth
A new report by TransUnion CIBIL, NITI Aayog’s Women Entrepreneurship Platform (WEP), and MicroSave Consulting (MSC) highlights the evolving role of women in India’s financial landscape.
Key Findings
Rising Women Borrowers
- Women seeking credit tripled between 2019 and 2024.
- 60% of women borrowers are from semi-urban or rural areas.
- Women under 30 account for only 27% of retail credit uptake, compared to 40% for men.
Regional Trends
- Southern states have a higher share of women borrowers than Northern and Central states.
- 27 million women borrowers have checked their credit scores with CIBIL, indicating growing financial awareness.
Challenges Faced by Women Borrowers
- Credit Aversion: Social norms, fear of default, and complex processes deter women from seeking loans.
- Poor Banking Experience: Many banks lack women-friendly advisory services.
- Limited Institutional Support:
- Women-owned businesses are perceived as high-risk due to limited credit history.
- 79% of women-owned businesses are self-financed, while only 7% of MSME credit goes to women.
- Barriers to Credit Readiness: Lack of documentation, guarantors, and collateral prevents many from securing loans.
- 22.2% of women-led collective enterprises are not credit-ready.
Recommendations
- Expand Women’s Access to Business Loans: Policies for affordable credit, sex-disaggregated data, and expanded guarantee covers.
- Gender-Intelligent Financial Products: Tailored financial solutions addressing women’s unique lifecycle needs.
- Reimagine Credit Risk Assessment: Use AI and big data to prevent gender bias in lending.
- Boost Credit Readiness: Promote digital transactions, bookkeeping, and business formalization to improve financial inclusion.
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RBI Announces Over USD 21 Billion Liquidity Infusion to Support Growth
The Reserve Bank of India (RBI) has initiated a USD 21 billion liquidity infusion through two Open Market Operations (OMO) purchases of Government Securities (G-Secs) and a USD/INR Buy/Sell Swap auction.
About Open Market Operations (OMO)
- RBI buys or sells G-Secs in the open market to control money supply and interest rates.
- Buying G-Secs → Increases high-powered money (H).
- Selling G-Secs → Decreases high-powered money (H).
- High-powered money (H) = Commercial bank reserves + Currency (notes & coins) with the public.
About USD/INR Swap Auctions
- A bank sells USD to RBI and agrees to buy back the same amount after the swap period.
- Conducted via an auction, where banks quote swap rates (forward premium/discount), and lowest bidders are prioritized.
Need for Liquidity Infusion
- Liquidity challenges in the banking system since November 2024 due to:
- Tax outflows.
- Foreign portfolio investor (FPI) sell-off in Indian equities.
- RBI’s forex market interventions.
- Adequate liquidity enables:
- Better transmission of loan rates.
- Smoother policy implementation.
- Boost to economic growth.
Other Liquidity Infusion Instruments
Quantitative Tools
- Liquidity Adjustment Facility (LAF): Repo & Reverse Repo.
- Cash Reserve Ratio (CRR).
- Statutory Liquidity Ratio (SLR).
- Bank Rate.
Qualitative Tools
- Credit Rationing.
- Moral Suasion.
- Selective Credit Control (SCC).
- Margin Requirements.
This move by the RBI aims to stabilize liquidity, support credit flow, and strengthen economic growth.
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Fiscal Support Agreement for India’s First Semiconductor Fab
Key Details
- Date: Signed on March 6, 2025
- Parties: India Semiconductor Mission (ISM), Tata Electronics (TEPL), Tata Semiconductor Manufacturing (TSMPL)
- Location: Dholera, Gujarat
Project Highlights
- Investment: Over ₹91,000 Crore
- Capacity: 50,000 wafer starts per month (WSPM)
- Significance: India’s first commercial semiconductor fab
Government Support
- Fiscal Aid: 50% funding on pari-passu basis
- Program: Semicon India Programme
- Body: India Semiconductor Mission (under Digital India Corporation)
Semicon India Programme Overview
- Goal: Support semiconductor, display, and design investments
- Budget: ₹76,000 Crore
- Schemes:
- Semiconductor Fabs Scheme
- Display Fabs Scheme
- Compound Semiconductors & ATMP/OSAT Scheme
- Design Linked Incentive (DLI) Scheme
Related Initiatives
- Electronic Components Scheme: Boost local manufacturing
- PLI for Electronics: Attract mobile phone and packaging investments
- Chips to Startup (C2S): Build chip design talent
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NPT Marks 55 Years: Evaluating Its Legacy and Challenges
The Treaty on the Non-Proliferation of Nuclear Weapons (NPT), the world’s only multilateral, legally binding commitment towards nuclear disarmament, has completed 55 years since its enforcement in 1970.
About the NPT
- Background: Came into force in 1970 to prevent the spread of nuclear weapons.
- Membership: 191 states, making it one of the most widely accepted arms control agreements.
- India’s Stance: India has not signed the treaty, citing its discriminatory nature, which divides countries into “nuclear haves” and “nuclear have-nots.”
Major Provisions of the Treaty
- Key Principles:
- Non-Proliferation: Nations agree not to acquire or transfer nuclear weapons.
- Disarmament: Calls for nuclear-weapon states (NWS) to reduce their arsenals.
- Peaceful Nuclear Technology: Promotes access to nuclear technology for peaceful purposes.
- Role of the International Atomic Energy Agency (IAEA):
- Ensures compliance through regular inspections.
- Established in 1957 under the United Nations to promote the safe and secure use of nuclear energy.
- Review Process:
- Every five years, member states assess the treaty’s effectiveness.
Challenges and Relevance Today
- Rising Nuclear Threats:
- Increased risks due to small arms proliferation and AI-driven military technologies.
- Strengthening of Nuclear Arsenals:
- SIPRI reports indicate that many nations are expanding their nuclear stockpiles instead of reducing them.
- Weakening Nuclear Diplomacy:
- Russia’s withdrawal from the Comprehensive Nuclear-Test-Ban Treaty (CTBT) signals a shift away from global disarmament efforts.
Other Major Nuclear Disarmament Treaties
- Comprehensive Nuclear-Test-Ban Treaty (CTBT):
- Bans nuclear explosions in all environments.
- India has not signed, citing concerns over its strategic interests.
- Treaty on the Prohibition of Nuclear Weapons (TPNW):
- The first legally binding treaty to completely ban nuclear weapons.
- India has not signed, maintaining that global disarmament should be non-discriminatory.
Way Forward
- Strengthening diplomatic efforts to prevent arms races.
- Ensuring transparency in nuclear programs through enhanced IAEA inspections.
- Encouraging global consensus on complete nuclear disarmament.
The NPT remains a cornerstone of global nuclear security, but its effectiveness is increasingly being questioned amid rising geopolitical tensions.
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