India’s 8.2% Growth Rate – The Question of Sustainability

Why in News?

Recently, India’s GDP surged 8.2% to Rs.48.63 lakh crore, indicating strong economic momentum and the IMF’s ‘Grade C’ rating warns of structural weaknesses that could threaten long-term growth amidst global volatility and internal challenges.

What is the general state of Indian economy?

• Genuine push of economy – An 8.2% increase of GDP indicates that this rise is part of a genuine momentum rather than just being a post-pandemic bounce.
• Rise in Industrial demand – The 9.1% growth in manufacturing indicates that industrial demand has increased and factories are operating closer to capacity.
• Growth of service sector – Services, now 60% of India’s GDP, is growing at 9.2%, with financial services at 10.2%, which reflects strong credit activity, higher transactions, and sustained urban demand.
• Increase in GVA – The increase in real Gross Value Added (GVA) numbers from Rs.82.88 lakh crore to Rs.89.41 lakh crore further indicates that agriculture, industry and services are experiencing genuine rise in added value and not just rise in prices.
• Increase in nominal GDP – The real numbers held up because the nominal GDP increased by 8.8%, demonstrating that inflation remained under check.
• Growing private consumption – Private Final Consumption Expenditure (PFCE) rising by 7.9% show that households are spending more.
• Improvements in rural income – The growth of agriculture by 3.5%, supported by fuller reservoirs and better horticulture output, points to a small but real improvement in rural incomes.
• Inflation under check – Inflation, which had been high for much of the previous years, finally eased and even slipped below target toward the end of 2024-25.
• Growth of credits – Banks experienced significant credit growth and were in a position to lend with a clean balance sheet, maintaining capital buffers which are far in excess of regulatory requirements.
• High quality spending – On the budget front, the Centre stuck to the path of consolidation with the help of strong GST and direct tax collections and successfully managed to keep the spending mix relatively high-quality.
• Stable external sector – The external sector remained stable with a small current account deficit, healthy services exports and diversified foreign exchange reserves to weather global volatility.
• Growth amidst global issues – If one were to just look at these figures, it would appear that the Indian economy is moving forward even as much of the world slows down and is eclipsed in greater economic uncertainty.

What is the rating of IMF and RBI report?

• Grade C – The International Monetary Fund (IMF) announced that India had been assigned ‘Grade C’ in its recent assessment on its national income accounting.
  • There are four grades in total: A, B, C, and D.

• Highlighted shortcomings – Some of the multiple shortcomings highlighted by the IMF team which require careful consideration and review include:
  • The use of an outdated base year (2011/12).
  • The use of wholesale price indices as data sources for deflators due to the lack of producer price indices.
  • The excessive use of single deflation, which may introduce cyclical biases.
  • Sizeable discrepancies between production and expenditure approaches that may indicate the need to enhance the coverage of the expenditure approach data and the informal sector.
  • Lack of seasonally adjusted data and room for improvement in other statistical techniques used in the quarterly national accounts compilation.
  • A lack of consolidated data on States and local bodies after 2019.
• Critical question raised – How can a nation possibly be underrated when it’s racing at 8% while the world limps at 3%?
  • But the truth lives in the footnotes of our own documents.
• The RBI’s Annual Report (2024-25) – It recognises that the economy has performed well, but it also quietly lays out the structural issues that still drag down India’s credibility.
• Economic Chronicles of Countries – The countries with discretionary exercises in projecting the good alone in numbers have two narratives: the one they tell the world and the one they whisper under their own breath.
  • India’s 8.2% is the story its government wants tell the world and The IMF’s C is the whisper.
  • An economy appearing to grow fast is not the same thing as an economy growing well.
  • What the IMF is really saying is that India’s institutional bones are not yet as strong as its muscle.
• Mining and Electricity – It was hit by an unusually long monsoon, while electricity generation slowed because of a milder-than-usual winter that reduced heating and peak-load demand.
• Although these might seem like fleeting weather phenomena, they significantly undermined the industrial base of the year.
• Growing unevenness – The unevenness is evident even in this strong quarter.
• Electricity and utilities grew only 4.4%, and mining barely moved at 0.04%.
• These are backbone sectors and subsequently their sluggishness signals that recovery is not evenly spread across the real economy.
• Employment-Output mismatch – According to nominal GVA, the primary sector accounted for 14%, the secondary sector for 26%, and the tertiary sector for 60% in Q2.
• These proportions look normal for a service-led economy, but India’s case is different because its employment structure does not match its output structure.
• Too many Indians still work in agriculture and low-wage services, sectors that contribute little to productivity gains.

What are the identified structural vulnerabilities?

• Exports affected – The RBI cautions that India’s export trajectory will continue to be impacted by growing trade protectionism, tariff uncertainty, and geopolitical tensions in key markets.
• Services exports and remittances help cushion the current account, but they cannot substitute for a diversified and scaled-up goods export engine which India still lacks.
• Financial market contradictions – The rupee looked stable from a distance, but underneath, it was constantly being pushed down by a strong U.S. dollar and the usual swings in foreign capital.
• Shortcoming of GDP – The GDP captures the pace of economic activity but it does not capture the quality of governance that sustains it.
• The true conflict is that, despite India’s robust short-term economic momentum, its long-term framework is still being developed.
• Slow growth of important sectors – Even with the strong Q2 performance, broad-sector analysis shows agriculture growing only 3.5%, utilities at 4.4%, and mining barely above zero, sectors that collectively employ millions but contribute less and less to value creation.
• This does not diminish the achievement of 8.2% growth.

What lies ahead?

• When one realises that the IMF is grading the architecture that supports India’s growth rather than the country’s growth rate, its Grade C starts to make sense.
• A country can grow at 8% and still have structural vulnerabilities.
• It can post healthy GVA numbers and still have weak institutional capacity at the State level, low labour productivity, and an export profile mismatched with global demand.
• The IMF’s grade serves as a subtle reminder to see past the quarterly glow and recognise the unresolved issues in economic structure, finance, and governance.
• India is leading the way and what it needs now is the depth.

Reference

The Hindu| India’s Economy & IMF’s Report

Recent Transport Crises in India – Lessons to Learn

Why in News?

Recently, India has recently faced two major transport disruptions that highlight important economic lessons.

What are the recent issues?

• Overcrowded Trains of Bihar – The severe rush for Bihar-bound trains during October and November occurred because migrant workers travelled home for Chhath Puja and the Bihar elections.
• This sudden increase in demand, without a corresponding increase in supply, created a textbook demand shock.
• Since Indian Railways maintains low and fixed ticket prices for public welfare, fares did not rise even though demand shot up.
• As a result, travellers were forced into dangerously overcrowded trains, especially in unreserved compartments.
• According to standard economic theory, prices should rise when demand increases so that only those willing to pay the higher price would travel.
• While this might create market equilibrium, it would also deny essential travel to people who cannot afford expensive fares.
• The IndiGo Crisis – In contrast to the railway crisis, the mass cancellation of IndiGo flights in December was a classic supply shock.
• IndiGo cancelled a large number of flights due to regulatory non-compliance.
• This sudden reduction in supply occurred while normal demand for flights continued.
• Because IndiGo controls over 60% of the Indian aviation market, the withdrawal of so many flights created immense disruption.
• Ticket prices on other airlines skyrocketed, passengers were stranded, and consumers suffered significant financial losses.
• Such extreme market-wide effects occur only when a single private company dominates the sector.

What are the reasons argued for transport crisis in India?

• Debate of low Prices and inefficiency – Critics often claim that low railway prices create inefficiency because excess demand results in overcrowding.
• However, this criticism ignores the real issue.
• The core problem is not low fares, but the insufficient supply of trains and seats.
• Essential services such as rail travel, healthcare, and education must remain affordable to ensure social welfare.
• Therefore, the correct solution is not to raise prices but to expand supply through greater public investment.
• Significant government investment is needed to increase the number of trains, improve infrastructure, and meet predictable seasonal demands. However, this becomes difficult in a neo-liberal framework that sets strict limits on fiscal deficits and discourages large-scale public spending.
• Limited government investment – The Indian state is often unable to expand public services because fiscal deficit rules prevent substantial investment.
• Although higher spending could improve welfare, governments avoid it due to pressure from global financial institutions and credit-rating agencies.
• One way to increase spending without raising the deficit is through greater taxation of the wealthy.
• Economists such as Thomas Piketty have shown that modest taxes on the top 1% could significantly strengthen India’s welfare services.
• However, such taxation is politically difficult because it is opposed by both domestic elites and global capital.
• As a result, public services remain underfunded despite being essential.
• Effects of monopolies – If India’s aviation market were genuinely competitive, the cancellation of one airline’s flights would not have caused such severe disruption.
• Other airlines would have replaced the cancelled flights and stabilised prices.
• However, IndiGo’s near-monopoly status meant that its withdrawal affected the entire market.
• This situation reflects a broader global trend. In the United States, supply disruptions during Joe Biden’s presidency contributed to high inflation.
• Large corporations used their pricing power to increase prices far beyond their cost increases.
• These examples show that flexible pricing only works in a truly competitive market, and such competition can exist only when governments enforce strong anti-monopoly rules.
• Outcomes of the Neo-Liberal Model – Although the railway and aviation crises appear different, both are outcomes of India’s neo-liberal economic model.
• This model restricts the state’s ability to invest in essential services but encourages the deregulation of private markets.
• Because the state is constrained by fiscal deficit rules, it cannot invest adequately in transport infrastructure.
• Because private markets are deregulated, monopolies grow unchecked and gain enormous pricing power.
• The result is predictable:
  Public services become overcrowded and under-funded, and private services become expensive and unreliable.
• Failure of Public and private sectors – The overcrowding of trains and the flight cancellations reveal a dual failure:
  • Public Sector Failure – It is caused by low investment, not low prices.
  • Private Sector Failure – It is caused by monopoly power, not regulation.
• In both cases, ordinary citizens bear the burden. Travellers either endure unsafe and overcrowded conditions or face extremely high prices when private monopolies reduce supply.

What lies ahead?

• India needs a balanced economic approach that strengthens the public sector while regulating private monopolies.
• Welfare cannot be achieved by simply keeping public prices low or by allowing private markets to operate without oversight. Real welfare requires:
  • Adequate public investment in infrastructure.
  • Fair taxation of high-income groups.
  • Strong anti-monopoly regulations.
  • A competitive marketplace that protects consumers.
• Without such reforms, India will continue to face repeated transport crises.
• Unless India strengthens its public infrastructure and prevents the rise of monopolies, such crises will continue to repeat.

Reference

The Hindu| Transport Crises in India

Deep Sea Mining

Why in News?

A recent study on deep-sea mining reveals significant biodiversity loss, with sharp declines in marine species following test operations.

• Deep Sea Mining – It is the process of retrieving mineral deposits from the ocean floor, hundreds or even thousands of meters below its surface (at depths greater than 200 meters).
• Targeted Minerals – Like copper, cobalt, nickel, aluminium, manganese, zinc, silver, gold and rare earth elements are extracted from rocks called "polymetallic nodules”.
• Key Mining Environments
  • Polymetallic Nodules – Scattered across abyssal plains.
  • Cobalt-rich crusts – Found on seamounts.
  • Hydrothermal vents – Biologically rich but fragile ecosystems.

• Current Status – Despite decades of interest, no country or company has successfully launched sustained commercial deep-sea mining.
• Attempts by firms such as Nautilus Minerals (Papua New Guinea project) and Loke Marine Minerals collapsed financially, highlighting the high costs and risks involved.
• Global Governance – International Seabed Authority (ISA) regulates mining in international waters under UNCLOS.
• Benefits – Deep-sea mining minerals are  essential for the green transition (renewables, batteries, smartphones).
• Threat – Research suggests that it could cause irreversible species loss and ecosystem degradation lasting generations.
• India’s Role – India launched the Deep Ocean Mission (2021) to explore and develop technologies for sustainable ocean resource use, with a budget of Rs.4,077 crore over 5 years.

To know about Samudrayaan Mission, Click here

Quick Fact

References

1. The Hindu | Commercial deep-sea mining is killing marine life
2. Down to Earth | Commercial deep-sea mining will increase risk to blue whales, dolphins
3. DSMC | Deep Sea Mining

India Skills Report, 2026

Why in News?

The India Skills Report 2026 has been released recently, was based on 100,000+ candidate assessments through the Global Employability Test (G.E.T.).

• Launched in – It has been published every year since its first release in 2014.
• Published by – Jointly by Educational Testing Service (ETS) in collaboration with Confederation of Indian Industry (CII), All India Council for Technical Education (AICTE), and the Association of Indian Universities (AIU).
• Purpose – To analyze India’s employability landscape, identify skill gaps, and guide policy, industry, and educational institutions in workforce planning.
• Theme, 2026 – Gig work, freelancing, AI-supported roles, remote work and entrepreneurship.

Key Findings

• Employability Growth – National employability rose from 46.2% in 2022 to 54.81% in 2025 to 56.3% in 2026.
• AI Talent Strength – India holds 16% of global AI talent, projected to reach 1.25 million specialists by 2027.
• Tech Adoption – Over 90% of employees reportedly use generative AI tools, reflecting deeper digital integration at workplaces.
• Gig Workforce Expansion – India's gig and freelance workforce is expected to reach 23.5 million by 2030, with project-based hiring rising 38% year-on-year.
• Sectors in Demand – Technology; Banking, Financial Services, and Insurance (BFSI); manufacturing; renewable energy and healthcare continue to drive hiring; top skills include AI, data analytics, cloud computing and cybersecurity.
• Most Employable States (2026) – Uttar Pradesh, Maharashtra, Karnataka.
• Significance – The findings position India as a preferred global source of skilled professionals, reflecting both the scale of its workforce and its adaptability to new technologies.

References

1. NDTV | India Skills Report, 2026
2. Indian Express | India Skills Report, 2026

One District One Product (ODOP) initiative

Why in News?

The Union Government in Lok Sabha highlighted the progress of the ODOP initiative, and detailed steps taken to promote them domestically and internationally.

• Aim – To select, brand, and promote at least One Product from each District of the country for enabling holistic growth across all regions.
• Under– The Department for Promotion of Industry and Internal Trade (DPIIT).
• Nodal Ministry – Ministry of Commerce & Industry.
• Merged with – It is operationally merged with ‘Districts as Export Hub (DEH)’ initiative of Directorate General of Foreign Trade (DGFT).
• Objective –
  • For enabling holistic socioeconomic growth across all regions.
  • To attract investment in the district to boost manufacturing and exports.
  • To generate employment in the district.
  • To provide ecosystem for Innovation use of Technology at District level to make them competitive with domestic as well as International market.
• Coverage & Achievements – So far, 1,243 products have been identified from 775 districts across the country.
• Sectoral Diversity of Products – These products span textiles, agriculture, food processing, handicrafts, and other sectors, reflecting India’s rich cultural and economic diversity.
• Institutional Mechanism – State Export Promotion Committees (SEPCs) & District Export Promotion Committees (DEPCs) constituted in 36 States/UTs provide support for export promotion and address bottlenecks.

Measures taken for promotion & exports of ODOP products

• Domestic Promotion
  • Participation in domestic exhibitions to showcase ODOP items.
  • Capacity building initiatives in collaboration with various agencies.
  • E-commerce onboarding drives for Government e-Marketplace (GeM) – ODOP Bazaar, which stocks India’s best ODOP products.
• International Promotion
  • Engagement with Indian Missions abroad.
  • Virtual buyer-seller meets to connect producers with global markets.
  • Participation in international exhibitions.
  • Inclusion of ODOP products as gifts during G-20 meetings in India, popularizing them globally.

References

1. PIB | One Product, One District
2. Invest India | One District, One Product
3. PIB | One Product, One District

Adikesava Perumal Temple/Tiruvattaru temple

Why in News?

A Yali sculpture located at Sripalikal mandapam of the Tiruvattaru temple has been found damaged a few days ago.

• It is dedicated to Lord Adi Kesava Perumal, an early and ancient form of Vishnu.

• Location – Tiruvattaru, Kanniyakumari district, Tamil Nadu.
• Rivers – The temple is surrounded by 3 rivers – Thamirabharani, Kothai and Pahrali.
• Presiding Deity – Lord Vishnu is in the form of Ananthapadmanbhan or Adi Kesava Perumal and resides in a reclining position.
• Unique feature
  • Idol is 22 feet long, made of mustard, jaggery, and lime powder.
  • Idol faces west, opposite to Padmanabhaswamy Temple idol in Thiruvananthapuram (facing east), symbolizing spiritual connection.
  • The temple is also called the ‘Srirangam of the Chera Kingdom’.
  • It is one of the 108 Vaishnavaite shrines, is sung in praise by Nammalwar.
• The temple was once a part of the erstwhile kingdom of Travancore.
• Architecture – It is built in authentic Kerala-style architecture, similar to the Padmanabhaswamy Temple in Thiruvananthapuram.
• Its features includes murals, sculptures, and paintings that enrich the interiors.
• Festivals – Vaikunta Ekadasi is one of the festivals celebrated in great pomp and glory in the temple.
• Other important celebrations include Panguni Uthiram and Brahmotsavam.

Yali

• Origin of Depiction – Began during the Pallava period and evolved through subsequent dynasties.
• Literary Note – Historians said that the word Aazhi appears in Sangam literature, but it has no connection with Yali. 
• Types of Yali
  • Simha Yali – Lion-like features.
  • Vezha Yali – Elephant-like, with a proboscis (snout); gained prominence during the Nayak period.
• Symbolism & Features – It is a mythical creature, considered more powerful than a lion, typically depicted with two horns above the eyeballs.
• It represents strength, protection, and ferocity in temple architecture.

References

1. The Hindu | Tiruvattaru temple
2. TN Tourism | Tiruvattaru temple

Black Band Disease (BBD)

Why in news?

A recent study reveals that heat stress combined with a rare disease has wipe out 75% of Goniopora coral colonies on Great Barrier Reef.

Goniopora corals – Commonly known as flowerpot/daisy corals, are a genus of colonial stony corals found throughout the Indo-Pacific in lagoons and turbid water conditions.

• Black Band Disease – It is a severe, globally occurring coral disease characterized by a visible black, expanding band that degrades coral tissue, leading to tissue death and bare skeleton.
• Caused by – Consortium of microbes such as
  • Cyanobacteria (photosynthetic, toxin-producing).
  • Sulfate-reducing bacteria (SRB) (thrive in oxygen-free zones).
  • Sulfide-oxidizing bacteria (SOB) (use chemical energy).
• Together, they create toxic sulfides and anoxic conditions, leading to coral tissue death.
• Historical Context – 1^st reported by Antonius (1973) in Belize, Caribbean.
  • BBD is common in the Caribbean but historically rare in the southern Great Barrier Reef,
• It was distinguished from other coral diseases (white plague, white band) by its visible microbial biomass.
• Environmental triggers – The incidence of this disease is associated with sharp rises in sea surface temperature & nutrient pollution, driven by environmental stressors like ocean warming and contamination.
• Symptoms
  • Black Band Formation – A distinct, dark, tar-like band appears at the leading edge of the infection.
  • Tissue Degradation – The band moves across the coral, completely consuming the living tissue.
  • Exposed Skeleton – Behind the band, the white coral skeleton is left exposed.
• Treatment – The BBD is manually treated by removing the infected tissue and microbial mat.
• Prevention – Reducing stressors like pollution and addressing climate change to lower water temperatures are crucial for prevention.
• Impact
  • High virulence – BBD is a highly virulent disease that can rapidly kill coral colonies.
  • Widespread threat – It affects numerous coral species and reefs globally, impacting reef health.

References

1. Down to Earth | Black Band Disease (BBD)
2. Springer Link | Black Band Disease (BBD)