Updates

NABARD has published the findings from its second All India Rural Financial Inclusion Survey (NAFIS) for 2021-22, which offers primary data based on a survey of 1 lakh rural households, covering various economic and financial indicators in the post-COVID period. Recognizing the vital role of financial inclusion for economic development, NABARD conducted the inaugural survey for the agricultural year (July-June) 2016-17, with results released in August 2018. Since then, the economy has faced numerous challenges, and policies have been implemented to support agriculture and boost rural socio-economic progress. The NAFIS 2021-22 results could help to shed light on how rural economic and financial development indicators have evolved since 2016-17. The survey included all 28 states and the Union Territories of Jammu & Kashmir and Ladakh. Strengthening Rural Population: Insights from the NAFIS 2021-22 Increase in Average Monthly Income: The average monthly income of households saw a substantial rise of 57.6% over a five-year period, increasing from Rs. 8,059 in 2016-17 to Rs. 12,698 in 2021-22. This indicates a nominal compound annual growth rate (CAGR) of 9.5%.  Annual average nominal GDP growth during the same period (on financial year basis) was 9%. When considering all households together, the average monthly income stood at Rs. 12,698, with agricultural households earning slightly more at Rs.13,661, compared to Rs. 11,438 for non-agricultural households. Salaried employment in the government or private sector was the largest income source for all households, accounting for approximately 37% of their total income. For agricultural households, cultivation was the main income source, making up about one-third of their monthly earnings, followed by government or private services contributing one-fourth share, wage labor (16%), and other enterprises (15%). Among the non-agricultural ones, it was the Government/ private service which contributed 57% of the total household income, followed by wage labour which made up for roughly 26% of the total income. Rise in Average Monthly Expenditure: The average monthly expenditure of rural households rose significantly from Rs. 6,646 in 2016-17 to Rs. 11,262 in 2021-22. The agricultural households reported a relatively higher consumption expenditure of Rs. 11,710 than Rs. 10,675 for non-agricultural households. In states like Goa and Jammu & Kashmir, the monthly household expenditure exceeded Rs. 17,000. Overall, agricultural households demonstrated both higher income and expenditure levels than non-agricultural households. Increase in Financial Savings: The annual average financial savings of households increased to Rs. 13,209 in 2021-22 from Rs. 9,104 in 2016-17. Overall, 66% of households reported saving money in 2021-22, compared to 50.6% in 2016-17. Agricultural households outperformed non-agricultural ones in terms of savings, with 71% of agricultural households reporting savings during the reference period, compared to 58% of non-agricultural households. In 11 states, 70% or more households saved money, with Uttarakhand (93%), Uttar Pradesh (84%), and Jharkhand (83%) leading. In contrast, states like Goa (29%), Kerala (35%), Mizoram (35%), Gujarat (37%), Maharashtra (40%), and Tripura (46%) saw less than half of households reporting savings. Kisan Credit Card (KCC): The Kisan Credit Card (KCC) has emerged as a key tool for promoting financial inclusion in the rural agricultural sector, showing substantial growth in coverage over the past five years. In total, 44% of agricultural households were found to possess a valid Kisan Credit Card (KCC). Among those with land holdings greater than 0.4 hectares or those who had taken any agricultural loans from banks in the past year, 77% reported having a valid KCC. Insurance Coverage: The percentage of households with at least one member covered by any form of insurance increased significantly from 25.5% in 2016-17 to 80.3% in 2021-22. This means that four out of every five households had at least one insured member. Agricultural households outperformed their non-agricultural counterparts by a margin of roughly 13 percentage points. Among different types of insurance, vehicle insurance was the most prevalent, with 55% of households covered. Life insurance coverage extended to 24% of households, with agricultural households showing slightly higher penetration (26%) compared to non-agricultural ones (20%). Pension Coverage: Pensions significantly enhance recipients’ quality of life by offering financial support and reducing dependency on others, thereby boosting their self-worth and confidence. The percentage of households with at least one member receiving any form of pension (such as old age, family, retirement, or disability) increased from 18.9% in 2016-17 to 23.5% in 2021-22. Overall, 54% of households with at least one member over 60 years old reported receiving it, highlighting the importance of pensions in supporting elderly members of society. Financial Literacy: The percentage of respondents demonstrating good financial literacy increased by 17 percentage points, rising from 33.9% in 2016-17 to 51.3% in 2021-22. The proportion of individuals exhibiting sound financial behavior- such as managing money effectively, making informed financial decisions, tracking expenses, and paying bills on time—also increased from 56.4% to 72.8% during the same period. When assessed on financial knowledge, 58% of respondents from rural areas and 66% from semi-urban areas answered all questions correctly. The NAFIS 2021-22 results highlight the remarkable strides made in rural financial inclusion since the last survey in 2016-17. Rural households have experienced notable improvements in income, savings, insurance coverage, and financial literacy. The Government welfare schemes like Pradhan Mantri Kisan Samman Nidhi, Pradhan Mantri Kisan MaanDhan Yojana, Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), Pradhan Mantri Awas Yojana-Gramin (PMAY-G), Pradhan Mantri Gram Sadak Yojana (PMGSY), Deendayal Antyodaya Yojana- National Rural Livelihoods Mission (DAY NRLM), Deendayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) have significantly contributed to improving the lives of the rural population. As access to financial services continues to expand, there is a bright outlook for the economic empowerment of these households. The survey underscores the importance of ongoing support and investment in rural development, paving the way for a more prosperous and financially secure future for India’s rural population.

An evergreen loan is a loan that does not require the repayment of principal during the life of the loan, or during a specified period of time. In an evergreen loan, the borrower is required to make only interest payments during the life of the loan. Evergreen loans are usually in the form of a line of credit that is continuously paid down, leaving the borrower with available funds for credit purchases. Evergreen loans may also be known as “standing” or “revolving” loans. What does evergreening of loans mean? The evergreening of loans is a term in which banks try to revive a loan that is on the verge of default by granting further loans to the same borrower. It is a form of zombie lending in which banks provide more loans to the borrowers to stop them from turning into huge non-performing assets (NPAs). The process of evergreening of loans is typically a temporary fix for a bank covering up the real status of stressed loans. How an Evergreen Loan Works Evergreen loans can take many forms and are offered through varying types of banking products. Credit cards and checking account overdraft lines of credit are two of the most common evergreen loan products offered by credit issuers. Evergreen loans are a handy type of credit because they revolve, meaning users do not need to reapply for a new loan every time they need money. They can be used by both consumers and businesses. Non-revolving credit differs in that it issues a principal amount to a borrower when a loan is approved. It then requires that a borrower pay a scheduled amount over the duration of the loan until the loan is paid off. Once the loan is repaid, the borrower’s account is closed, and the lending relationship ends. What are the evergreening methods? Bringing two lenders together to evergreen each other’s loans by sale and buyback of loans or debt instruments. Good borrowers being persuaded to enter into structured deals with a stressed borrower to conceal the stress. Use of internal or office accounts to adjust borrower’s repayment obligations. Renewal of loans or disbursement of new/additional loans to the stressed borrower or related entities closer to the repayment date of the earlier loans. Why do banks follow evergreening of loans? If an account turns into a non-performing asset (NPA), banks are required to make higher provisions which will impact their profitability. To avoid classifying a loan as an NPA, banks adopt the evergreening of loans. Banks offer fresh loans to borrowers on the verge of default to ensure they repay an old loan. Banks delay the recognition of losses through evergreening process. Banks also avoid provisioning to cover loan losses and increase their liquidity. FAQs What is the “evergreening of loans”? Evergreening of loans refers to the practice where banks or financial institutions extend new loans to borrowers to help them repay their existing debt. This gives the appearance that the borrower is meeting their obligations, while in reality, the debt is just being rolled over without any real repayment. Is evergreening of loans legal? Evergreening of loans is not illegal per se, but it is considered a risky and unhealthy banking practice. Regulatory authorities such as the Reserve Bank of India (RBI) discourage evergreening as it distorts the financial health of banks and can lead to larger financial instability over time.

Report analyzes PPP regulatory landscapes across 140 economies and suggests a significant correlation between regulatory reforms relatingto PPPs and PPP infrastructure investments.PPP is an approach under which public services are delivered by private sector (both non‐profit and for‐profit organizations) whileresponsibility for providing resources rests with the government Key Highlights of the report Public Fiscal Management System (PFMS): Only 19 economies have adopted specific provisions for budgeting, reporting, and accounting, and only 18 economies publicly disclose PPP liabilities. Robust PFMS helps mitigate potential financial sustainability challenges that a distressed or cancelled PPP could create. Monitoring and Evaluation: Only 37% of the economies require payments linked to performance. Renegotiation of PPP contracts: Expressly regulated by ~90% surveyed economies with the issue of changes in risk allocation explicitly addressed inonly 19% of the economies. Existing PPP Regulatory Framework in India Private Investment Unit under Department of Economic Affairs (Union Ministry of Finance): Responsible for policy-level matters concerning PPPs. PPP Vertical under NITI Aayog: Makes policy-level recommendations towards the standardisation of PPP documents. It is also steering recycling and monetisation of core infrastructure assets to unleash ‘creative destruction’. Kelkar Committee (2015) Recommendations on PPPEstablish Independent Sectoral Regulators: To ensure harmonized performance in sectors going in for PPP.Discourage unsolicited proposals (Swiss Challenge): To address information asymmetry and lack of transparency. Establish National Facilitation Committee to ensure time-bound resolution of issues including getting timely clearances. What Are Public-Private Partnerships? Public-private partnerships involve collaboration between a government agency and a private-sector company that can be used to finance, build, and operate projects, such as public transportation networks, parks, and convention centers. Financing a project through a public-private partnership can allow a project to be completed sooner or make it a possibility in the first place. Public-private partnerships often involve concessions of tax or other operating revenue, protection from liability, or partial ownership rights over nominally public services and property to private sector, for-profit entities. Challenges to PPP in India Financial: Aggressive bidding and project underpricing, inadequate ‘creative destruction’, project delays resulting in cost overruns, etc.Capacity and procedural challenges: Inadequate management capacity of public sector, delays in obtaining requisite clearances such as EnvironmentalImpact Assessments, etc.Regulatory and Institutional gaps: Absence of comprehensive National PPP policy, inadequate information availability and reliability about private sectorservice providers, etc

The Union Cabinet recently approved the PM E-Drive (Electric Drive Revolution in Innovative Vehicle Enhancement) scheme, replacing the previous FAME II subsidy. With the FAME II subsidy ending on March 31, 2024, and the temporary EMPS scheme having been in place until September 2024 with an outlay of ₹778 crore, the new PM E-Drive scheme aims to accelerate EV adoption in India. Objective: To accelerate Electric Vehicles (EV) adoption and establish essential charging infrastructure across the country, promoting cleaner and more sustainable transportation.Major Component: Subsidies/Demand Incentives for e-2Ws, e-3Ws, e-ambulances, e-trucks and other emerging EVs. E-Voucher for EV buyers to avail demand incentives. Promote Deployment of E-Ambulances, E-Buses and E-Trucks. EV Public Charging Stations in selected cities with high EV penetration. Test Agency Modernization.Financial Outlay: ₹10,900 crore over a period of two years PM E-Drive Scheme Outline The PM E-Drive scheme is set for a 2-year period with a substantial allocation of ₹10,900 crore. It offers subsidies for electric two-wheelers, three-wheelers, trucks, buses, and ambulances. However, unlike the FAME schemes, the new scheme does not provide subsidies for electric and hydrogen cars or SUVs. A significant portion of the scheme’s funding—₹4,391 crore—is dedicated to procuring 14,028 electric buses for state and public transport units. Additionally, ₹2,000 crore is allocated for installing 22,100 fast chargers for four-wheelers, 1,800 fast chargers for electric buses, and 48,000 chargers for electric two and three-wheelers. E-Voucher System Under PM E-Drive A key feature of the scheme is the introduction of an e-voucher system designed to streamline the subsidy and incentive process. Buyers will receive an Aadhaar-authenticated e-voucher sent to their registered mobile number after purchasing an EV. This voucher enables them to claim the scheme’s incentives. The digital voucher system aims to make the subsidy process more transparent and accessible across India. EV Adoption in India Despite growing interest in electric vehicles (EVs), many in India still experience range anxiety, causing hesitation among potential buyers. The PM E-Drive scheme addresses this by reducing the cost of ownership and developing charging infrastructure for various vehicle categories nationwide.

It makes an assessment of 50 economies (excluding India) and aims to cover 180 economies by 2026. It is a successor to Ease of Doing Business (EoDB) rankings of WB. EoDB (flagship report of WB) ranked countries based on ease of opening and operating a company.It was discontinued in 2021 owing to ethical irregularities. About Business- Ready Index The B-READY index is a successor to the Ease of Doing Business rankings, which were discontinued in 2021 due to irregularities. It is a ground-breaking initiative that aims to focus on quantitatively assessing the business environment across world economies. It envisages taking into consideration more diverse factors while arriving at the rating. Global financial institutions and multi-national companies will use the B-Ready framework as a benchmark to understand the regulatory and policy environment of a country. It will be published annually, taking into consideration three main pillars: regulatory framework, public services, and efficiency. The index incorporates digitalization, environmental sustainability, and gender equality into each indicator, ensuring a holistic and forward-thinking approach to business evaluation.  It tracks ten parameters covering a firm’s lifecycle from starting, operating, closing, and reorganising.  The index will expand in three stages, covering 54 economies initially and reaching up to 180 countries by 2026. Features of B-Ready vis-a-vis EoDB Comprehensive: Evaluates business environment from perspective of an individual firm and from point of private sectordevelopment as a whole. EoDB evaluates same for individual small/medium firms. Qualitative: Examines regulatory burden on firms and quality of regulation. EoBD examined only burden of regulation on firms. Balanced: Collects both de jure (statutory laws) and de facto (practical) information on firms. In EoDB, certain indicators covered only de-facto regulations while certain covered only de jure.Diverse: Covers all major topics unlike EoDB that excluded some important topics like employing labor What is the World Bank Group? It is an international financial institution that provides loans and grants to the governments of low and middle-income/developing countries for the purpose of pursuing capital projects. It was established along with the IMF at the 1944 Bretton Woods Conference. The WB is the collective name for the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA), two of five international organizations owned by the WB Group.

BharatGen, a pioneering initiative in generative AI, was launched in India on September 30, 2024, in Delhi. The initiative is designed to revolutionize public service delivery and boost citizen engagement by developing a suite of foundational models in language, speech, and computer vision.  The event convened in the virtual presence of Dr Jitendra Singh, Union Minister of State (Independent Charge) for Science and Technology, Minister of State (Independent Charge) for Earth Sciences, MoS PMO, Department of Atomic Energy and Department of Space and MoS Personnel, Public Grievances and Pensions. “BharatGen is a proud example of India’s commitment to advancing homegrown technologies. It positions India as a global leader in the field of Generative AI, much like our achievements with UPI and other innovations that have transformed various sectors,” said Dr Jitendra Singh during the inauguration. He added that this initiative marks the world’s first government-funded Multimodal Large Language Model project focused on creating efficient and inclusive AI in Indian languages. About BharatGen Aim: To revolutionize public service delivery and enhance citizen engagement by developing foundational models in language, speech, and computer vision.  Implementation: By IIT Bombay under the National Mission on Interdisciplinary Cyber-Physical Systems (NM-ICPS) Key Features of BharatGen: Multilingual and multimodal foundation models. Building and training based on India-centric datasets. Open-source platform for fostering AI research and innovation. The project is expected to be completed by 2026, with ongoing research, development, and scaling of AI applications. Significance BharatGen will address both text and speech, ensuring representation across India’s diverse linguistic landscape. By using multilingual datasets, it will capture the nuances of Indian languages, which are often underrepresented in global AI models. This emphasis on data sovereignty gives India greater control over its digital resources and narrative. BharatGen will democratize AI access across government, education, and private sectors, ensuring AI benefits all segments of society, particularly underserved Indian languages.  BharatGen aligns with the vision of Atmanirbhar Bharat by developing AI models specifically for India. By building these technologies domestically What are Large Language Models? Large language models, also known as LLMs, are very large deep learning models that are pre-trained on vast amounts of data.  Large Language Models (LLMs) use machine learning techniques to recognize, interpret, and generate human languages or other complex data.  Their capabilities also extend to handling structured and unstructured data, including speech, images, and other multimodal inputs, which enhances their utility in fields like customer service, healthcare, and education.  About MLLM and Generative AI MLLM are Large Language Models (LLM) trained on large datasets including both text and non-textual data (image,audio, video, etc.) LLM uses machine learning and is capable of recognizing and interpreting human languages or othercomplex data. Generative AI is the most well-known application of LLM. Generative AI (GenAI) It is an Artificial Intelligence (AI) technology that automatically generates content in response to prompts written in natural language conversational interfaces.– Rather than simply curating existing web pages, by drawing on existing content, GenAI actually produces new content.– The content can appear in formats that comprise all symbolic representations of human thinking: texts written in natural language, images (including photographs to digital paintings and cartoons), videos, music and software code.– GenAI is trained using data collected from web pages, social media conversations and other online media. It generates its content by statistically analysing the distributions of words, pixels or other elements in the data that it has ingested and identifying and repeating common patterns.– In November 2022, OpenAI released ChatGPT (Chat Generative Pre-trained Transformer) to the public. 

Policy Brief identifies regulatory and other issues and makes policy recommendations to help develop a sustainable food system and take the country from food security to nutrition security, and help enhance quality production, exports and earnings of farmers. What is Sustainable Food System (SFS)? It is a system that delivers food security, safety, and nutrition for all which is economically, socially and environmentally sustainable. (refer infographic).  Issues in India’s SFS Gaps in coordination across multiple government agencies:  e.g., divided responsibilities among APEDA, Spices Board and the Export Inspection Council in case of spices. Lack of data and information on policies/schemes: e.g., Lack of impact assessment. Difficulties in supply chain traceability and gaps in use of technology: e.g., fragmented supply chain, lack of robust public-private partnerships on farm for technology transfer, etc. Trade-related issues: e.g., sporadic bans or export duties, rejection of exports due to non-adherence of SPS standards, etc. Comprehensive vision document with specific goals of reducing foodwaste, use of harmful pesticides etc.Streamline coordination across multiple regulators. e.g., single nodalagency for exports.Implement farm-to-fork product traceability. e.g., ‘GrapeNet’ monitoringfresh grapes exported from India to EUReduce trade barriers by strengthening quality testing and certification.Implementation of good agricultural practices. e.g., International Yearof Millets 2023. FAQs What is the purpose of the ICRIER policy brief on Sustainable Food Systems and India’s Trade Agreement? he policy brief aims to examine the role of trade agreements in promoting sustainable food systems in India. It highlights how India’s trade policies can be aligned with sustainability goals, improving food security, economic growth, and environmental protection. What are sustainable food systems? Sustainable food systems are processes that ensure food security and nutrition in a way that is economically viable, socially equitable, and environmentally sound. These systems focus on minimizing food waste, conserving resources

Name of the scheme Make in India Date of launching 25th September 2014 Launched by PM Narendra Modi Government Ministry Ministry of Commerce and Industry Make in India website http://www.makeinindia.com/home/ 10 years of ‘Make in India’ Launched in 2014 to transform India into a global manufacturing hub.About Make in IndiaObjective: To facilitate investment, foster innovation, enhance skill development, protect intellectual property & build best in classmanufacturing infrastructure.It is based on four pillarsNew Processes: Recognizes ease of doing business as the most important factor to promote entrepreneurship.New Infrastructure: Provide infrastructure based on state-of-the-art technology.New Sectors: Identified 27 sectors (under Make in India 2.0) in manufacturing, infrastructure and service activities.New Mindset: Government shall act as a facilitator and not a regulatorNodal Agencies:Department for Promotion of Industry and Internal Trade- ManufacturingsectorDepartment of Commerce- Service sectorImpact of InitiativeForeign Direct Investment (FDI): Attracted FDI inflow of $667.4 billion (2014-24),an increase of 119% over the preceding decade (2004-14).Employment: Employment in the manufacturing sector increased from 57 millionin 2017-18 to 64.4 million in 2022-23.Exports: India’s merchandise exports surpassed $437 billion in FY 2023-24.Ease of Doing Business: Sharp rise from 142nd rank in 2014 to 63rd rank in 2019in the World Bank’s Doing Business Report.Sector-wise Success:Transportation: E.g. Vande Bharat Express TrainDefence Manufacturing: E.g. INS Vikrant, the country’s first domestically made aircraft carrierElectronics: Samsung started the World’s Largest Mobile Factory in NoidaMake in India initiative celebrates 10 Years of its launch‘Sustainable Food Systems and India’s Trade Agreement’ Make In India – Focus on 25 Sectors The Make in India website also has listed the 25 focus sectors and also furnished all relevant details about these sectors, and related government schemes, including the FDI policies, IPR, etc. The main sectors (27 sectors) covered under this campaign are given below: Manufacturing Sectors: Aerospace and Defence Automotive and Auto Components Pharmaceuticals and Medical Devices Bio-Technology Capital Goods Textile and Apparels Chemicals and Petro chemicals Electronics System Design and Manufacturing (ESDM) Leather & Footwear Food Processing Gems and Jewellery Shipping Railways Construction New and Renewable Energy Services Sectors: Information Technology & Information Technology enabled Services (IT &ITeS) Tourism and Hospitality Services Medical Value Travel Transport and Logistics Services Accounting and Finance Services Audio Visual Services Legal Services Communication Services Construction and Related Engineering Services Environmental Services Financial Services Education Services Why Make in India? For the past two decades, India’s growth story seems to have been led by the services sector. This approach paid off in the short-run, and India’s IT and BPO sector saw a huge leap, and India was often dubbed the ‘back office of the world’. However, even though the share of the services sector in the Indian economy rose to 57% in 2013, it contributed to only 28% in the share of employment. So, the manufacturing sector needed to be augmented to boost employment. This is because the services sector currently has low absorption potential considering the demographic dividend in the country. Another reason to launch the campaign is the poor condition of manufacturing in India. The share of manufacturing in the overall Indian economy is only about 15%. This is way lower than our neighbours in East Asia. There is an overall trade deficit when it comes to goods. The trade surplus in services hardly covers one-fifth of India’s trade deficit in goods. The services sector alone cannot hope to answer this trade deficit. Manufacturing will have to chip in. The government is hoping to encourage businesses, both Indian and foreign to invest in manufacturing in India, which will help this sector and also generate employment in both skilled and unskilled levels. To focus on manufacturing is that no other sector seems to have such a huge multiplier effect on economic growth in a country, according to various studies. The manufacturing sector has larger backward linkages and hence, growth in demand in manufacturing spurs growth in other sectors as well. This generates more jobs, investments, and innovation, and generally leads to a higher standard of living in an economy. Make in India – Initiatives For the first time, the sectors of railways, insurance, defense, and medical devices have been opened up for more Foreign Direct Investment (FDI). The maximum limit in FDI in the defense sector under the automatic route has been raised from 49% to 74%. This increase in FDI was announced by Finance Minister Nirmala Sitaraman on May 16, 2020. In construction and specified rail infrastructure projects, 100% FDI under the automatic route has been permitted. There is an Investor Facilitation Cell that assists investors from the time of their arrival in India to their departure from the country. This was created in 2014 to give services to investors in all phases such as the pre-investment phase, execution, and also after delivery services. The government has taken steps to improve India’s ‘Ease of Doing Business’ rank. India climbed 23 points in the Ease of Doing Business index to 77th place in 2019, becoming the highest-ranked in South Asia in this index. The Shram Suvidha Portal, eBiz portal, etc. have been launched. The eBiz portal offers single-window access to eleven government services connected with starting a business in India. Other permits and licenses required to start a business have also been relaxed. Reforms are being undertaken in areas like property registration, payment of taxes, getting power connection, enforcing contracts, and resolving insolvency. Other reforms include licensing process, time-bound clearances for applications of foreign investors, automation of processes for registration with the Employees State Insurance Corporation and the Employees Provident Fund Organization, adoption of best practices by states in granting clearances, decreasing the number of documents for exports, and ensuring compliance through peer evaluation, self-certification, etc. The government hopes to improve physical infrastructure chiefly through the PPP mode of investment. Ports and airports have seen increased investment. Dedicated freight corridors are also being developed. Make in India – Schemes Skill India This mission aims to skill 10 million in India annually in various sectors. For ‘Make in India’ to turn into a reality, there is a need