Archives
(PRELIMS Focus)
Cancer treatment drugs
Category: SCIENCE AND TECHNOLOGY
Context: A recent investigation by the Bureau of Investigative Journalism, published in The Hindu, has revealed that many cancer drugs shipped globally have failed quality tests.
Common Chemotherapy Drugs Covered:
Cisplatin
Type: Platinum-based
Use: Treats testicular, ovarian, bladder, and lung cancers
Mechanism: Binds to cancer DNA, blocking division
Side Effects: Kidney damage, sickness, immune suppression, hearing issues
Oxaliplatin
Type: Platinum-based
Use: Advanced colorectal cancer
Mechanism: Similar to cisplatin
Side Effects: Similar to cisplatin
Cyclophosphamide
Use: Breast cancer, leukemia, sarcoma, lymphoma
Mechanism: Damages cancer DNA, lowers white blood cells
Side Effects: Inflammation in bladder, immune suppression
Doxorubicin
Nickname: “Red devil” (due to color and toxicity)
Use: Breast cancer, leukemia, lymphoma, sarcoma
Mechanism: Interferes with DNA replication
Side Effects: Heart damage, infections, skin issues, hair loss
Methotrexate
Use: Leukemia, lymphoma, tumor types
Mechanism: Blocks DNA synthesis
Side Effects: Toxic at high doses; managed by leucovorin
Leucovorin
Type: Not a direct chemotherapy drug
Use: Taken with methotrexate to reduce its toxicity
Function: A form of vitamin B9 used to protect healthy cells
Learning Corner:
Cancer Care and Treatment in India
Cancer is a major public health challenge in India, with over 1.5 million new cases diagnosed annually. The country is working to strengthen its cancer care system through a mix of public health programs, infrastructure development, and financial assistance schemes.
Key Components of Cancer Treatment in India
Types of Treatment Available
Surgery: Removal of tumors or cancerous tissues
Radiation therapy: Use of high-energy rays to kill cancer cells
Chemotherapy: Use of anti-cancer drugs
Immunotherapy & Targeted Therapy: Advanced treatments to boost the body’s immune response or attack specific cancer cells
Bone marrow transplant: For blood cancers like leukemia
Palliative care: To improve quality of life in advanced stages
Government Initiatives and Support
National Programme for Prevention and Control of Cancer, Diabetes, Cardiovascular Diseases and Stroke (NPCDCS)
Focuses on early detection, screening, and referral for cancer
Implemented under Ayushman Bharat Health & Wellness Centres
Tertiary Cancer Care Centres (TCCC)
Upgrading existing medical colleges and hospitals to provide advanced cancer care
Financial Assistance Schemes
Ayushman Bharat–PMJAY: Free treatment for poor and vulnerable families
Health Minister’s Cancer Patient Fund
Support from state-level insurance schemes (e.g., Arogyasri in Telangana/AP)
Recent Developments
Launch of Digital Cancer Registry and AI-based diagnostics
Expansion of National Cancer Grid (NCG) to link over 300 cancer centers
Promotion of indigenous cancer drugs and equipment to lower treatment costs
Source: THE HINDU
Golden Jubilee of the Department of Official Language
Category: POLITY
Context: Union Home Minister Amit Shah, speaking at the Golden Jubilee of the Department of Official Language in New Delhi.
Key highlights:
The importance of promoting India’s official and regional languages.
The department’s role in implementing the Official Languages Act and preserving linguistic diversity.
Recognition of the department’s contributions over the past 50 years.
A call for continued efforts to strengthen the use of Hindi and regional languages in governance and public communication.
The address reinforced the government’s commitment to linguistic inclusivity and national unity through effective language use.
Learning Corner:
Provisions on Language in the Indian Constitution
The Indian Constitution includes detailed provisions to manage the country’s rich linguistic diversity. These are mainly covered under Articles 343 to 351 in Part XVII.
Official Language of the Union (Articles 343–344):
Article 343:
Hindi in Devanagari script is the official language of the Union.
English was to be used for official purposes along with Hindi for 15 years (till 1965), and continues today due to the Official Languages Act, 1963.
Article 344:
A Commission and Committee of Parliament to be constituted to recommend measures to promote Hindi and restrict the use of English.
Regional Languages (Articles 345–347):
Article 345:
State legislatures can adopt any one or more languages in use in the state as official language(s).
Article 346:
For communication between the state and the Union, Hindi or English will be used unless the President permits otherwise.
Article 347:
President can recognize a language spoken by a section of the population of a state if there is a demand.
Language of the Judiciary and Laws (Articles 348–349):
Article 348:
English to be used in Supreme Court and High Courts and for laws unless Parliament provides otherwise.
Article 349:
Parliament must consider recommendations of the President and Language Commission before changing the official language of legislation.
Special Directives (Articles 350–351):
Article 350:
Citizens can submit grievances in any language used in the Union or State.
Article 350A:
States must provide facilities for instruction in the mother tongue at the primary level for children of linguistic minorities.
Article 350B:
Provides for a Special Officer for Linguistic Minorities to report to the President.
Article 351:
The Union must promote the spread and development of Hindi, drawing from Sanskrit and other Indian languages, without harming other languages.
Official Languages Act, 1963
The Official Languages Act, 1963 was enacted to regulate the use of Hindi and English for official purposes of the Union of India, especially after the expiry of the 15-year constitutional limit (1950–1965) for English use under Article 343.
Key Provisions:
Continuation of English:
Even after 1965, English can continue to be used for official purposes of the Union alongside Hindi.
This was done to avoid backlash from non-Hindi-speaking states (especially southern states like Tamil Nadu).
Communication Between Union and States:
Hindi or English to be used for communication between the Union and Hindi-speaking states.
English to be used for communication with non-Hindi-speaking states.
Optional Use of Regional Languages:
States can use their own official languages for state-level administration.
English translations must be provided when communicating with the Union or other states.
Bilingual Communication:
Central government documents, notifications, and bills should be issued in both Hindi and English.
Amendment in 1967:
The Official Language (Amendment) Act, 1967 ensured indefinite continuation of English along with Hindi for all official purposes.
Source: PIB
MSME Day 2025
Category: ECONOMICS
Context : President Droupadi Murmu will preside over the MSME Day 2025 – Udyami Bharat celebrations on June 27, 2025, at Vigyan Bhawan, New Delhi.
Key Highlights
The event will acknowledge the crucial role of the Micro, Small and Medium Enterprises (MSME) sector in India’s economy.
Objective:
The event underscores the government’s commitment to building a digitally empowered, resilient, and competitive MSME ecosystem to drive India’s inclusive economic development.
Significance:
MSMEs contribute nearly 30% of GDP and 48% of exports.
The day highlights the sector’s role in job creation, economic growth, and entrepreneurship.
Key Initiatives to Be Launched:
Online Dispute Resolution (ODR) Portal
A digital platform to help micro and small businesses resolve payment disputes quickly and cost-effectively.
Commemorative Stamp – CGTMSE@25
Celebrating 25 years of the Credit Guarantee Fund Trust, which has enabled over ₹9.80 lakh crore in credit guarantees.
MSME Hackathon 5.0
Launch of the new edition to foster innovation and entrepreneurship. Results of Hackathon 4.0 will also be announced.
Publications Release
‘MSME Patrika’ and ‘Know Your Lender’ to enhance credit literacy among MSME entrepreneurs.
Learning Corner:
Overview of the MSME Sector in India (2025)
The Micro, Small and Medium Enterprises (MSME) sector continues to be the backbone of India’s economy, contributing significantly to employment, GDP, and exports.
Key Statistics (2025)
Indicator
Data (2025)
Total MSMEs
~63 million units
Employment
~110 million (11 crore)
Contribution to GDP
~30–31% of Gross Value Added (GVA)
Contribution to Exports
~45.8% of merchandise exports
Total Export Value (FY25)
₹12.39 lakh crore
Credit Guarantees (CGTMSE FY25)
₹3 lakh crore
Revised Classification of MSMEs (April 1, 2025)
Category
Investment Limit
Turnover Limit
Micro
Up to ₹2.5 crore
Up to ₹10 crore
Small
Up to ₹25 crore
Up to ₹100 crore
Medium
Up to ₹125 crore
Up to ₹500 crore
Recent Initiatives and Reforms
Udyam Registration
~59 million registered units
Supported over 251 million jobs
CGTMSE Modernization
AI-enabled processing to reduce approval time by 30%
Enabled over 1 crore loan guarantees
Budget 2025–26 Support
MSME Credit Cards for easy working capital
Fund-of-funds and equity infusion for startups and growing MSMEs
Digital Platforms
Launch of Online Dispute Resolution (ODR) Portal
Tools to address delayed payments and credit literacy
NITI Aayog Policy Focus
Emphasis on medium enterprises
Medium enterprises (0.3% of MSMEs) contribute ~40% of MSME exports
Major Challenges
Limited access to formal credit
Technology adoption gaps
Inadequate market access
Burden of regulatory compliance
Skill shortages in emerging sectors
Sectoral Significance
Key driver of Aatmanirbhar Bharat
Vital for inclusive growth, especially in rural and semi-urban India
Catalyzing India’s digital and export-oriented economy
Source : PIB
Fiscal Health Index
Category: ECONOMICS
Context: Union Minister Rao Inderjit Singh has emphasized the importance of the Fiscal Health Index (FHI) developed by NITI Aayog as a tool to promote fiscal discipline among Indian states
Brief Note on Fiscal Health Index (FHI)
The FHI ranks states based on indicators such as:
Debt sustainability
Revenue mobilization
Fiscal prudence
By making fiscal performance publicly visible and comparable, the index encourages competitive federalism, motivating states to improve their financial management practices.
As the central government aims to reduce its debt-to-GDP ratio from 2026–27 onward, ensuring that states do not experience fiscal slippage becomes crucial to maintaining India’s overall sovereign risk profile.
The FHI helps align state-level fiscal strategies with national goals, fosters transparency, and supports policy reforms, ultimately promoting a more fiscally stable India.
Learning Corner:
Different Types of Deficits in Government Finance
In public finance, deficits represent shortfalls between government income and expenditure. Understanding various types of deficits is crucial for assessing a country’s fiscal health.
Revenue Deficit
Definition: When revenue expenditure exceeds revenue receipts.
Formula:
Revenue Deficit = Revenue Expenditure – Revenue Receipts
Implication: Indicates that the government is borrowing even to meet its day-to-day expenses, like salaries and subsidies (non-productive borrowing).
Fiscal Deficit
Definition: The total borrowing requirement of the government.
Formula:
Fiscal Deficit = Total Expenditure – (Revenue Receipts + Non-debt Capital Receipts)
Implication: Reflects overall financial health. A high fiscal deficit may lead to inflation or unsustainable debt.
Primary Deficit
Definition: Fiscal deficit minus interest payments.
Formula:
Primary Deficit = Fiscal Deficit – Interest Payments
Implication: Indicates how much of the borrowing is used for expenses other than interest payments.
Effective Revenue Deficit
Definition: Revenue deficit excluding grants given to states for creating capital assets.
Formula:
Effective Revenue Deficit = Revenue Deficit – Grants for Capital Creation
Implication: Gives a clearer picture of actual revenue shortfall, excluding productive transfers.
Budget Deficit (Not used in modern Indian budgeting)
Definition: When total expenditure exceeds total receipts (including borrowings).
Formula:
Budget Deficit = Total Expenditure – Total Receipts
Status: Concept replaced by fiscal deficit in India’s budget documents.
Source: THE INDIAN EXPRESS
International Conference on Financing for Development
Category: INTERNATIONAL
Context: The 4th International Conference on Financing for Development (FfD4) will be held from June 30 to July 3, 2025, in Seville, Spain. Organized by the United Nations
It brings together global leaders, financial institutions, businesses, and civil society to discuss urgent reforms to strengthen the financing of the Sustainable Development Goals (SDGs).
Purpose & Context
Builds on the Addis Ababa Action Agenda (2015) and the 2024 Pact for the Future.
Seeks to unlock larger volumes of affordable development finance by reforming international financial systems.
The conference will conclude with an agreed outcome document titled ‘Compromiso de Sevilla’.
Key Focus Areas
International Financial Architecture Reform
Reform of global financial governance (e.g., IMF quota realignment, World Bank voting reforms).
Debt Sustainability
Development of voluntary principles for responsible sovereign debt management.
Tax Reform
Implementation of global minimum corporate tax and anti-base erosion measures.
Closing the SDG Financing Gap
Addressing the $4 trillion annual shortfall in financing for developing countries.
Blended & Innovative Finance
Boosting private sector participation, nature-based solutions, and MSME support.
Public Development Banks
Strengthening banks managing over $23 trillion in assets to mobilize cross-border development finance.
Local & Urban Finance
Enhancing financial access for subnational and urban development projects.
Participation & Side Events
Attended by heads of state, finance ministers, and global development leaders.
Over 40 side events will cover tax cooperation, resource mobilization, private finance, and effective development.
Key global institutions such as OECD, UNDP, and Climate Policy Initiative are active participants.
Notable Developments
UN Member States have agreed on the outcome document ahead of the summit.
The United States is not participating in the FfD4 process.
Learning Corner:
International Conference on Financing for Development (FfD)
The International Conference on Financing for Development (FfD) is a high-level global platform convened by the United Nations to address the challenges of mobilizing financial resources for sustainable development, particularly the implementation of the Sustainable Development Goals (SDGs).
Background:
The FfD process began with the first conference in Monterrey, Mexico (2002), which led to the Monterrey Consensus.
It was followed by:
Doha Conference (2008) – Doha Declaration
Addis Ababa Conference (2015) – Addis Ababa Action Agenda
4th Conference (FfD4, 2025) – To be held in Seville, Spain
Objectives:
Strengthen global financial architecture
Mobilize domestic and international resources
Promote policy coherence and partnerships
Address debt sustainability and development financing gaps
Ensure equitable financing for developing countries
Key Features:
Involves UN Member States, international financial institutions (IFIs), private sector, and civil society
Results in negotiated outcome documents guiding global financial governance
Aligns financing strategies with Agenda 2030 and the SDGs
Source: UNITED NATIONS
(MAINS Focus)
MSME empowering India’s Growth (GS Paper III – Economy)
Introduction (Context)
MSME day is celebrated on 27th June every year. The day is dedicated for recognizing the vital contributions of micro-, small- and medium-sized enterprises (MSMEs) toward sustainable development, economic growth, employment creation, and innovation globally. MSME Day’ theme for 2025 focuses on “Enhancing the role of MSMEs as drivers of Sustainable Growth and Innovation.”
Classification of MSME
In the Union Budget 2025, the Government of India announced a significant revision to the MSME classification criteria. Specifically, investment limits have been increased by 2.5 times, and turnover limits have been doubled. This expansion aims to empower MSMEs to scale up without losing out on crucial benefits and incentives, thus driving broader economic growth and employment
Benefits of Being Classified as MSME
By securing MSME status, businesses can tap into these extensive benefits, paving the way for sustained growth, innovation, and market expansion.
Collateral-Free Loans: Many financial institutions, under government-backed schemes, extend collateral-free loans to MSMEs, making it easier for businesses to secure funding and maintain cash flow.
Lower Interest Rates & Priority Lending: MSMEs often enjoy lower interest rates on loans and are prioritised under various lending schemes, boosting their access to credit and helping them expand operations.
Government Subsidies & Incentives: MSMEs can leverage a range of subsidies—such as credit-linked capital subsidy for technology upgrades—and enjoy schemes offering partial funding support for international trade fairs, marketing, or patent registration.
Preference in Procurement: Public sector units (PSUs) and government departments have specific procurement policies that offer preferential treatment to MSMEs, enhancing their chances of securing government contracts.
Protection Against Delayed Payments: The MSME Development Act, 2006, mandates that buyers (particularly larger companies) must settle invoices for supplies from MSMEs within a stipulated timeframe or face penal interest, helping MSMEs maintain healthy cash flow.
Tax & Compliance Benefits: MSMEs may benefit from various tax relief measures and simplified compliance protocols, reducing their operational burdens and freeing up resources to focus on growth.
Credit Rating & Easier Access to Capital Markets: MSME classification often improves the business’s credit rating as banks recognise the lower risk associated with government-backed guarantees, paving the way for further fundraising opportunities.
Skill Development & Training Programs: Government initiatives frequently offer subsidised training programs to MSMEs, enhancing their workforce skills, productivity, and overall competitiveness.
Significance of MSMEs
1. Economic Contribution
MSMEs contribute 30% to India’s Gross Domestic Product (GDP), playing a key role in driving national economic growth.
In the financial year 2023–24, MSME-related products constituted 45.73% of India’s total exports, reaffirming their importance in promoting India as a global manufacturing and export hub.
2. Employment Generation
With 5.93 crore registered MSMEs employing over 25 crore individuals, the sector is the second-largest employer in the country after agriculture.
MSMEs also absorb migrant labour from rural areas and play a major role in providing urban livelihoods, thereby supporting economic transitions and reducing rural distress.
3. Inclusivity and Social Equity
The MSME sector employs the maximum number of women workers among all industrial sectors, thus promoting gender inclusion.
By supporting smaller entrepreneurs and decentralized manufacturing, MSMEs contribute to inclusive growth, benefiting marginalized communities and backward regions.
4. Sectoral Importance
MSMEs have evolved into key suppliers of mass consumption goods, catering to a wide domestic market.
They are also vital in producing electronic goods, electrical equipment, drugs, and pharmaceuticals, strengthening India’s manufacturing ecosystem and supporting critical sectors.
Key Government Schemes Supporting MSMEs
PMEGP: Offers subsidy-based loans for micro-enterprises to promote self-employment, especially in rural areas.
CGTMSE: Provides collateral-free loans up to ₹2 crore to boost formal credit access for small businesses.
MSE-CDP: Facilitates shared infrastructure, tech upgrades, and common facility centers to enhance MSME productivity.
SFURTI: Revives traditional industries (khadi, coir, handicrafts) through cluster development, skill training, and marketing support.
RAMP: World Bank-backed initiative to improve MSME competitiveness through better access to credit, markets, and innovation.
PMS Scheme: Aims to widen MSME market reach via trade fairs, exhibitions, and digital platforms.
ESDP: Focuses on entrepreneurial and skill development, particularly for youth and women.
Coir Industry Development Scheme: Modernizes the coir sector, supports export potential, and improves product design.
ZED Certification: Promotes quality manufacturing with minimal environmental impact. Financial support is provided for certification and green technology adoption.
National SC-ST Hub: Supports inclusive growth by offering SC/ST entrepreneurs access to training, mentorship, and procurement opportunities.
Technology Upgradation Scheme: Provides financial support for ISO certification, R&D, AI integration, and modern manufacturing techniques.
Green Manufacturing Support under ZED: Incentivizes environmentally sustainable practices and helps MSMEs meet global green standards.
Key Highlights for MSMEs in Union Budget 2025–26
The Union Budget 2025–26 reinforces the government’s commitment to strengthening the MSME sector by addressing structural bottlenecks and supporting enterprise growth through financial, infrastructural, and entrepreneurial reforms.
1. Improved Access to Credit
Credit guarantee cover increased from ₹5 crore to ₹10 crore for small enterprises, unlocking ₹1.5 lakh crore in credit over 5 years.
Startups can now avail up to ₹20 crore in guaranteed loans with a reduced 1% fee for priority sectors.
Export-oriented MSMEs can access term loans up to ₹20 crore with better guarantee terms.
2. Credit Cards for Micro Enterprises
A new MSME Credit Card offers ₹5 lakh in working capital for Udyam-registered businesses; 10 lakh cards to be rolled out in the first year.
3. Support for Entrepreneurs
A ₹10,000 crore Fund of Funds is being established to bolster startups.
Term loans up to ₹2 crore will be offered to 5 lakh first-time SC/ST and women entrepreneurs over five years, learning from the Stand-Up India model.
4. Boost to Labour-Intensive Sectors
A Focus Product Scheme for the footwear and leather industry aims to create 22 lakh jobs and generate ₹4 lakh crore in turnover.
New initiatives for the toy sector will focus on cluster development and skill enhancement to position India as a global toy manufacturing base.
A National Institute for Food Technology and Entrepreneurship will be set up in Bihar to support eastern India’s agro-processing industry.
5. Support for Manufacturing & Clean Tech
The upcoming National Manufacturing Mission will assist industries under Make in India, focusing on MSMEs.
Special attention will be given to clean technologies including domestic production of solar cells, EV batteries, wind turbines, and transmission equipment.
Challenges and Suggestions
Despite policy support and reforms, MSMEs often face financial, technological, and infrastructural limitations that demand urgent and targeted solutions. Some are discussed below:
1. Inadequate Access to Finance
Accessing affordable and timely credit remains a major roadblock for MSMEs. Traditional lending institutions demand high collateral, involve complex documentation, and impose rigid repayment conditions. As a result, many enterprises are forced to depend on informal lending sources.
Strategic Solutions:
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) enables collateral-free loans.
The Emergency Credit Line Guarantee Scheme (ECLGS) provided urgent liquidity during the pandemic.
Promotion of digital lending platforms and fintech can democratize credit access.
Simplified loan disbursement mechanisms and reduced paperwork can encourage more MSMEs to enter the formal financial ecosystem.
2. Delayed Payments and Liquidity Crunch
Delayed payments from both government departments and large corporations often strain the working capital cycle of MSMEs, hampering daily operations and limiting expansion plans.
Strategic Solutions:
The MSME Samadhaan portal facilitates filing of payment delay complaints.
Platforms like TReDS (Trade Receivables Discounting System) enable faster realization of payments through invoice discounting.
Legal reforms mandating timely payments and stricter enforcement of contract terms can enhance cash flow stability.
3. Low Technological Integration
A large portion of MSMEs continues to operate using outdated machinery and production techniques. This results in lower productivity, inconsistent quality, and limited competitiveness in both domestic and international markets.
Strategic Solutions:
The ZED Certification Scheme promotes quality assurance and sustainable manufacturing.
The Digital MSME initiative offers financial support for adopting digital tools like cloud computing.
Subsidies and grants for embracing Industry 4.0 technologies—such as AI, IoT, and automation—can enhance productivity.
Establishment of R&D and technology incubation centres across industrial clusters.
4. Infrastructure Gaps and Operational Bottlenecks
Many MSMEs, especially in non-urban regions, suffer due to poor infrastructure—irregular power supply, inadequate transport, and lack of industrial land or clusters.
Strategic Solutions:
The Micro and Small Enterprises Cluster Development Programme (MSE-CDP) promotes shared infrastructure in industrial clusters.
Public-Private Partnerships (PPPs) can be leveraged to build logistics hubs and improve utilities.
Government provision of subsidized land and infrastructure in MSME-dedicated parks or zones.
5. Limited Market Access and Export Challenges
Despite support schemes, many MSMEs face difficulty in accessing larger markets due to lack of branding, certification, and marketing networks.
Strategic Solutions:
The International Cooperation Scheme supports participation in global trade exhibitions.
Expansion of e-commerce partnerships through platforms like Amazon Saheli, Flipkart Samarth, and GeM can connect MSMEs to broader markets.
Strengthening quality certification mechanisms to make Indian products export-ready.
6. Regulatory Complexities and Compliance Pressure
Although ease-of-doing-business reforms have been introduced, many MSMEs still struggle with complex regulations, frequent compliance updates, and delayed tax refunds.
Strategic Solutions:
The Udyam Registration portal has simplified the registration process and formalized the sector.
The RAMP programme (Raising and Accelerating MSME Performance), backed by the World Bank, focuses on streamlining regulatory frameworks.
Simplification of GST processes and faster refund mechanisms are crucial for reducing compliance burdens.
7. Weak R&D Ecosystem and Low Innovation
Insufficient investments in innovation, product development, and research result in stagnation and limit MSMEs’ ability to compete globally.
Strategic Solutions:
Government funding through the Technology Upgradation and Quality Certification Scheme can promote innovation.
Encouraging partnerships between MSMEs and institutions like IITs and NITs for technology transfer and incubation.
Tax breaks for expenditure on R&D, patent filings, and automation adoption.
8. Skill Shortages and Labor Productivity
Many MSMEs rely on semi-skilled or unskilled labor, resulting in productivity levels that lag behind larger firms.
Strategic Solutions:
The Entrepreneurship and Skill Development Programme (ESDP) imparts business and digital skills.
Skill India Mission aligns training programs with MSME requirements.
Promoting apprenticeship schemes and vocational training with stipends to build a skilled talent pool.
9. Sustainability and Environmental Compliance
With rising environmental awareness and global supply chain expectations, MSMEs must adopt eco-friendly practices to remain competitive.
Strategic Solutions:
The ZED Certification Scheme also supports the adoption of green technologies.
Financial support for switching to renewable energy, waste reduction, and cleaner production techniques.
Incentives like low-interest green loans and tax benefits for sustainable business models.
Conclusion
The MSME sector remains a cornerstone of India’s economy fueling growth, innovation, and employment. However, it faces multilayered challenges that require coordinated efforts involving financial inclusion, regulatory simplification, digital and technological advancement, skilling, and sustainability.
By effectively leveraging targeted government schemes, public-private partnerships, and digital transformation, India’s MSMEs can unlock their full potential and play a central role in achieving inclusive and resilient economic development.
Mains Practice Question
Q Critically examine the key issues confronting the MSME sector in India. How far do the recent measures in the Union Budget 2025–26 and existing government schemes address these challenges? Suggest a multi-pronged strategy for sustainable growth of MSMEs. (250 words, 15 marks)
Issues in calculation of Poverty line (GS Paper II – Governance, Paper III - Economy)
Introduction (Context)
Despite having the world’s largest population and a complex history of poverty alleviation efforts, India’s poverty remains a deeply contested subject due to varied methods for poverty calculation.
In April 2025 the Government of India cited the World Bank’s Poverty and Equity Brief, claiming 171 million people were lifted out of extreme poverty over 10 years. Whereas in June 2025 the World Bank revised its poverty line to $3 per day (PPP-adjusted) and stated that only 5.75% of Indians now live under extreme poverty which is a sharp fall from 27% in 2011-12.
By seeing this, mostly will use the market exchange rate (₹85) to convert $3, resulting in ₹255/day. However, poverty calculations are based on Purchasing Power Parity (PPP), not market exchange rates. Let’s understand it.
What is a Poverty Line?
Poverty is a state of deprivation in which an individual lacks the financial resources to meet basic living needs like food, shelter, education, and healthcare.
It is the cut-off income level below which an individual is considered poor.
Poverty lines are context-sensitive differing across time and geography.
Examples: ₹1,000/month in 1975 could have supported a household, but is meaningless today. A salary of ₹1 lakh/month is decent in Patna but inadequate in Paris or New York.
This subjectivity leads to multiple poverty lines, depending on the analytical context and purpose.
Why do we use poverty lines?
Governments and international bodies use poverty lines for two main purposes:
One, to help them gauge the extent of poverty and shape welfare policies for the poor.
The second use is for governments, policymakers and analysts to understand whether a set of policies has actually worked over time to reduce poverty and improve wellbeing.
Why is India using the World Bank’s poverty line to estimate poverty?
Historically, India had been a leader in poverty estimation and India’s poverty line methodology and data collection influenced the rest of the world in how to study poverty.
However, India’s last officially recognised poverty line was in 2011-12.
The Tendulkar Committee (2009) produced the last officially accepted poverty line, used in 2011-12.
The Rangarajan Committee (2014) suggested a new method, but it was never officially adopted.
Since then, India has relied on:
World Bank’s international poverty lines, and
NITI Aayog’s Multidimensional Poverty Index — though the latter uses non-income criteria like education, health, and living standards.
How World Bank calculates the poverty line?
World Bank’s poverty line is based on the purchasing power parity calculations.
Initially set at $1/day in 1985, based on poverty thresholds from the poorest countries.
The line is revised over time to reflect global inflation and price changes.
In June 2025, they have now raised it to $3 a day
The PPP exchange rate for Indian rupees in 2025 is 20.6. As such, the poverty line delineating abject or extreme poverty for an individual in the US is an income of $3 a day, while for India it is Rs 62 a day. For the UK, the PPP conversion rate is just 0.67, while for China it is 3.45 and for Iran it is a whopping 1,65,350.
The PPP approach ensures that people can purchase equivalent baskets of goods across countries.
What were India’s domestic poverty lines in the past?
India’s own (domestically formulated) poverty line in 2009, before the Tendulkar recommendation, was Rs 17 a day per person for urban areas and Rs 12 a day per person for rural areas.
In 2009, Tendulkar raised the poverty line to Rs 29 per day per person in urban areas and Rs 22 per day per person in rural areas, and later to Rs 36 and Rs 30, respectively, in 2011-12.
In 2014, Rangarajan recommended raising the domestic poverty line to Rs 47 per person per day in urban areas and Rs 33 in rural areas.
These numbers reflect inflation and consumption pattern updates, but they were never institutionalised beyond Tendulkar’s.
Value addition: Government schemes for Poverty alleviation
1.MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme
Provides 100 days of guaranteed wage employment annually to rural households.
Aims to enhance livelihood security and create rural infrastructure through unskilled manual work.
2. Deen Dayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM)
Promotes self-employment and women-led SHGs in rural areas.
Focuses on capacity building, financial inclusion, and sustainable livelihoods.
3.PM-KISAN (Pradhan Mantri Kisan Samman Nidhi)
Provides ₹6,000 per year in three equal installments to small and marginal farmers.
Offers direct income support to reduce distress and ensure basic farming sustainability.
4.National Food Security Act (NFSA), 2013
Legally entitles 75% of rural and 50% of urban population to receive subsidized food grains.
Implements welfare schemes like PDS, Mid-Day Meal, and ICDS under a unified law.
5.POSHAN Abhiyaan (National Nutrition Mission)
Aims to reduce stunting, undernutrition, and anemia among children and women.
Uses data-driven monitoring and community-based health practices.
6.PM Awas Yojana (PMAY)
Provides affordable housing with basic amenities to the rural and urban poor.
Offers credit-linked subsidies and infrastructure support under “Housing for All”.
7.Swachh Bharat Mission (SBM)
Focuses on eliminating open defecation and improving sanitation infrastructure.
Encourages construction of household and community toilets with behavioral change campaigns.
8.Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PMJAY)
Offers health insurance cover up to ₹5 lakh/family/year for 50 crore poor citizens.
Covers secondary and tertiary care hospitalization at empaneled hospitals.
9.Samagra Shiksha Abhiyan
Integrates SSA, RMSA, and Teacher Education for holistic school education from pre-primary to Class 12.
Focuses on equity, access, and quality learning with infrastructural support.
10.Deendayal Antyodaya Yojana – National Urban Livelihoods Mission (DAY-NULM)
Aims to reduce urban poverty through self-employment, skill training, and SHG support.
Promotes economic empowerment of the urban poor and street vendors.
11.One Nation One Ration Card (ONORC)
Enables nationwide portability of food entitlements under NFSA.
Benefits migrant workers and ensures uninterrupted access to subsidized food anywhere in India.
Conclusion
India has seen measurable progress in reducing “extreme” poverty as defined by international standards. However, the lack of a robust and context-specific domestic poverty line results in confusion and competing narratives. The World Bank poverty line helps offer global comparability but may underrepresent actual deprivation. The absence of updated official Indian poverty estimates leaves a policy vacuum and opens room for multiple interpretations.
Mains Practice Question
Q While India has made significant strides in reducing extreme poverty as per global standards, questions remain about the actual economic well-being of its population. Examine. (250 words, 15 marks)
Daily Practice MCQs
Daily Practice MCQs
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