02 to 07 February 2025 : The Hindu Editorial Analysis (Daily Current Affairs)

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1. Beyond tax cuts, a closer read of the Union Budget

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

Topic: Indian Economy – Government Budgeting

Context

• The Union Finance Minister, Nirmala Sitharaman, presented the Union Budget on February 1, 2025, amid significant economic challenges.

Backdrop of the Budget

• Key issues include high taxes, unemployment, sluggish private investment, external vulnerabilities, and fiscal concerns. 
• The Budget emphasizes Viksit Bharat, with policies covering agriculture, manufacturing, MSMEs, social welfare, and infrastructure.

Fiscal Targets and Concerns

• The Budget targets a fiscal deficit of 4. 4% of GDP in FY26, depending on a 11. 2% increase in total tax revenues and a 14. 4% rise in income tax revenues. 
• These projections appear overly optimistic given the tax cuts and declining economic conditions. The second asset monetization plan (2025-30) is anticipated to generate funds, yet past failures cast doubt  on its  effectiveness.
•  The projected ₹11. 54 lakh crore in net market borrowings may hinder private investments during a period of weak credit demand. 
• Meeting these targets will necessitate improved tax efficiency and more effective asset monetization strategies.

Tax Reforms and Revenue Losses

• The Budget revises personal income tax slabs, exempting incomes up to ₹12 lakh (after rebate).
• While this eases the burden on the middle class, it results in a ₹1 lakh crore revenue loss, which could impact government financing for development projects.
• Household savings have declined to 18. 4% of GDP in FY23, raising concerns about long-term economic stability.
• The sustainability of these tax cuts is uncertain when public investments in infrastructure and social welfare are essential.

Manufacturing and MSME Sector

• The Budget seeks to enhance India’s manufacturing sector, which currently accounts for only 17% of GDP. 
• Production-Linked Incentives (PLIs) have had moderate success but require additional support. Increased credit facilities for MSMEs and the establishment of a National Manufacturing Mission are positive  developments. 
• Changes in MSME classificationincluding a 2. 5x increase in investment limits and doubling of turnover thresholdsmay facilitate business growth. 
• However,  underlying issues such as regulatory inefficiencies, infrastructure  shortcomings, and low innovation spending (0. 64% of GDP) remain unaddressed.
• The insufficient focus on industrial research and development restricts India’s competitiveness compared to countries like China and Germany.

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Agriculture Sector Initiatives

• The Budget launches the Prime Minister Dhan-Dhaanya Krishi Yojana and the National Mission on High-Yielding Seeds to enhance productivity and climate resilience.
• The Kisan Credit Card (KCC) loan limit is increased from ₹3 lakh to ₹5 lakh, providing financial support to farmers.
• The emphasis on 100 low-productivity districts reflects a shift towards targeted support rather than broad subsidies.
• However, the Budget overlooks critical inefficiencies in agricultural markets, price volatility, and export growth.
• The absence of initiatives to promote millet and organic farming exports represents a missed opportunity.

Challenges in External Trade

• IT and business process outsourcing (BPO) exports maintain a growth rate of 10. 5% CAGR, but diversification remains limited.
• Bharat Trade Net (BTN) and export credit support for MSMEs are encouraging steps but lack the necessary scale to address trade deficits.
• The weakening rupee and declining foreign exchange reserves call for a more robust export strategy.
• Focusing on value-added sectors such as pharmaceuticals, electronics, and renewable energy could enhance global competitiveness.

Climate and Clean Energy Measures

• The Budget promotes supply-chain resilience by offering incentives for lithium-ion battery recycling, exemptions on duties for critical minerals, and supporting domestic solar photovoltaic and battery manufacturing. \
• However, it falls short in addressing grid modernization, energy storage, and industrial decarbonization.
• Without these initiatives, India's transition to a low-carbon economy may remain fragmented.

Conclusion: Trade-offs in Growth Strategy

• The Budget seeks to achieve a balance between the growth of private enterprises and inclusive development.
• It aims to enhance consumption while ensuring savings and macroeconomic stability.
• The success of these efforts will hinge on effective implementation and the government's capacity to adapt policies as needed.

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2. A Budget that is forward-looking and growth-oriented

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

Topic: Indian Economy – Government Budgeting

Context

• The Union Budget 2025-26 continues the government's strategy of promoting economic growth, fiscal discipline, and sectoral development.
• Key measures include reductions in income tax, increased capital expenditure, support for the manufacturing sector, and targeted incentives for industries that create jobs.

Impact of Personal Income Tax Cuts

• A significant aspect of the budget is the complete exemption from personal income tax for individuals earning up to ₹12 lakh annually.
• For salaried individuals, this exemption extends to ₹12. 75 lakh, which includes a standard deduction of ₹75,000.
• This initiative increases disposable income, thereby enhancing consumption and economic activity.
• The anticipated results include higher demand, improved business performance, and increased indirect tax revenue.
• Key sectors such as retail, real estate, and automobile manufacturing are expected to benefit, leading to greater employment opportunities.

Capital Expenditure Increase

• The budget allocates ₹11. 2 lakh crore for capital expenditure in 2025-26, marking a 10% increase from the previous year.
• This allocation will bolster infrastructure development, create jobs, and stimulate economic activity.
• Investment in logistics and industrial sectors will contribute to sustainable, long-term growth.

National Manufacturing Mission

• A new National Manufacturing Mission is introduced to support the ‘Make in India’ initiative.
• This mission will provide policy support, execution roadmaps, and governance frameworks for small, medium, and large industries.
• Its objectives include enhancing domestic manufacturing capabilities, reducing import dependence, and attracting foreign investment.
• By streamlining regulations and offering incentives, the mission aims to position India as a global manufacturing hub.

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Support for Labour-Intensive Sectors

• The budget emphasizes job creation in the tourism, food processing, and leather industries, which significantly contribute to India’s export earnings and employment.
• Targeted incentives and regulatory reforms will enhance productivity, competitiveness, and job opportunities in these sectors.

Maritime and Aviation Development

• A Maritime Development Fund has been announced to strengthen the marine economy, benefiting coastal states.
• The UDAN scheme will be expanded to provide flight connectivity to 120 new destinations.
• These initiatives are expected to generate economic opportunities in emerging growth centers nationwide.

Prime Minister Dhan-Dhaanya Krishi Yojana

• This initiative seeks to improve agricultural productivity and rural livelihoods. It will target 100 districts with low productivity and limited access to credit, partnering with state governments.
• Key focus areas include crop diversification, sustainable farming practices, improved irrigation, post-harvest storage, and enhanced credit access.
• With an estimated 1. 7 crore farmer beneficiaries, this scheme aims to increase rural purchasing power and support related industries.

Fiscal Deficit Reduction

• The government intends to reduce the fiscal deficit from 4. 8% in 2024-25 to 4. 4% in 2025-26.
• This reduction is expected to help stabilize inflation, bolster investor confidence, and strengthen the overall macroeconomic environment.

Ease of Doing Business Reforms

• The budget simplifies the tariff structure by eliminating seven tariff rates. It ensures that no more than one cess or surcharge is imposed, making taxation more equitable and predictable.
• The issue of inverted duty structures has been addressed to enhance trade competitiveness and encourage domestic firms to participate in global supply chains.

Conclusion

• The Budget’s emphasis on capital expenditure, manufacturing, and labour-intensive sectors, along with fiscal discipline and tax relief, establishes a foundation for economic growth.
• While the detailed implementation of these schemes is yet to be observed, the overall strategy is proactive and focused on growth.
• Businesses and stakeholders will evaluate and adjust to these measures, with the total impact emerging over time.

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

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

Topic: Indian Economy

Context

●The Indian government has made substantial investments in the maritime sector through the Sagarmala Programme, yet Indian shipping remains stagnant and encounters various challenges.The 2025 Budget has introduced reforms; however, significant tax disparities continue to hinder competitiveness.

 Government’s Commitment to Maritime Development

• The government has emphasized maritime sector development through the Sagarmala Programme, which aims to complete 839 projects with an overall investment of ₹5. 8 lakh crore by 2035.
• Investment allocation within Sagarmala:
• ₹2.91 lakh crore (50%) for port modernization.
• ₹2.06 lakh crore (35%) for port connectivity.
• ₹55.8 thousand crore (10%) for port-led industrialization.
• The remaining 5% for coastal community development, infrastructure for coastal shipping, and inland water transport.
• India’s GDP increased from ₹153 trillion in 2016-17 to ₹272 trillion in 2022-23, achieving a 7% CAGR despite the impacts of COVID-19.
• The economy is anticipated to reach $3. 7 trillion in 2024, $5 trillion by 2027, and $7 trillion by 2030.
• India’s EXIM trade rose from $66 billion in 2016-17 to $116 billion in 2022, reflecting a 12. 83% annual growth rate.
• India aims to elevate exports to $2 trillion by 2030 to enhance global trade.

 Challenges in the Indian Shipping Industry

• Capital Constraints – High borrowing costs, short loan tenures, and stringent collateral requirements hinder financing for shipowners and builders.
• Tax Disparities – Indian-flagged vessels face elevated taxation, including IGST on ship purchases and TDS on seafarer salaries, reducing their competitiveness compared to foreign-flagged vessels.
• Aging Fleet – Although there have been recent improvements, a significant number of Indian vessels remain outdated, impacting efficiency and global competitiveness.
• Shipbuilding Challenges – Limited infrastructure for large vessel construction, high input costs, and underdeveloped ancillary industries increase reliance on imports.
• Regulatory Hurdles – Stringent regulations and delays in fund repatriation for ship acquisitions impede sectoral growth.
• Competition from Foreign Ships – Foreign-flagged vessels benefit from better access to capital, lower costs, and relaxed regulations, diminishing the market share for Indian shipping.
• Lack of Domestic Cargo Preference – Indian shipping faces challenges competing with rail and road transport for domestic cargo movements.
• Slow Implementation of Reforms – While policies like the Maritime Development Fund (MDF) and infrastructure status for large vessels have been introduced, their success hinges on effective execution and clear funding processes.

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Government Initiatives for Maritime Growth

The Union Budget 2025 proposed several measures to support the industry:

• ₹25,000 crore Maritime Development Fund (MDF) (49% from the government, remainder from major ports).
• Infrastructure status for large vessels.
• Facilitation of shipbuilding clusters and a 10-year extension of customs duty exemption on shipbuilding spares.
• Revised financial assistance policy for shipbuilding and credit incentives for shipbreaking.
• Tonnage tax scheme extended to inland vessels.

Nevertheless, the industry remains apprehensive:

• The ₹25,000 crore MDF funding mechanism lacks claritywhether it will be allocated in one year or over multiple years.
• The aging fleet urgently requires replacement to fulfill green technology objectives and emission reduction targets.
• Long-term financing with lower interest rates and 7-10 year repayment terms is essential.

Need for Further Reforms

• The Maritime Development Fund (MDF) should be strategically used to attract low-cost external commercial borrowings (ECBs).
• Additional investments are needed for modernization of shipyards and building large vessels.
• The tax disparities affecting Indian shipping competitiveness remain unaddressed.
• The government’s efforts are a positive step, but more decisive action is needed to ensure real growth in the shipping industry.

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

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

Topic: Indian Economy – Issues relating to development and employment.

Context: The Union Budget 2024 of India prioritizes long-term job creation, emphasizing climate resilience, AI resilience, and employment aligned with aspirations to foster sustainable economic growth and inclusivity.

 Introduction

• The presentation of the Union Budget 2024 marks an opportune moment to consider the jobs India should prioritize for development.
• Alongside the immediate revival of urban consumer spending, it is crucial to focus on long-term job creation and genuine wage growth.
• The Employment Linked Incentives (ELI) scheme, part of the Prime Minister's five-scheme initiative, aims to generate over four crore jobs within five years, supported by a ₹2 lakh crore budget.
• While the Prime Minister's Internship Scheme attracted 6. 21 lakh applications for 1. 27 lakh roles, the execution of the other four schemes remains unclear.
• A clearly defined job creation strategy is essential for India's goal of becoming a developed nation.

Climate-Resilient Jobs

• In 2019, India ranked as the seventh most climate-affected country, incurring $159 billion in damages in 2021 due to climate-related challenges.
• The Reserve Bank of India projects that nearly $1 trillion will be required for climate adaptation by 2030.
• Climate change adversely affects agriculture, labor productivity, and livelihoods, necessitating increased investment in adaptation strategies.
• Job creation should support climate objectives and enhance “co-benefits” as outlined by the IPCC.

Possible job-creation strategies:

• Offering 3-4 state-subsidized e-rickshaws in 600,000 villages to generate two million jobs, particularly for women.
• Promoting private investment in compressed biogas plants, addressing a shortfall of only 82 plants established against a target of 5,000 for FY23-24.
• Accelerating the 500GW non-fossil energy capacity target to create over one million jobs.
• Supporting decentralized and rooftop solar projects, which are seven times more labor-intensive.

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AI-Resilient Jobs

• The emergence of generative AI presents a 50% automation risk for numerous jobs.
• The McKinsey Global Institute forecasts that India could see a 50% automation adoption rate within a decade.
• IT and business services, which account for over 70% of India’s service exports, may face challenges due to rising labor costs in the AI era.
• New job strategies should revolve around creativity and physical engagementskills that AI cannot replicate.

Solutions for AI-resilient job creation:

• Increasing education and health budgets to mitigate shortages of teachers and healthcare professionals.
• Strengthening financing for the National Rural Livelihood Mission to assist rural artisans and farmers in accessing global and urban markets.

Aspiration-Centric Jobs

• Rural youth often lack confidence due to inadequate foundational education and limited resources.
• Many remain reliant on government jobs and coaching centers as they struggle to secure employment.
• As youth aspirations evolve, the creation of non-farm jobs must align with their needs.

Key measures to create aspiration-centric jobs:

• Developing around 70,000 integrated pack-houses to fill infrastructure gaps, creating over two million jobs.
• Enhancing productivity and value addition in high-import/export items and agricultural input manufacturing.
• Promoting the National Mission on Edible Oils – Oilseeds to reduce India’s 57% reliance on edible oil imports.
• Revitalizing rural processing of indigenous oilseeds such as soybean and sunflower.
• Leveraging technology, social media, and rebranding rural employment to attract youth to off-farm opportunities.
• Promoting public-private partnerships to support large-scale rural businesses.

Conclusion

• While tax incentives may provide a temporary increase in urban demand, sustainable job creation necessitates structural reforms.
• The government must prioritize jobs that are climate-resilient, AI-resilient, and centered on aspirations to ensure long-term growth.
• By capitalizing on these opportunities, India can progress towards its vision of Viksit Bharat, providing stable employment for its workforce.

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5. A Budget that is mostly good but with one wrong move

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

Topic: Indian Economy – Government Budgeting

Context

• The Union Budget 2025-26 aims to accelerate economic growth while ensuring fiscal prudence. It emphasizes capital expenditure, tax revenue trends, and shifts in fiscal policy, including adjustments to deficit targets.

GDP Growth and Capital Expenditure

• The government has projected a nominal GDP growth of 10. 1% for 2025-26, regarded as reasonable.
• The Economic Survey 2024-25 suggested real GDP growth between 6. 3% and 6. 8% for 2025-26, allowing flexibility should growth exceed expectations.
• Capital expenditure for 2025-26 is forecasted at ₹11. 2 lakh crore, an increase of ₹1. 03 lakh crore over 2024-25 (RE).
• However, this is nearly identical to the ₹11. 1 lakh crore estimated in the previous budget.

Need for Higher Economic Growth

• The budget's objective is to foster growth and steer India toward developed country status.
• A real GDP growth rate of 8% is necessary to realize this ambition. While several measures introduced in the budget are advantageous, some could have been enacted earlier.
• Income tax relief for the middle class is anticipated to stimulate demand, though its impact will depend on household consumption patterns.

Trends in Indian EconomyDeclining Revenue Growth: The overall revenue growth has been slowing down over the past three years.

Tax Buoyancy Reduction: The efficiency of tax collection in relation to economic growth has decreased.

Slower GST Growth: The growth rate of GST revenue has declined compared to previous years.

Shift Towards Direct Taxes: Direct taxes now form a larger share of total revenue compared to earlier years.

Personal Income Tax vs Corporate Tax: Personal income tax has shown stronger performance than corporate tax but has slowed due to tax concessions.

Corporate Tax Recovery: Corporate income tax is expected to grow at a better rate in the coming year.

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Non-Tax Revenues

• Non-tax revenues, primarily from RBI and public sector dividends, have risen to ₹3. 25 lakh crore in 2025-26, an increase of ₹35,715 crore from 2024-25 (RE). Overall, non-tax revenue increased from ₹5. 3 lakh crore (RE) to ₹5. 8 lakh crore in 2025-26 (BE).

Government Expenditure and Fiscal Consolidation

• Declining Government Expenditure: The government’s spending as a share of GDP is set to decrease due to efforts to manage the fiscal deficit.
• Slower Expenditure Growth: Government spending is growing at a slower pace than the overall economy.
• Improved Spending Quality: A greater portion of government funds is being directed toward long-term investments in infrastructure.
• AI Investment Importance: Strengthening AI infrastructure is crucial as global leaders like the U.S. and China are advancing rapidly in this sector.
• Need for AI Incentives: The government should consider tax benefits to boost AI research and development in India.

Concerns Over Fiscal Transparency

• Shift in Fiscal Focus: The budget moves away from using the fiscal deficit as the main measure of financial discipline.
• Previous Target: Earlier, there was a clear goal to reduce the fiscal deficit below 4.5% by 2025-26.
• New Approach: The focus is now on lowering the debt-to-GDP ratio instead of setting a specific fiscal deficit target.
• Lack of Clarity: The new strategy is unclear, as it depends on different economic growth scenarios.
• Need for a Clear Target: A defined fiscal deficit goal would help maintain financial discipline and prevent excessive government borrowing, which can impact private investment.

Conclusion

• The Budget 2025-26 aims to sustain economic growth while maintaining fiscal discipline.
• Capital expenditure remains a priority, but AI infrastructure investment needs more focus.

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6. A green signal for India to assert its health leadership

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

Topic: Social Justice – Health

• ContextThe Union Budget 2025-26 prioritizes health-care expansion, medical education, and global collaborations.
• The budget aims to establish India as a leader in affordable and innovative health services.

India’s Vision for Health Care and Innovation

• The Union Budget 2025-26 focuses on strengthening India’s health-care sector by improving medical infrastructure, expanding educational opportunities, and promoting global collaboration.
• With a total allocation of ₹90,958 crore for health care, the government is prioritizing accessibility, affordability, and quality in medical services.
• The introduction of 75,000 new medical seats over the next five years, including 10,000 seats in FY26, reflects India’s commitment to addressing the shortage of health-care professionals.

India’s Transformation in Health Care

• Over the past few decades, India has made remarkable progress in health care, moving from limited infrastructure in the 1980s to becoming a global leader in medical services.
• The ‘Heal in India’ initiative aims to position India as a preferred medical destination for international patients by improving hospital infrastructure and simplifying visa procedures.
• The ‘Heal by India’ initiative focuses on training and deploying Indian health-care professionals abroad to address global shortages while creating new employment opportunities.

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Strengthening Cancer Care and Affordable Medicines

• Recognizing the growing burden of non-communicable diseases, the Budget provides for the establishment of 200 day-care cancer centres in district hospitals.
• These centres will enable early diagnosis and treatment, improving survival rates and reducing the cost of care.
• Customs duty exemptions on 36 life-saving drugs, including those for cancer, rare diseases, and chronic conditions, will make critical treatments more affordable.
• The addition of 13 new patient assistance programs will further help patients, especially those with chronic illnesses, in accessing essential medicines.

Technology and Innovation in Health Care

• The Budget emphasizes the role of Artificial Intelligence (AI) and digital health in advancing medical research, diagnostics, and treatment.
• National Centres of Excellence will be established to drive innovation, enabling India to develop cutting-edge medical solutions.
• Private hospitals, alongside government initiatives, have played a crucial role in bringing advanced health-care technologies to India.
• Apollo Hospitals introduced Proton Therapy for advanced cancer care, attracting patients from countries such as Australia and the UK.

India’s Leadership in Global Health Care

• India’s health-care sector is now a key pillar of national growth and development.
• By combining the strengths of Heal in India, Heal by India, and technology-driven innovation, the country is setting new benchmarks in global health care.
• Continued investment in medical education, infrastructure, and technological advancements will help India further strengthen its position in global health care.
• The focus remains on ensuring that high-quality medical services reach every individual, both within the country and beyond.

Conclusion

• India is not only improving health care for its own citizens but also contributing to global health solutions.
• The Budget lays a strong foundation for further progress by integrating technology, expanding education, and enhancing medical infrastructure.
• It is now a collective responsibility to build on this momentum to ensure accessible and world-class health care for all.

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7. The saga of regulating India’s thermal power emissions

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

Topic:  Environment

Context

• On December 30, 2024, India’s Ministry of Environment, Forest, and Climate Change (MoEFCC) extended the deadline for thermal power plants to meet sulphur dioxide (SO₂) emission norms.
• The new deadline pushes compliance back by three years.

Deadline Extension Without Justification

• This delay affects around 20 GW of thermal plants, which are located in densely populated areas.
• No reason was provided for the extension, marking another delay in a decade-long process of implementing emission norms.

Revised Norms Introduced in 2015

• In December 2015, MoEFCC introduced stricter emission norms after public consultations.
• All thermal plants were expected to comply by December 2017.
• The norms included limits on particulate matter emissions and, for the first time, introduced standards for SO₂ emissions.
• These norms aligned with those in countries like Australia, China, and the United States.

Shifting Focus in the Debate

• Indian coal has lower sulphur content, making it easier to meet SO₂ emission norms compared to high-sulphur coal.
• However, discussions focused on challenges in using Flue Gas Desulphurisation (FGD) technology, which removes sulphur from high-sulphur coal.
• FGDs were never mandatory, but debates centered around their high cost, long installation time, and supply chain issues.

Government Reports and Changing Opinions

• 2020-2021: The Central Electricity Authority (CEA) questioned uniform emission norms and proposed extending deadlines to 2035.
• 2022: A study by IIT Delhi found FGDs improve air quality but recommended delays due to high costs and increased greenhouse gas emissions.
• 2024: A study by NITI Aayog and CSIR-NEERI suggested SO₂ norms were less important than particulate matter norms for air quality.
• Despite these studies, a consensus was never reached before norms were first implemented, leading to repeated extensions.

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Repeated Extensions and Varying Deadlines

• Over the years, MoEFCC weakened some norms and extended deadlines four times.
• New deadlines:
• Particulate matter emissions: Final deadline December 31, 2024 (some plants had to comply by 2022-2023).
• SO₂ emissions: New deadline December 31, 2027.
• There is no public data on whether plants follow particulate matter norms.

Financial Burden on Electricity Consumers

• Many plants tendered contracts for FGDs but not fast enough to meet deadlines.
• Electricity regulators allowed plants to pass FGD costs to consumers, even if they do not meet emission norms.
• Current status:
• 22 GW of thermal plants have installed FGDs.
• 102 GW (nearly 50% of India’s thermal power) is in advanced FGD installation stages.
• With deadlines extended, many plants may not use FGDs to save costs, leading to:
• Consumers paying for unused equipment.
• No air quality improvement for nearby areas for at least three more years.

Long-Term Implications

• Delays in SO₂ norms cause serious environmental, health, and financial impacts.
• It is uncertain whether India will learn from these delays and improve pollution control policies.

Conclusion

• Repeated extensions in SO₂ emission norms show regulatory inefficiencies and financial strain on consumers.
• These delays increase environmental risks and raise concerns about India’s commitment to pollution control and public health.

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8. Should India build a sovereign, foundational AI model?

(Source – The Hindu, International Edition – Page No. – 9)

Topic: Science and Technology

Context

• The emergence of DeepSeek as a low-cost foundational AI model has sparked debate on India’s capacity to develop its own AI models, balancing sovereignty, costs, and strategic goals.

Why Should India Build an AI Model?

• India should develop foundational AI models to build expertise and technological skills.
• It is important to have people who can create and improve AI models and develop applications on top of them.
• Sanctions on AI-related technologies like chips and software could impact India’s AI growth.
• Open-source AI models exist, allowing India to modify and use them without starting from scratch.

Is Sovereignty a Major Concern?

• Some believe sovereignty should be a reason for building an AI model, but others argue that India can adapt open-source models instead.
• AI development depends on advanced chips, which India does not currently manufacture.
• If global restrictions are imposed on AI technology, India could still use open-source AI models.

Financial Challenges of Developing an AI Model

• Creating a high-quality AI model is very expensive and requires hundreds of millions of dollars.
• Even a low-cost AI model requires millions for training and ongoing costs like salaries and infrastructure.
• India’s AI market is smaller than that of other countries, making it harder to recover the investment.
• Businesses in India mostly serve global markets, not just the local market.

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Government’s Role in AI Development

• The government has announced efforts to provide AI resources, such as GPU clusters, at lower costs.
• This move can help startups and researchers by making AI training more affordable.
• However, big tech companies invest billions in AI, while India’s resources are more limited.

Where Should India Focus Its AI Efforts?

• Instead of competing directly with the world’s largest AI models, India should focus on targeted AI solutions.
• AI should be developed for important needs like Indian language processing and speech recognition.
• AI models should be designed for local use cases where they can make a big impact.
• The key question is how to improve India’s research environment and attract private investments.

Conclusion

• India should wisely allocate its resources and focus on practical AI applications rather than competing with global giants.
• Developing an AI ecosystem with strong research, investment, and innovation is more important than just building one AI model.

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