Current Affairs 29 August 2025

Content

1. Industrial growth jumps to four-month high of 3.5%
2. Lost villages and other costs of coalfields
3. Should States be compensated for revenue loss from GST reforms?
4. Which sectors are worst hit by tariffs?
5. School enrolment in 3-11 age group down by 25 lakh: UDISE+
6. Centering elderly women: caring for the quiet majority

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Industrial growth jumps to four-month high of 3.5%

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Understanding the Index of Industrial Production (IIP)

• Definition: IIP measures the volume of production of different industry groups (manufacturing, mining, electricity).
• Base year: 2011–12.
• Weightage:
  • Manufacturing: ~77%
  • Mining: ~14%
  • Electricity: ~8%
• Importance:
  • Monthly indicator of industrial health.
  • Proxy for economic activity and GDP (particularly industry sector).
  • Guides policy interventions in demand, supply, and infrastructure.

Relevance : GS 3(Indian Economy)

 

Key Data: July 2025

• Overall industrial growth:
  • 3.5% (July 2025) – four-month high.
  • Lower than 5% (July 2024) → deceleration YoY.
• Sectoral performance:
  • Manufacturing: +5.4% (six-month high), up from 4.7% in July 2024.
  • Electricity: +0.6% (weak growth vs double-digit levels last year).
  • Mining: -7.2% (fourth straight month of contraction).
• Use-based classification:
  • Capital goods: +5% → investment revival.
  • Consumer durables: +7.7% (seven-month high).
  • Consumer non-durables: +0.5% (eight-month high, but very low absolute growth).
  • Basic metals, fabricated metals, electrical machinery: strong double-digit growth.
  • Non-metallic minerals: +9.5% → infra and construction push.

Why Growth Picked Up in July 2025

• Manufacturing rebound:
  • Recovery after two months of contraction.
  • Driven by investment demand (metals, machinery).
  • Consumer durables revival shows festive/pre-festive demand pickup.
• Electricity slowdown:
  • Monsoon impact → lower power demand from irrigation.
  • High base effect (double-digit growth in 2024).
• Mining contraction:
  • Seasonal monsoon disruption in coal, iron ore, limestone.
  • Subdued global commodity demand, especially in China.
  • Regulatory and environmental bottlenecks.
• Consumer goods mixed trend:
  • Durables (+7.7%) → white goods, electronics, appliances supported by urban demand and credit growth.
  • Non-durables (+0.5%) → rural demand still sluggish due to erratic monsoon, food inflation pressures.

Structural Takeaways

• Investment revival signals: Capital goods + basic/intermediate goods expansion → infra + capex cycle strengthening.
• Rural–urban divergence: Strong urban discretionary demand, weak rural essentials.
• Policy sensitivity: RBI likely to watch rural weakness + commodity volatility for growth–inflation trade-off.
• Mining as a drag: Persistent contraction risks supply-side constraints for core industries (steel, cement, power).
• Base effect reality: Lower growth vs July 2024 highlights statistical distortion – economy grew on a high base last year.

Implications

• For GDP growth (Q2 FY26):
  • Industrial sector contribution may be moderate due to mining weakness + slower electricity.
  • Manufacturing strength prevents sharp slowdown.
• For government policy:
  • Need for rural demand stimulus (via MSP, rural jobs, credit).
  • Mining reforms (ease clearances, monsoon-resilient infra).
  • Support electricity diversification (RE integration, industrial demand).
• For markets & industry:
  • Metals, machinery, and consumer durables show strong prospects.
  • FMCG (non-durables) growth remains tepid, rural stress may weigh on stock performance.

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Lost villages and other costs of coalfields

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Coal Mining and Displacement in India

• Coal in India:
  • India has 389.42 billion tonnes of estimated reserves (2024).
  • Odisha is the largest coal reserve holder: 99.2 billion tonnes (25.5% of India).
  • Coal still supplies ~45.65% of India’s electricity capacity (June 2025).
• Talcher Coalfields (Angul, Odisha):
  • Largest in India.
  • Angul spans 6.3 lakh hectares, with 32% cultivable land, 43% forests, and 12.26% coal-bearing areas.
  • 66 coal blocks identified; 12 operational, 2 about to start.
  • If all blocks become active → 348 villages to be displaced.
• Displacement in Odisha:
  • 5,923 families displaced in past 5 years (2019–24), mainly from Angul.
  • Angul accounts for 48% of Odisha’s coal production (269.71 MT in 2024).

Relevance : GS 3(Environment and Ecology)

Human Cost of Displacement

• Loss of community & cultural identity:
  • Example: Antaryami Pradhan had to travel 10 km for his brother’s cremation as new village denied him land.
  • Villagers scattered → weakened social cohesion.
• Disruption of livelihoods:
  • Farmers, cattle rearers, milkmen lose land & traditional professions.
  • Rehabilitation colonies often lack open space for farming.
• Psychological & social alienation:
  • New villagers don’t accept displaced families socially.
  • Migrants often feel like outsiders even in new houses.
• Gendered impacts:
  • Pregnant/lactating women lose access to health workers and schemes post-relocation.
  • Women bear additional burden of household and social adjustment.

Compensation & Rehabilitation Issues

• Compensation discrepancies:
  • Example:
    • SCCL (Telangana) offers ₹70 lakh/acre.
    • Gopiballavpur villagers offered only ₹11 lakh/acre.
  • Within Angul, land valuation varies drastically between adjacent villages (e.g., ₹35 lakh vs ₹17 lakh per acre).
• R&R (Rehabilitation & Resettlement) packages:
  • Options include:
    • ₹35 lakh (cash in lieu of employment + self-relocation).
    • ₹31 lakh + land at R&R colony.
  • Issues:
    • R&R colonies often delayed or on disputed land (e.g., forest land challenged at NGT).
    • Many forced to rent or return to old villages.
• Failure in implementation:
  • Law requires resettlement colonies before displacement → often violated.
  • Welfare schemes (health, nutrition, education) do not transfer automatically post-relocation.

Larger Structural Concerns

• Fragmented governance:
  • No centralised displacement database in Angul.
  • Land acquisition handled piecemeal → policies differ across projects.
• Legal & policy shifts:
  • 2014: SC cancelled 204 coal block allocations (including 8 in Angul).
  • 2015: Coal Mines (Special Provisions) Act allowed auctions.
  • 2020: Commercial coal mining introduced → private & foreign players entered.
  • Outcome → increased pace of land acquisition & displacement.
• Energy paradox:
  • India pushes renewables but still heavily dependent on coal.
  • Angul remains at the epicenter of India’s coal–development trade-off.

Socio-Economic & Environmental Impact

• Economic paradox:
  • Some families receive life-changing sums but cannot buy equivalent land in towns.
  • Compensation often erodes quickly without sustainable livelihood alternatives.
• Environmental stress:
  • Villages, forests, agricultural lands consumed by expanding open-cast mines.
  • Ecological degradation (loss of forest cover, dust pollution, groundwater depletion).
• Education disruption:
  • Schools demolished → children’s education interrupted.
  • Families caught in limbo delay investments in education due to uncertain future.
• Rural–urban shift stress:
  • Villagers struggle to adapt to urban costs & lifestyles.
  • Loss of access to affordable vegetables, community services, and collective rural economy.

Implications

• For displaced communities:
  • Identity erosion, livelihood collapse, weak social absorption → long-term vulnerability.
  • Inter-generational impact as children lose educational continuity and cultural roots.
• For governance & policy:
  • Need for uniform, transparent, and inflation-adjusted compensation.
  • Collective relocation models (keeping villages intact) rather than atomised dispersal.
  • Transfer of welfare entitlements (PDS, Anganwadi, health services) to new sites.
  • Centralised displacement tracking & accountability mechanism.
• For India’s energy policy:
  • Rising dependence on Odisha coalfields → concentrated risk.
  • Balancing energy security vs social justice vs environmental sustainability will be a defining challenge.
  • Transition to renewables must consider a “just transition” framework for coal-dependent regions.

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Should States be compensated for revenue loss from GST reforms?

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Basics of GST

• GST launched: July 1, 2017, as a destination-based, indirect tax subsuming central (excise, service tax, CST) and state taxes (VAT, entry tax, octroi).
• Current structure: Multiple slabs (0%, 5%, 12%, 18%, 28%) + special rates (gold, precious stones) + cess (luxury/sin goods).
• Revenue sharing: GST collected is split between Centre and States (CGST + SGST; IGST for inter-state).
• Compensation principle (2017–2022): Centre guaranteed States 14% annual revenue growth, bridging losses via Compensation Cess on luxury/sin goods (cars, tobacco, aerated drinks).

Relevance : GS 3(Economy – Taxation)

Proposed Reform

• Move from 4–5 slab system → 2-tier (5% & 18%), with essentials exempt or 0% rated.
• Higher tax (40%) to continue on luxury/sin goods.
• Target average GST rate: reduce from ~11.5% (current) to ~10%.
• Objective:
  • Simplification → compliance ease.
  • Lower rates → boost consumption, formalisation, investment.
  • At par with developed economies (average GST/VAT 10–12%).

Likely Revenue Impact

• Short-term dip inevitable:
  • Estimated ₹60,000–1,00,000 crore/year loss (~0.2–0.3% of GDP).
  • FY2025–26: ~₹45,000 crore hit (partial year implementation).
• Medium/long term gains:
  • Wider tax base: More consumption under formal economy.
  • Leakage reduction: Simplified slabs reduce classification disputes.
  • Demand boost: Lower rates on consumer durables/essentials → higher sales volume → more GST.
  • Luxury/sin cess: Higher rates (40%) to partly offset revenue fall.

Impact on States

• Unequal effect across States:
  • Manufacturing/urban States (Maharashtra, Karnataka, Tamil Nadu): Larger revenue hit as bulk of GST collections come from industrial goods and services.
  • Agrarian/consumption-heavy States (Bihar, UP, NE States): Smaller impact since their GST base is narrower and skewed towards essentials (already exempt/low slab).
• Past experience: July 2018 GST cuts → Maharashtra/Karnataka collections dipped 3–4%, but NE states unaffected.
• Revenue distribution remains unequal: Richer States lose more; poorer States less affected.

Compensation Question

• Legal status: 5-year compensation period (2017–2022) ended; technically Centre has no liability now.
• Arguments against further compensation:
  • Perpetual transfers unsustainable.
  • States should expand their tax base, plug leakages, attract investment.
  • Alternative: allocate funds for infrastructure or contingency, not continuous GST gap-filling.
• Arguments for compensation:
  • Asymmetry in GST revenue distribution → small states structurally disadvantaged.
  • Global precedent: Countries like Australia/Canada initially provided both GST-linked compensation + consolidated fund support.
  • Equity demands special packages for less industrialised states.
• Possible middle ground:
  • Create Contingency/Equalisation Fund from part of GST or Consolidated Fund of India.
  • Use mechanism like Kerala Flood Cess for State-specific needs.
  • Time-bound compensation, not indefinite.

Political & Institutional Dimensions

• GST Council: Consensus-based so far (except ~2 votes). Likely to approve reform since announced by PM.
• Potential friction: Product classification disputes (whether certain goods fall in 5% or 18%), timing of implementation, and transitional compensation.
• Consensus outlook: Strong — reforms likely passed in next Council meeting (may require vote, but government has majority).

Macro Implications

• Average GST rate falls to ~10% → competitive with OECD economies.
• Ease of doing business improves: Simple two-rate GST system boosts investor confidence.
• Formalisation accelerates: lower rates + better compliance → more firms enter GST net.
• Revenue trajectory: Dip in Year 1–2, stabilisation by Year 3, higher buoyancy thereafter.
• State fiscal independence: Pushes states to strengthen own tax (property tax, excise, stamp duty) rather than rely on GST transfers.

Summary Judgment:

• Reform = Simplification + Ease of doing business + Long-term revenue buoyancy.
• Short-term revenue dip of ₹45,000–1,00,000 crore inevitable, disproportionately hitting industrialised states.
• Compensation debate: Centre unlikely to extend blanket GST compensation; instead, targeted equalisation fund or special packages may balance inequities.
• Net effect = Moderate tax regime (~10% avg), stronger compliance, higher consumption, improved investor sentiment.

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Which sectors are worst hit by tariffs?

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Basics of the Tariffs

• Effective date: August 27, 2025.
• Tariff level: Flat 50% additional tariff on imports from India (over existing tariffs).
• Coverage: Broad, covering labour-intensive and manufacturing sectors where U.S. is a major export destination.
• Earlier tariff structure: Most sectors faced 0–10% tariffs; now in many cases, effective duties are 50–60%.
• Metrics of severity (impact analysis):
  • Export value to U.S. (absolute terms).
  • Share of U.S. in India’s total exports of that product.
  • Final tariff rate post-hike.

Relevance : GS 3(Economy – Tariff)

Sectors Facing Severe Impact

(a) Shrimp

• Exports to U.S.: $2.4 billion (2024–25).
• Share: 32.4% of India’s total shrimp exports.
• Tariff jump: 10% → 60%.
• Immediate impact:
  • Sharp fall in demand from U.S. buyers.
  • Reports of exporters in Andhra Pradesh lowering purchase prices.
  • Cancelled contracts and shipment delays.
  • High risk for aquaculture farmers and coastal labour.

(b) Textiles & Apparel (Tiruppur cluster etc.)

• Exports to U.S.: $2.7 billion.
• Share: 13.2% of India’s total textile exports.
• Tariff jump: 4% → 54%.
• Immediate impact:
  • Exporters rushing existing shipments before duties bite.
  • U.S. buyers cancelling fresh orders.
  • Threat to jobs in Tiruppur, Surat, Panipat (labour-intensive hubs).

(c) Jewellery, Diamonds & Carpets

• U.S. a top market for India’s gems & jewellery (~$10–12 billion annually, though not all under 50% tariff).
• Impact:
  • High-value exports like cut diamonds and studded jewellery hit severely.
  • Surat, Jaipur clusters face job & liquidity pressures.
  • Reports of production cuts and downsizing.

Sectors Facing Moderate Impact

(a) Metals (Steel, Aluminium, Copper)

• Exports to U.S.: $4.7 billion (17% of total Indian metal exports).
• Impact:
  • U.S. not largest global market, but vital for SMEs in Delhi-NCR engineering belt and eastern foundry hubs.
  • Stainless steel, aluminium casting, and copper semi-finished goods face job disruptions.

(b) Machinery & Mechanical Appliances

• Exports to U.S.: $6.7 billion (20% of India’s total in this category).
• Impact:
  • Demand drop expected, but diversified global buyers soften the blow.
  • Still critical for SMEs dependent on U.S. orders.

(c) Organic Chemicals

• Medium exposure to U.S.
• Tariff impact is cushioned by wider markets in EU, Japan, ASEAN.
• Industry body CHEMEXCIL has sought government intervention.

Immediate Economic Impact

• Severe demand shock: shrimp, textiles, jewellery already seeing cancellations.
• Price crash: Shrimp prices falling in Andhra Pradesh procurement markets.
• Employment risk: Labour-intensive sectors (textiles, gems, aquaculture) at risk of layoffs.
• Exporters’ reaction: Pre-shipment rush, appeals to government, lobbying through industry bodies.

Government Response (Short-term)

• “Swadeshi” & “Vocal for Local” narrative: Reduce export dependency; boost domestic demand.
• Multi-ministry plan under consideration (Commerce, Finance, External Affairs, MSME):
  • Possible interest subvention / credit support for exporters.
  • Export incentive packages for worst-hit sectors.
  • Marketing support to explore alternative destinations.
• RBI readiness: Governor stated RBI will provide liquidity or credit easing to impacted sectors.

Medium to Long-term Strategy

• Diversification of export markets:
  • Leverage FTAs (UAE, Australia, EU in progress).
  • Push into Africa, ASEAN, Latin America.
• Strengthening domestic value chains: Reduce reliance on U.S. orders.
• Special packages/funds: For sectors with high labour absorption (textiles, gems, marine exports).
• Negotiation channels: Possible WTO consultations or bilateral trade talks with U.S.

International Parallels

• Similar protective tariffs by U.S. in past (e.g., Trump-era steel tariffs, China tariffs) caused:
  • Short-term export pain.
  • Trade diversion to alternate markets.
• Other countries responded with compensation packages for farmers/exporters or by negotiating bilateral deals.

Summary

• High-impact sectors: Shrimp, textiles, jewellery/carpets (tariffs up to 60%, immediate order cancellations, production/job cuts).
• Moderate-impact sectors: Metals, machinery, organic chemicals (tariffs 50%, but diversified export base reduces damage).
• Government response: Short-term relief plan + credit support + long-term diversification strategy.
• Outlook: Immediate pain in labour-heavy sectors, with medium-term adjustment possible if markets diversify and domestic demand strengthens.

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School enrolment in 3-11 age group down by 25 lakh: UDISE+

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Basics: What is UDISE+?

• Unified District Information System for Education Plus (UDISE+): Annual survey by the Ministry of Education.
• Covers pre-primary to Class 12 in govt., aided, private, and other schools.
• Provides data on enrolment, dropouts, Gross Enrolment Ratio (GER), infrastructure, teachers, etc.
• Latest data: 2024-25, compared to 2023-24.

Relevance : GS 2(Education , Social Issues)

 

Key Findings of UDISE+ 2024-25

• Sharp fall in young student enrolment (ages 3–11; Anganwadi, pre-school, Classes 1–5):
  • 2023-24: 12.09 crore
  • 2024-25: 11.84 crore
  • Decline: 24.93 lakh students
• Overall enrolment (Classes 1–12):
  • 2023-24: 24.8 crore
  • 2024-25: 24.69 crore
  • Drop: 11 lakh students → lowest since 2018-19.
• Historical trend:
  • 2012-13: 26.3 crore
  • 2021-22: ~26 crore
  • 2022-23: 25.18 crore
  • 2023-24: 24.8 crore
  • 2024-25: 24.69 crore
  • Net fall in a decade: ~1.6 crore students (~6%).

Causes of Decline in Enrolment

• Demographic transition:
  • Falling birth rates → shrinking school-age population.
  • India’s TFR = 1.91 (2021) < replacement level (2.1).
  • Except UP, Bihar, Meghalaya, all states below replacement fertility.
• Shift to standalone pre-primary private institutions → some children outside UDISE+ school count.
• Methodological changes in 2022-23 and 2023-24 → not fully comparable to older datasets.
• Urbanization & migration: Possible undercounting of mobile/migrant children.

Positive Indicators Amid Decline

• Rising GER (Gross Enrolment Ratio):
  • Middle level: 89.5% → 90.3% (2023-24 to 2024-25).
  • Secondary level: 66.5% → 68.5%.
  • Suggests higher share of eligible children are actually enrolled, even if population base shrinks.
• Dropout rates improving:
  • Preparatory stage: 3.7% → 2.3%.
  • Middle school: 5.2% → 3.5%.
  • Secondary: 10.9% → 8.2%.
  • Indicates better retention, fewer children leaving school midway.
• Higher enrolment in upper classes:
  • Classes 6–8: +6 lakh students (6.31 → 6.36 crore).
  • Classes 9–12: +8 lakh students (6.39 → 6.48 crore).
  • Suggests progress in transition from primary to secondary education.

Implications of the Decline

• Demographic dividend challenge: Shrinking base of young students → smaller workforce in future.
• Education system planning: Govt. must align teacher recruitment, infrastructure, and budgets with falling school-age population.
• Policy focus shift:
  • From universal access → to quality of learning outcomes.
  • With fewer children, per-child investment can be higher.
• Regional disparities: States like UP & Bihar (still high fertility) may see continued high demand for schools, while southern & western states face declining enrolment.
• Long-term social impact: Lower child population → ageing society sooner, with implications for pensions, health care, and dependency ratios.

Way Forward

• Use of upcoming 2026 Census: To update school-age population base and refine GER/dropout estimates.
• Policy realignment:
  • Rationalizing school infrastructure in low-population areas.
  • Investing more in teacher training, digital learning, foundational literacy.
• Focus on early childhood education: Integrate Anganwadis and standalone pre-schools into formal system (NEP 2020 mandate).
• Address regional imbalance:
  • Northern states → focus on access (school availability).
  • Southern states → focus on retention & higher-order skills.

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Centering elderly women: caring for the quiet majority

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India’s Ageing Context

• Demographic transition:
  • India is moving from a young to ageing society due to falling fertility & rising life expectancy.
• India Ageing Report 2023 (IIPS + UNFPA):
  • By 2050, 20%+ of India’s population will be aged 60+.
  • This equals ~347 million elderly, compared to ~149 million in 2022.
• Gendered longevity:
  • Women live 2.7 years longer than men on average.
  • Results in a feminisation of ageing (more elderly women than men).

Relevance : GS 1(Society) , GS 2(Social Issues)

Health & Longevity Gap Between Men and Women

• McKinsey Health Institute:
  • Women spend 25% more years in poor health than men.
  • Much of this burden falls in later years of life.
• Elderly women’s health paradox:
  • Longer life expectancy ≠ better quality of life.
  • Higher prevalence of chronic conditions, cancers, and cognitive decline.

Social Determinants of Elderly Women’s Health

• Cultural & social conditioning:
  • Women prioritise family health > own health.
  • Gatekeeping of care decisions by husband/adult children.
• Economic dependency:
  • 60% of elderly women have no personal income (UNFPA 2011).
  • <20% women can pay their own medical bills (vs. 44% men).
  • Very few elderly women have health insurance.
• Digital divide:
  • Limited access to digital health platforms & insurance enrolment.
  • Reduces access to information & tele-health solutions.
• Education gap:
  • Education strongly linked to better health-seeking behaviour.
  • Uneducated women face poor awareness about preventive screenings & therapies.

Disease Burden Among Elderly Women

• Cancer risks:
  • Breast cancer: Elderly women often get less aggressive treatment, lowering survival despite effectiveness of surgery/chemo.
  • Cervical cancer: Vaccination awareness growing in younger women, but elderly women lack access to pap smear screening.
  • Ovarian cancer: Most lethal gynaecological cancer; 5-year survival only 17% if diagnosed late.
• Neurodegenerative diseases:
  • Higher vulnerability to Alzheimer’s, dementias (due to oestrogen decline, widowhood, isolation).
  • LASI: Women 70+ report higher cognitive impairment, but are under-diagnosed & under-treated.
• Mental health:
  • Depression highly under-reported.
  • HelpAge India: Only 1 in 10 elderly women with depressive symptoms seek help.
  • Barriers: stigma, lack of geriatric psychiatry services, family neglect.

Positive Protective Factors

• Social embeddedness:
  • Elderly women deeply connected to family & community networks.
  • Protective against loneliness & cognitive decline.
• Active lifestyles:
  • Walking groups, yoga, hobbies (painting, music) improve physical & mental well-being.
• Education advantage:
  • Educated women are more likely to seek outpatient care, both public & private.

Policy & Systemic Gaps

• Healthcare spending bias:
  • Across age groups, health expenditure on men > women.
• Gender-insensitive care:
  • Few healthcare facilities tailor care to elderly women’s needs (e.g., cancer screening, mental health).
• Elderly treated as dependents:
  • Public discourse ignores elderly women’s agency; sees them only as caregivers or passive dependents.
• Insurance gap:
  • Limited geriatric coverage; most elderly women lack health protection schemes.

Way Forward – Recommendations

• Policy realignment:
  • Build gender-sensitive geriatric health systems.
  • NEP for ageing: integrate elderly women’s health into Ayushman Bharat & state health missions.
• Preventive care expansion:
  • Free screening programs for cancers (cervical, breast, ovarian) & cognitive decline.
• Financial inclusion:
  • Pensions, micro-insurance, and social security nets for widows & single elderly women.
• Mental health integration:
  • Geriatric psychiatry, community counselling, elderly support helplines.
• Digital & health literacy:
  • Train elderly women in basic digital health platforms.
  • Expand awareness on vaccinations, screening, and treatment options.
• Community-driven solutions:
  • Promote elderly women’s groups, SHGs, walking clubs, skill-based learning for social & mental health benefits.

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