NATIONALLY DETERMINED CONTRIBUTION (NDC)
1. Context
India’s announcement of its revised Nationally Determined Contributions (NDCs) to the Paris Agreement — the term applied to the mitigation and other climate action targets that countries voluntarily commit to under the agreement — represents a considered step forward when India’s energy and development policies are encountering serious headwinds
2. What is a Nationally Determined Contribution (NDC)?
- A Nationally Determined Contribution (NDC) is a country's self-defined climate action plan under the Paris Agreement (2015), outlining its commitments to reduce greenhouse gas emissions and adapt to the impacts of climate change
- Each NDC typically covers a country's targets for reducing emissions (e.g., cutting CO? by X% by 2030), the sectors it will focus on (energy, transport, agriculture, etc.), adaptation strategies to deal with climate impacts, and sometimes finance, technology, and capacity-building needs
- Countries submit their NDCs to the UNFCCC (UN Framework Convention on Climate Change). There is no single global template — each country determines its own goals based on its capabilities and national circumstances
- NDCs are the core mechanism through which the Paris Agreement's goal — limiting global warming to 1.5–2°C above pre-industrial levels — is expected to be achieved. Collectively, the ambition of all NDCs determines whether the world stays on track
3. Are Nationally Determined Contributions (NDC) voluntary or mandatory?
- Under the Paris Agreement, all participating nations are required to submit their Nationally Determined Contributions (NDCs) at regular intervals.
- These are voluntary climate commitments that outline how each country plans to reduce its dependence on fossil fuels and contribute to global climate goals.
- India’s earlier NDC, submitted in August 2022, included commitments to achieve 50% of its installed power capacity from non-fossil fuel sources by 2030, reduce the emissions intensity of its GDP by 45%, and create an additional carbon sink of 2.5 to 3 billion tonnes of CO?-equivalent through forest and tree cover.
- The newly announced targets go beyond these earlier commitments by raising each of these benchmarks.
- The revised goal of 60% non-fossil installed capacity is particularly significant, as India has already demonstrated strong progress in this direction.
- By the beginning of 2026, nearly 52% of the country’s installed capacity was already derived from non-fossil sources, meaning the earlier 2030 target had been achieved well ahead of schedule.
- Moreover, until the close of 2025, India and Argentina were the only G20 countries yet to declare their 2035 NDCs.
- With this latest announcement, India has now addressed that notable gap in the global record of climate commitments
4. Have Nationally Determined Contributions Truly Accelerated the Clean Energy Transition?
- Whether Nationally Determined Contributions (NDCs) have genuinely pushed countries toward clean energy remains the most important question in every climate commitment cycle, and the available evidence presents a rather mixed picture.
- The United Nations Environment Programme’s Emissions Gap Report 2025, significantly titled “Off Target,” offered a stark assessment: since 2015, countries have had three opportunities to align their commitments with global climate goals, yet on each occasion they have fallen short.
- Although the projected rise in global temperature has been revised downward from 2.6–2.8°C to 2.3–2.5°C, a substantial part of this apparent improvement is attributed to changes in methodology rather than real progress.
- In addition, the United States’ withdrawal from the Paris Agreement has further weakened these gains.
- According to the World Resources Institute, the NDCs submitted so far bridge less than 14% of the emissions gap required to keep warming within 1.5°C.
- A closer look at the commitments makes the situation even more concerning. The E3G NDC Energy Commitments Tracker, which reviewed 101 national submissions by the end of 2025, found that while 94% of countries had included at least one pledge related to the energy transition, none had produced a fully integrated roadmap consistent with the COP28 energy package.
- This package, popularly known as the “UAE Consensus,” was adopted by nearly 200 countries in December 2023 and called for faster climate action through a shift away from fossil fuels, a tripling of global renewable energy capacity, and a doubling of improvements in energy efficiency by 2030 to keep the 1.5°C target within reach.
- Yet, despite these commitments, no country specified a concrete target for reducing oil and gas production, and almost three-fourths of the submissions made no reference to reforming fossil fuel subsidies.
- Furthermore, many developing countries have made their climate goals contingent on receiving international financial support, which currently remains far below the required scale.
- This leads to a striking paradox: even though NDCs themselves have had limited success in driving policy transformation, the clean energy transition is still gathering pace globally.
- In 2025, worldwide installations of solar and wind energy reached an unprecedented 814 GW, and renewable sources overtook coal to become the largest source of electricity generation globally in the first half of the year.
- However, this momentum appears to be driven less by NDC commitments and more by rapidly declining renewable energy costs, technological advances, and intense industrial competition, especially the dominant role played by China in clean energy manufacturing.
- In this sense, the NDC framework has been more effective in recording and reflecting ongoing progress than in actually compelling countries to undertake the deep structural reforms necessary for a complete transition away from fossil fuels
5. India's emissions data
- A recent study by the Centre for Research on Energy and Clean Air (CREA), highlighted by Carbon Brief, indicates that India’s CO? emissions increased by only 0.7% in 2025, marking the slowest pace of growth since 2001, excluding the exceptional pandemic year of 2020.
- This represents a sharp slowdown compared to the 4–11% annual rise recorded during 2021–24. The major reason behind this moderation was the power sector, where emissions declined by 3.8%.
- Notably, electricity generation from coal registered a fall for the first time since 1973 outside the Covid period. CREA notes that in 2025, India added nearly 47 GW of solar capacity, 6.3 GW of wind power, 4 GW of hydropower, and 0.6 GW of nuclear energy, creating enough clean electricity capacity to meet up to 5% of the growth in demand.
- However, this improvement was not uniform across all sectors. Emissions from steel production rose by 8%, while the cement sector expanded by 10%, contributing to the modest overall increase in emissions.
- According to the analysis, India’s power sector may be approaching a turning point as early as 2026, when the amount of newly installed clean energy capacity could fully match the annual rise in electricity demand.
- Supporting this outlook, the Central Electricity Authority’s National Generation Adequacy Plan estimates that non-fossil fuel capacity will reach 786 GW by 2035–36, accounting for nearly 70% of the total installed capacity, with solar power alone expected to exceed 500 GW.
- At the same time, some observers urge caution. They point out that 2025 witnessed relatively mild summer conditions, limited heatwaves, and subdued industrial activity, factors that may have temporarily reduced energy demand and emissions growth.
- Therefore, while the findings are encouraging, it may still be too early to treat this as a long-term structural shift, and a clearer trend would need to be confirmed over the coming years
6. Way Forward
India’s Nationally Determined Contribution (NDC) assesses its climate progress through the metric of emissions intensity, that is, the volume of emissions released for every unit of GDP produced. Under this method, total emissions are still allowed to rise, so long as the economy expands at a faster rate than the growth in emissions. India has justified this approach on the basis of equity and developmental fairness, emphasizing that its per capita emissions are still only a small share of those seen in many developed Western countries.
However, certain inconsistencies continue to remain. The country is planning to add nearly 100 GW of coal-based power capacity over the next seven years, channel around $1 trillion into petrochemical investments by 2040, and expand coal-dependent steel production capacity by 50% by 2031. These plans appear to sit uneasily alongside its long-term climate commitments. In addition, as highlighted by Vibhuti Garg of the Institute for Energy Economics and Financial Analysis, more than 37 GW of renewable energy capacity is currently lying underutilized because the power grid is not yet fully prepared to absorb and transmit it efficiently.
|
For Prelims: Paris Agreement, Nationally Determined Contribution (NDC), Fossil fuels
For Mains: GS III - Environment and Ecology
|
|
Previous Year Questions
1. The term ‘Intended Nationally Determined Contributions’ is sometimes seen in the news in the context of (2016) (a) pledges made by the European countries to rehabilitate refugees from the war-affected Middle East (b) plan of action outlined by the countries of the world to combat climate change (c) capital contributed by the member countries in the establishment of Asian Infrastructure Investment Bank (d) plan of action outlined by the countries of the world regarding Sustainable Development Goals Answer: (b) 2. With reference to the Agreement at the UNFCCC Meeting in Paris in 2015, which of the following statements is/are correct? (2016)
Select the correct answer using the code given below. (a) 1 and 3 only (b) 2 only (c) 2 and 3 only (d) 1, 2 and 3 Answer: (b) Mains
1. Describe the major outcomes of the 26th session of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC). What are the commitments made by India in this conference? (2021) 2. ‘Climate Change’ is a global problem. How will India be affected by climate change? How Himalayan and coastal states of India are affected by climate change? (2017) |
Source: The Hindu
FINANCE COMMISSION OF INDIA
1. Context
The Sixteenth FC’s changes in the horizontal criteria, discontinuation of statutory grants, and tacit approval to the shrinking of the divisible pool have tilted the scales toward greater central leverage through discretionary transfers.
2. What is the Finance Commission?
The Finance Commission is a constitutional body in India, established under Article 280 of the Indian Constitution. Its primary purpose is to define the financial relations between the central government and the individual state governments.
Here are some key functions and roles of the Finance Commission:
-
Distribution of Taxes: It recommends how the net proceeds of taxes should be divided between the Centre and the States, and among the States themselves.
-
Grants-in-Aid: It determines the principles governing Grants-in-Aid to the States from the Consolidated Fund of India.
-
Augmenting State Finances: It suggests measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities in the State, based on the recommendations made by the State Finance Commissions.
-
Financial Performance Review: It evaluates the financial performance of both the central and state governments and suggests corrective measures for better fiscal management.
-
Any Other Matter: The Commission may also address any other matter referred to it by the President of India in the interest of sound finance.
The Finance Commission is reconstituted every five years and comprises a chairman and four other members, who are appointed by the President of India. The recommendations of the Finance Commission are advisory in nature, meaning they are not binding but are generally followed by the government
3. How does the Commission decide?
- The Finance Commission determines the percentage of the central government's net tax revenue allocated to the States overall (vertical devolution) and how this share is distributed among the individual States (horizontal devolution).
- The horizontal distribution is typically based on a formula devised by the Commission, which considers factors such as a State's population, fertility rate, income level, and geography.
- In contrast, vertical devolution does not follow a specific objective formula. Recent Finance Commissions have recommended increasing the share of tax revenues allocated to States. For instance, the 13th, 14th, and 15th Finance Commissions proposed that the Centre share 32%, 42%, and 41% of the divisible pool of funds, respectively, with the States. Additionally, the Centre may provide extra grants to States for certain jointly funded schemes.
- The 16th Finance Commission is anticipated to suggest ways to boost the revenues of local bodies, such as panchayats and municipalities. It is worth noting that, as of 2015, only about 3% of public spending in India occurred at the local body level, in contrast to countries like China, where over half of public spending happened at the local level
4. Friction between the Centre and States
Friction between the Centre and States in India arises from several factors related to the distribution of powers, financial resources, and political differences.
Here are some key reasons for this friction:
- Disagreements over the allocation of financial resources and the share of tax revenue. States often feel that they do not receive an adequate share of central taxes and grants, impacting their ability to fund local projects and services
- The central government sometimes makes decisions unilaterally, leading to perceptions of overreach and undermining the autonomy of state governments. This centralization can be seen in policy decisions, imposition of centrally sponsored schemes, and emergency provisions
- Conflicts often arise when different political parties govern the Centre and the States. Political rivalries can lead to tensions and lack of cooperation, impacting the implementation of policies and schemes
- The Constitution divides subjects into Union, State, and Concurrent Lists. Disputes can arise over subjects in the Concurrent List, where both the Centre and States have legislative powers. The Centre’s laws can sometimes override state laws, causing friction
- States may resist the implementation of central policies and reforms that they believe do not align with local needs and priorities. This resistance can lead to conflicts over policy implementation
- Disputes over the control and distribution of natural resources like water, minerals, and forests can create tensions. States often demand a greater say in the management and revenue from these resources
- Conditional grants and loans from the Centre can be a point of contention. States may feel that conditions imposed are restrictive and interfere with their autonomy
- Issues related to the appointment and control of key administrative positions, such as governors, can lead to conflicts. Governors are appointed by the Centre but play a crucial role in state administration
5.Disagreements and Agreements between States
- The States and Centre often clash over the percentage of total tax proceeds that should be allocated to the States and the actual disbursement of these funds.
- States contend that they deserve a larger share than what the Finance Commission recommends, arguing that their responsibilities are greater than those of the Centre.
- They also criticize the Centre for not even allocating the recommended amounts, which they believe are already insufficient.
- For instance, analysts note that the Centre has transferred an average of only 38% of funds from the divisible pool to the States under the current Fifteenth Finance Commission, compared to the Commission’s recommendation of 41%.
- Additionally, States dispute what portion of the Centre’s total tax revenues should be included in the divisible pool from which they are funded. It is believed that cesses and surcharges, which are not included in the divisible pool and thus not shared with the States, can account for as much as 28% of the Centre’s total tax revenues in some years, significantly reducing States' revenues.
- Consequently, the increased devolution of funds from the divisible pool recommended by successive Finance Commissions may be offset by rising cess and surcharge collections. In fact, estimates suggest that if these cesses and surcharges are considered, the States' share of the Centre’s overall tax revenues could drop to as low as 32% under the 15th Finance Commission.
- More developed States like Karnataka and Tamil Nadu have also complained that they receive less money from the Centre than they contribute in taxes. For example, Tamil Nadu received only 29 paise for each rupee it contributed to the Centre’s exchequer, while Bihar gets more than ₹7 for each rupee it contributes.
- Critics argue that more developed States with better governance are being penalized by the Centre to support States with poorer governance. Some also believe that the Finance Commission, whose members are appointed by the Centre, may not be entirely independent and free from political influence
6. Way Forward
Friction between the Centre and States over the distribution of tax proceeds and financial resources is a complex and ongoing issue. States argue for a larger share of the divisible pool to meet their greater responsibilities, while they also express concerns over the Centre's retention of significant revenue through cesses and surcharges. The perceived inequity in financial allocations, where more developed States feel penalized in favor of less developed ones, adds to the tension. Additionally, questions about the independence of the Finance Commission, given its appointments by the Centre, further complicate the trust and cooperation required for equitable fiscal federalism. Addressing these concerns is crucial for fostering a balanced and harmonious Centre-State financial relationship in India
|
For Prelims: Finance Commission, Article 280, Fiscal Consolidation, Fiscal Federalism, and Alternative Dispute Resolution (ADR) mechanism.
For Mains: 1. Discuss the Role and Challenges of the Finance Commission in Promoting Fiscal Federalism and Ensuring Equitable Resource Distribution in India. (250 words).
|
Previous year Question1. With reference to the Finance Commission of India, which of the following statements is correct? (UPSC 2011)
A. It encourages the inflow of foreign capital for infrastructure development.
B. It facilitates the proper distribution of finances among the Public Sector Undertaking.
C. It ensures transparency in financial administration.
D. None of the statements (a), (b), and (c) given above is correct in this context.
Answer: D
2. With reference to the Fourteenth Finance Commission, which of the following statements is/are correct? (UPSC 2015)
1. It has increased the share of States in the central divisible pool from 32 percent to 42 percent.
2. It has made recommendations concerning sector-specific grants.
Select the correct answer using the code given below.
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2
Answer: A
3. Which of the following is/are among the noticeable features of the recommendations of the Thirteenth Finance Commission? (UPSC 2012)
1. A design for the Goods and Services Tax, and a compensation package linked to adherence to the proposed design.
2. A design for the creation of lakhs of jobs in the next ten years in consonance with India's demographic dividend.
3. Devolution of a specified share of central taxes to local bodies as grants
Select the correct answer using the codes given below:
A. 1 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: C
|
Source: The Hindu
MONETARY POLICY COMMITTEE (MPC)
1. Context
As Reserve Bank of India Governor Sanjay Malhotra prepares to announce the monetary policy on Wednesday (April 8), the economic backdrop has shifted dramatically since the February 2026 review: the West Asia conflict has clouded the economic horizon
2. What is Monetary policy?
Monetary policy refers to the actions and strategies undertaken by a country's central bank to control and regulate the supply of money, credit availability, and interest rates in an economy. Its primary goal is to achieve specific economic objectives, such as price stability, full employment, and sustainable economic growth.
Central banks use various tools to implement monetary policy, including:
Interest Rates: Adjusting the interest rates at which banks lend to each other (known as the federal funds rate in the United States) influences borrowing and spending in the economy.
Open Market Operations: Buying or selling government securities in the open market to regulate the money supply. When a central bank buys securities, it injects money into the system, and when it sells them, it reduces the money supply.
Reserve Requirements: Mandating the amount of reserves banks must hold, affecting their ability to lend money.
By influencing the availability and cost of money, central banks aim to stabilize prices, control inflation, encourage or discourage borrowing and spending, and promote economic growth. However, the effectiveness of monetary policy can be influenced by various factors such as global economic conditions, fiscal policies, and market expectations.
3.What is the primary objective of the monetary policy?
The primary objective of monetary policy typically revolves around maintaining price stability or controlling inflation within an economy. Central banks often set an inflation target, aiming to keep it at a moderate and steady level. Stable prices help in fostering confidence in the economy, encouraging investment, and ensuring that the value of money remains relatively constant over time.
However, while controlling inflation is often the primary goal, central banks might also consider other objectives, such as:
Full Employment: Some central banks have a secondary objective of supporting maximum employment or reducing unemployment rates.
Economic Growth: Encouraging sustainable economic growth by managing interest rates and credit availability to stimulate or cool down economic activity.
Exchange Rate Stability: In some cases, maintaining stable exchange rates might be an important consideration, especially for countries with open economies heavily reliant on international trade.
These additional objectives can vary depending on the economic conditions, priorities of the government, and the central bank's mandate. Nonetheless, ensuring price stability is typically the fundamental goal of most monetary policies, as it forms the basis for a healthy and growing economy.
4. Monetary Policy Committee (MPC)
- In line with the amended RBI Act, 1934, Section 45ZB grants authority to the central government to establish a six-member Monetary Policy Committee (MPC) responsible for determining the policy interest rate aimed at achieving the inflation target.
- The inaugural MPC was formed on September 29, 2016. Section 45ZB stipulates that "the Monetary Policy Committee will ascertain the Policy Rate necessary to meet the inflation target" and that "the decisions made by the Monetary Policy Committee will be obligatory for the Bank."
- According to Section 45ZB, the MPC comprises the RBI Governor as the ex officio chairperson, the Deputy Governor overseeing monetary policy, a Bank official nominated by the Central Board, and three individuals appointed by the central government.
- The individuals chosen by the central government must possess "capabilities, ethical standing, expertise, and experience in economics, banking, finance, or monetary policy" (Section 45ZC)
5.Monetary Policy Committe and Inflation
- The Monetary Policy Committee (MPC) plays a crucial role in managing inflation through its decisions on the policy interest rate.
- When inflation is too high, the MPC might decide to increase the policy interest rate. This action aims to make borrowing more expensive, which can reduce spending and investment in the economy.
- As a result, it could help decrease demand for goods and services, potentially curbing inflation.
- Conversely, when inflation is too low or the economy needs a boost, the MPC might decrease the policy interest rate.
- This move makes borrowing cheaper, encouraging businesses and individuals to spend and invest more, thus stimulating economic activity and potentially raising inflation closer to the target level.
- The MPC's goal is to use the policy interest rate as a tool to steer inflation toward a target set by the government or central bank.
- By monitoring economic indicators and assessing the current and expected inflation levels, the MPC makes informed decisions to maintain price stability within the economy
6. Way forward
With more than half of the current financial year witnessing positive developments in the economy, the full financial year should conclude as projected with a strong growth performance and macroeconomic stability. Yet risks on the downside persist. Inflation is one of them that has kept both the government and the RBI on high alert. Financial flows in the external sector also need constant monitoring as they impact the value of rupee and the balance of payments. A fuller transmission of the monetary policy may also temper domestic demand
|
For Prelims: Economic and Social Development
For Mains: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
|
|
Previous Year Questions
1. Consider the following statements: (UPSC 2021)
1. The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government.
2. Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in the public interest.
3. The Governor of the RBI draws his natural power from the RBI Act.
Which of the above statements is/are correct?
A. 1 and 2 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
Answer: C
2. Concerning the Indian economy, consider the following: (UPSC 2015)
Which of the above is/are component(s) of Monetary Policy? (a) 1 only (b) 2, 3 and 4 (c) 1 and 2 (d) 1, 3 and 4 Answer: C 3. An increase in Bank Rate generally indicates: (UPSC 2013) (a) Market rate of interest is likely to fall. (b) Central bank is no longer making loans to commercial banks. (c) Central bank is following an easy money policy. (d) Central bank is following a tight money policy. Answer: (d) 4. Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)? (UPSC 2017) 1. It decides the RBI's benchmark interest rates. 2. It is a 12-member body including the Governor of RBI and is reconstituted every year. 3. It functions under the chairmanship of the Union Finance Minister. Select the correct answer using the code given below: A. 1 only B. 1 and 2 only C. 3 only D. 2 and 3 only Answer: A |
Source: Indianexpress
CRBON CAPTURE AND UTILISATION (CCU)
1. Context
Carbon Capture and Utilisation (CCU) refers to a set of technologies that capture carbon dioxide emissions from industrial sources or directly from the air and convert them into useful products. This process removes carbon from the atmosphere and puts it into the economy as inputs for fuels, chemicals, building materials, or polymers. Unlike carbon capture and storage, where captured COâ‚‚ is permanently stored underground rather than reused, CCU uses up the captured carbon.
2. What is Carbon Capture and Utilisation (CCU)?
- Carbon Capture and Utilisation (CCU) is an approach to climate mitigation that focuses on treating carbon dioxide not merely as a waste product, but as a resource.
- In the context of rising global temperatures and increasing industrial emissions, CCU represents an attempt to balance economic development with environmental responsibility.
- When fossil fuels such as coal, oil, or natural gas are burned in power plants or used in industries like cement and steel manufacturing, large quantities of carbon dioxide (COâ‚‚) are released into the atmosphere.
- This COâ‚‚ traps heat and contributes to global warming. Carbon Capture and Utilisation seeks to intervene in this process. Instead of allowing the carbon dioxide to escape into the air, it is captured at the source of emission through specialized technologies.
- These technologies separate COâ‚‚ from other gases produced during combustion or industrial processes.
- Once captured, the carbon dioxide is compressed and transported to facilities where it can be put to productive use. This is the key difference between CCU and Carbon Capture and Storage (CCS).
- While CCS focuses on storing the captured carbon dioxide deep underground in geological formations to prevent its release, CCU aims to convert the captured COâ‚‚ into valuable products.
- The utilisation aspect of CCU can take many forms. Carbon dioxide can be used to manufacture chemicals such as methanol and urea, which are widely used in fertilisers and industry.
- It can also be converted into synthetic fuels, building materials like carbon-infused concrete, and even used in the production of carbonated beverages. In some cases, COâ‚‚ is injected into oil fields to enhance oil recovery.
- By turning emissions into economically useful goods, CCU attempts to create a circular carbon economy, where carbon is reused instead of continuously extracted and emitted.
- The importance of CCU becomes particularly relevant for countries that rely heavily on fossil fuels for energy and industrial growth.
- For example, India, which has significant coal-based power generation, is exploring CCU as part of its broader climate strategy, with policy discussions supported by institutions such as NITI Aayog. For developing economies, CCU offers a transitional pathway: it allows industries to continue operating while reducing their carbon footprint.
- However, CCU is not without challenges. Capturing carbon dioxide requires substantial energy and investment. In some cases, the process itself can be energy-intensive, which may reduce the overall environmental benefit unless powered by renewable energy.
- Moreover, the long-term climate impact depends on how permanently the carbon is locked into products. If COâ‚‚ is used to produce fuels that are later burned, it eventually returns to the atmosphere.
3. Why does India need CCU?
- India needs Carbon Capture and Utilisation (CCU) because of the unique structure of its economy, energy system, and development priorities.
- Unlike many developed countries that have already industrialised and are now transitioning away from fossil fuels, India is still in a growth phase where energy demand, infrastructure expansion, and industrial production are rapidly increasing.
- This creates a complex challenge: how to grow economically while reducing carbon emissions.
- One of the primary reasons India needs CCU is its continued dependence on coal. A large portion of India’s electricity generation comes from coal-based thermal power plants.
- While renewable energy capacity is expanding significantly, coal remains critical for ensuring energy security and meeting base-load power requirements. Completely phasing out coal in the short term is neither economically nor socially feasible.
- CCU provides a transitional solution by capturing carbon emissions from these plants and converting them into useful products, thereby reducing the overall carbon footprint without abruptly disrupting energy supply.
- Another important factor is the nature of India’s industrial emissions. Sectors such as cement, steel, fertilisers, and petrochemicals are considered “hard-to-abate” sectors because their production processes inherently generate carbon dioxide.
- For example, cement manufacturing releases COâ‚‚ not only from fuel combustion but also from chemical reactions in limestone processing.
- In such sectors, switching to renewable energy alone cannot eliminate emissions. CCU offers a technological pathway to manage these unavoidable emissions.
- India’s climate commitments also make CCU strategically important. Under the Paris Agreement, India has pledged to reduce the emissions intensity of its GDP and achieve net-zero emissions by 2070.
- Achieving this target while maintaining high economic growth will require a combination of renewable energy expansion, energy efficiency improvements, green hydrogen, and carbon management technologies like CCU.
- Institutions such as NITI Aayog have recognised CCU as part of India’s long-term decarbonisation strategy.
- Economic considerations further strengthen the case for CCU. By converting captured carbon into products such as methanol, synthetic fuels, construction materials, and chemicals, India can create new industries and green jobs.
- This supports the vision of a circular carbon economy, where waste emissions become raw materials for other sectors. For a country aiming to boost manufacturing under initiatives like Make in India, CCU can align environmental sustainability with industrial competitiveness
4. Where does India Stand today ?
- India has started promoting Carbon Capture and Utilisation (CCU) by extending research support through the Department of Science and Technology, which has developed a dedicated roadmap to guide research and development in this field.
- Additionally, the Ministry of Petroleum and Natural Gas has released a draft 2030 roadmap for Carbon Capture, Utilisation and Storage (CCUS), outlining potential projects where these technologies can be implemented.
- In the private sector, Ambuja Cements, part of the Adani Group, is collaborating with IIT Bombay on an Indo-Swedish pilot initiative aimed at converting captured carbon dioxide into fuels and other value-added materials.
- Similarly, JK Cement is engaged in developing a CCU demonstration facility focused on capturing COâ‚‚ for use in products such as lightweight concrete blocks and olefins.
- Expanding beyond the cement industry, Organic Recycling Systems Limited (ORSL) is spearheading India’s first pilot-scale Bio-CCU platform, which transforms carbon dioxide derived from biogas streams into bio-alcohols and specialised chemical products
5. Global Scenario
- The European Union’s Bioeconomy Strategy and its Circular Economy Action Plan clearly endorse CCU as an approach to transform carbon dioxide into raw materials for fuels, chemicals, and other industrial products, aligning the technology with broader sustainability and circular economy objectives.
- In the industrial sector, ArcelorMittal and Mitsubishi Heavy Industries, Ltd. have partnered with the climate technology firm D-CRBN to test an innovative process at ArcelorMittal’s facility in Ghent, Belgium.
- This initiative focuses on converting captured COâ‚‚ into carbon monoxide, which can then be reused in steelmaking and chemical manufacturing.
- In the United States, the expansion of CCU technologies is supported through a mix of fiscal incentives, including tax credits and government funding, especially for projects producing fuels and chemicals derived from carbon dioxide.
- Meanwhile, in the United Arab Emirates, the Al Reyadah project and proposed COâ‚‚-to-chemicals clusters are integrating CCU solutions with green hydrogen to advance low-carbon industrial development
6. Way Forward
The primary challenge in expanding CCU in India relates to economic viability. The processes involved in capturing, refining, and converting carbon dioxide demand significant energy and financial investment. In the absence of supportive policy measures or incentives, products manufactured using captured COâ‚‚ may find it difficult to compete with conventional, fossil-fuel-based alternatives that are currently more affordable.
Another major concern is the state of infrastructure. Effective deployment of CCU depends on the presence of well-developed industrial clusters, efficient systems for transporting captured COâ‚‚, and seamless integration with downstream manufacturing units. However, such integrated ecosystems are not uniformly available across India’s industrial landscape.
In addition, the lack of well-defined regulatory standards, certification mechanisms, and stable market signals generates uncertainty for investors. This uncertainty can dampen private sector participation and restrict market demand for products derived from captured carbon.
That said, India has made encouraging progress by formulating strategic roadmaps for the advancement of CCU technologies. The successful and timely implementation of these plans will be crucial in ensuring that CCU contributes meaningfully to the country’s broader climate and industrial objectives
|
For Prelims: Carbon Capturing, COP21, Paris Agreement, carbon cycle
For Mains:
1. What is Carbon farming? discuss the effective techniques within carbon farming for reducing greenhouse gas emissions, and explain the challenges that exist in implementing them, particularly in developing countries like India. (250 Words)
|
|
Previous Year Questions
1. With reference to carbon nanotubes, consider the following statements (UPSC 2020)
1. They can be used as carriers of drugs and antigens in the human body.
2. They can be made into artificial blood capillaries for an injured part of the human body.
3. They can be used in biochemical sensors.
4. Carbon nanotubes are biodegradable.
Which of the statements given above are correct?
A. 1 and 2 only B. 2, 3 and 4 only C. 1, 3 and 4 only D. 1, 2, 3 and 4
2. With reference to the recent developments in science, which one of the following statements is not correct? (UPSC 2019)
A. Functional chromosomes can be created by joining segments of DNA taken from cells of different species.
B. Pieces of artificial functional DNA can be created in laboratories.
C. A piece of DNA taken out from an animal cell can be made to replicate outside a living cell in a laboratory.
D. Cells taken out from plants and animals can be made to undergo cell division in laboratory petri dishes
3. Consider the following statements (upsc 2016)
1. The Sustainable Development Goals were first proposed in 1972 by a global think tank called the 'Club of Rome
2. Sustainable Development goals has to be achieved by the year 2030
Which of the statements given above is/ are correct
A. 1 Only B. 2 Only C. Both 1 and 2 D. Neither 1 Nor 2
4. LPG stands for (MPSC 2017)
A. Liquidity, Profitability and Growth
B. Liberalisation, Privatisation and Growth
C. Liberalisation, Privatisation and Globalisation
D.None of the above
5. Pradhan Mantri Ujjwala Yojana was launched (RRC Group D 2018)
A. July 2017 B. January 2018 C. May 2014 D. May 2016
6. In the context of WHO Air Quality Guidelines, consider the following statements: (UPSC 2022)
1. The 24-hour mean of PM2.5 should not exceed 15 μg/m³ and annual mean of PM2.5 should not exceed 5 μg/m³.
2. In a year, the highest levels of ozone pollution occur during the periods of inclement weather.
3. PM10 can penetrate the lung barrier and enter the bloodstream.
4. Excessive ozone in the air can trigger asthma.
Which of the statements given above are correct?
A. 1, 3 and 4 B. 1 and 4 only C. 2, 3 and 4 D. 1 and 2 only
Answers: 1-C, 2-A, 3-B, 4-C, 5-D, 6-B
|
Source: The Hindu
STAGFLATION
1. Context
During the 1970s and early 1980s, most Western countries experienced “stagflation”— a condition where low, if not negative, economic growth coexisted with high inflation
2. What is the stagflation?
- Stagflation is an economic condition in which three difficult problems occur at the same time: slow or stagnant economic growth, rising unemployment, and high inflation.
- The word itself is formed by combining “stagnation” and “inflation.”
- To understand it in a simple way, imagine an economy as a vehicle.
- Normally, when the economy moves forward strongly, businesses produce more, jobs increase, people earn more, and spending rises.
- In such periods, prices may also go up because demand is strong. This is ordinary inflation associated with growth.
- On the other hand, when the economy slows down, production falls, jobs may be lost, and consumer spending weakens. In such situations, prices usually tend to stabilize or even fall.
- Stagflation is unusual because it combines the worst of both situations.
- The economy is not growing, jobs are becoming scarce, yet the prices of goods and services continue to rise.
- For example, imagine that food prices, petrol costs, transport fares, and house rents are increasing every month, but at the same time companies are not hiring, salaries are not increasing, and some people are even losing jobs. This is a classic stagflationary situation.
- A common historical example is the 1970s oil crisis, when oil prices rose sharply across the world.
- Since petroleum is a major input for transport, industries, fertilizers, and electricity generation, the rise in oil prices increased the cost of production across sectors. As a result, prices rose rapidly while economic growth slowed down.
- What makes stagflation especially serious is that it is very difficult for governments and central banks to manage.
- Usually, if inflation is high, the central bank increases interest rates to reduce demand and bring prices down.
- But if the economy is already weak and unemployment is rising, increasing interest rates can slow growth even further.
- Similarly, if the government tries to stimulate growth by lowering interest rates or increasing spending, inflation may worsen
3. What comes first stagflation or recession?
- A recession and stagflation are different economic situations, and either can appear first depending on the cause of the slowdown.
- A recession usually means the economy is shrinking — production falls, businesses slow down, jobs reduce, and GDP growth turns negative for a period.
- A stagflation situation means the economy is slowing while prices are still rising sharply and unemployment is also increasing.
So, the key difference is:
- Recession = economic slowdown + low demand + usually lower inflation
- Stagflation = economic slowdown + high inflation + unemployment
4. How Stagflation is measured in India?
- In India, stagflation is not measured through a single official “stagflation index.”
Instead, economists and policymakers identify it by looking at a combination of macroeconomic indicators together. - Think of it as a three-signal diagnosis rather than one number.
- The three most important indicators are:
- Inflation
- Economic growth
- Unemployment
- When inflation remains high while growth slows and unemployment rises, the economy may be moving toward stagflation.
5. Statistics of Stagflation
- During the mid-1970s, both the United States and the United Kingdom experienced a rare and difficult economic phase marked by simultaneous slowdown and high inflation.
- In 1974, the US economy contracted by 0.5%, while the UK recorded a sharper decline of 1.7%. The weakness continued into 1975, with GDP growth rates of -0.2% in the US and -0.7% in the UK.
- At the same time, inflation remained exceptionally high. Consumer prices rose by 11.1% in the United States and 16% in the United Kingdom in 1974, followed by 9.1% and 24.2% respectively in 1975.
- A comparable phase emerged again between 1979 and 1982. During this period, the US economy showed uneven growth performance, registering 3.2% in 1979, -0.3% in 1980, 2.5% in 1981, and -1.8% in 1982. Inflation, however, remained elevated throughout, with annual consumer price increases of 11.3%, 13.5%, 10.3%, and 6.1% across these four years.
- Both of these episodes are classic examples of stagflation, a term first introduced by Iain Macleod, a British Conservative politician. In each case, the principal trigger was a severe oil price shock.
- The first shock followed the Yom Kippur War in October 1973, fought between Israel and the combined forces of Egypt and Syria. In response to Western support for Israel, the Organization of Arab Petroleum Exporting Countries imposed a comprehensive oil embargo on several Western nations.
- The second major oil crisis was linked to the Iranian Revolution in 1979, which disrupted oil production, and was further intensified by the Iran–Iraq War that began after Iraq’s invasion of Iran in 1980.
- Since then, the global economy has encountered at least three additional oil shocks — in 2008, 2022, and 2026.
- The 2008 global crisis led to economic stagnation, with growth either turning negative or remaining at very low single-digit levels, but it did not result in runaway inflation. Similarly, the 2022 Russia–Ukraine conflict pushed inflation upward, yet it did not culminate in a severe global recession
6. Demand and Supply
- In basic economic theory, market behaviour is often explained using the supply and demand model. In this framework, price (P) is shown on the vertical axis, while quantity (Q) is placed on the horizontal axis.
- The supply curve generally rises from left to right, indicating a direct relationship between price and quantity supplied. In simple terms, when prices increase, producers are motivated to supply more of a product because higher prices usually mean better profits.
- On the other hand, the demand curve slopes downward, reflecting an inverse relationship between price and quantity demanded. This means consumers tend to purchase more when prices are low and reduce their purchases when prices rise.
- The graph typically begins with an initial supply curve (S?) and a demand curve (D?). The point at which these two curves meet is known as the market equilibrium or market-clearing point. At the equilibrium price P?, the quantity demanded by consumers Q? is exactly equal to the quantity supplied by producers.
- Stagflation usually emerges due to what economists call a negative supply shock. Under normal circumstances, changes in the quantity supplied occur mainly because of changes in price, while other factors — such as input costs, production technology, and supply conditions — remain unchanged.
- In such cases, the adjustment happens through movement from one point to another along the same supply curve.
- However, a negative supply shock is different. It occurs when external factors such as rising fuel prices, higher raw material costs, war, or disruptions in production reduce the overall supply capacity of the economy. This causes the entire supply curve to shift leftward, leading to higher prices and lower output simultaneously — the classic condition for stagflation.
- As discussed earlier, in the case of stagflation, the duration of the supply shock is just as important as its intensity. For instance, if the conflict involving Iran were to end quickly, and if attacks on oil refineries and natural gas facilities in West Asia have not caused major long-term damage, the supply situation could normalise soon.
- In that case, the supply curve may shift back from S? to S? rapidly enough to prevent a prolonged stagflationary phase similar to that witnessed during the 1970s oil crisis
7. Way Forward
Addressing stagflation requires a carefully balanced policy mix, because the problem involves both rising prices and slowing economic activity at the same time. Unlike normal inflation or a conventional recession, relying on a single policy instrument may worsen one side of the problem while solving the other
|
For Prelims: Current events of national and international importance
For Mains: GS III - Indian Economy
|
|
Previous Year Questions
1.Consider the following statements: (UPSC CSE 2020)
Which of the statements given above is/are correct? (a) 1 and 2 only Answer (a)
Mains 1.There is also a point of view that Agricultural Produce Market Committees (APMCs) set up under the State Acts have not only impeded the development of agriculture but also have been the cause of food inflation in India. Critically examine. (2014) |
Source: Indianexpress
MATERNITY LEAVE IN INDIA
1. Context
Last week, the Supreme Court ruled that adoptive mothers could avail themselves of 12 weeks of paid maternity leave regardless of the age of their children at the time of adoption. Striking down Section 60(4) of the Social Security Code, 2020 (previously Section 5(4) of the Maternity Benefit Act, 1961), which limited this benefit only to mothers who adopted children under the age of three months, the Court said that an adoptive mother had the same rights and obligations towards the child as a biological mother.
2. Maternity leave in India
- The provision of statutory maternity benefits for working women in India traces its origins to the colonial period. The Bombay Maternity Benefit Act of 1929 was among the earliest laws, extending such benefits to women employed in factories.
- Over time, similar legislation was introduced in other regions prior to Independence. Eventually, in 1961, Parliament enacted the Maternity Benefit Act, which granted 12 weeks of paid maternity leave to working women nationwide.
- A significant reform came in 2017 with the Maternity Benefit (Amendment) Act. This amendment increased paid maternity leave for biological mothers to 26 weeks and, for the first time, included provisions for adoptive and surrogate mothers.
- Under Section 5(4), women who legally adopt a child below the age of three months, as well as commissioning mothers, are eligible for 12 weeks of maternity leave starting from the date the child is handed over to them
3. Drawbacks of the above law
- While the Maternity Benefit Act, 1961 and its 2017 amendment marked a progressive step for working women, the framework has several structural and practical limitations that affect its effectiveness.
- One of the most significant drawbacks is that the law places the entire financial burden of paid maternity leave on employers rather than the state.
- This increases the cost of hiring women, especially in the private sector, and can unintentionally discourage employers from recruiting or promoting women of childbearing age. In this sense, a well-intentioned welfare measure may contribute to gender discrimination in hiring practices.
- Another major limitation is its restricted coverage. The law applies mainly to women working in the formal sector, which constitutes only a small fraction of India’s workforce.
- A vast majority of women employed in the informal sector—such as domestic workers, agricultural labourers, and gig workers—remain outside its scope, thereby excluding those who are often most vulnerable.
- The 2017 amendment to the Maternity Benefit (Amendment) Act, 2017 extended leave to 26 weeks, which is beneficial for child and maternal health, but it has also raised concerns among employers regarding productivity and workforce continuity.
- Smaller firms, in particular, may struggle to manage prolonged employee absence without adequate support or incentives from the government.
- The provision for adoptive and surrogate mothers, while a positive inclusion, is limited in scope.
- It applies only when the adopted child is below three months of age, excluding many adoptive parents who take in older infants or children. This creates an inconsistency in how caregiving responsibilities are recognized.
- Additionally, the law does not adequately address paternity leave or shared parental responsibilities. By focusing almost entirely on mothers, it reinforces traditional gender roles and places the burden of childcare primarily on women, which can further affect their long-term career progression.
- There are also implementation challenges. Awareness about entitlements remains low among workers, and compliance is uneven, particularly in smaller establishments. Monitoring mechanisms are not always robust, leading to gaps between legal provisions and actual practice
|
Supreme Court on Motherhood
The Court emphasized that motherhood should not be confined to a purely biological perspective. It recognized adoption as an integral aspect of reproductive autonomy. Highlighting the importance of leave, the Court observed that this period is essential for building a strong emotional connection between the mother and the child. It further pointed out that children raised in institutional settings often exhibit higher levels of stress hormones compared to those brought up in family environments, underscoring the need for adequate paid leave even in cases involving older adopted children
|
4. Maternity Benefit Act 1961
- The Maternity Benefit Act was originally passed by Parliament on December 12, 1961, to regulate the employment of women in “certain establishments” for the period before and after childbirth and “to provide for maternity benefit and certain other benefits.”
- Originally it applied to every establishment “being a factory, mine or plantation” and later in 1973, it was extended to “any such establishment belonging to Government” and “every establishment where persons are employed for the exhibition of equestrian, acrobatic and other performances.”
- It repealed the Mines Maternity Benefit Act, 1941 and Maternity Benefit Act, 1929
- Section 4 of the 1961 Act prohibited the employment of or work by women during a certain period and under sub-section (1) stated, “No employer shall knowingly employ a woman in any establishment during the six weeks immediately following the day of her delivery or her miscarriage.”
- The right to paid maternity leaves was also given under Section 5 of the 1961 Act, although the period of such leave could not exceed twelve weeks, “that is to say, six weeks up to and including the day of her delivery and six weeks immediately following that day.”
- Additionally, no woman could be allowed to avail maternity benefits if she had not worked in the establishment for at least “one hundred and sixty days in the twelve months immediately preceding the date of her expected delivery.”
- These benefits would be allowed without dismissing the female worker from service or reduction of wages
- Violating provisions of the Act could result in three months’ punishment, with or without a fine
- On March 9, 2017, the Maternity Benefits (Amendment) Act 2017, was passed by Parliament, which brought about key changes to the original Act
5. Way Forward
The Court also urged the Union government to consider introducing a comprehensive legal provision that formally recognises paternity leave for all fathers, whether biological or adoptive. It observed that India’s existing legal framework does not sufficiently acknowledge the role of fathers in childcare and stressed the need to promote shared parenting responsibilities. At present, only male government employees are eligible for 15 days of paternity leave in cases of childbirth or adoption, while in the private sector, such leave is largely governed by individual company policies
Source: The Hindu
ESSENTIAL COMMODITIES ACT, 1955
1. Context
As the blockade of the Strait of Hormuz exposed the vulnerability of India’s supply chain for cooking gas, the majority of which is imported, the Union government invoked the Essential Commodities Act, 1955. While long-term steps are needed to diversify and reduce reliance on global suppliers and expand strategic reserves, the Act is a crucial emergency tool for now. It allows the Centre to direct refiners to boost domestic LPG production, prioritise household consumption, and regulate the allocation of natural gas.
2. What is the Essential Commodities Act, 1955?
- The Act authorizes the Union government to regulate the production, supply, and distribution of key commodities, such as medicines, fertilizers, food items, edible oils, fuels, and seeds.
- According to Section 3 of the Essential Commodities Act, 1955, the government may issue directives to ensure adequate supply, promote increased production of essential goods, and guarantee their fair distribution so that they remain accessible to the public at reasonable prices.
- It also has the authority to fix prices and stock limits, restrict certain sales, regulate storage, transportation, and distribution, and take measures to curb hoarding and black-marketing.
- In recent years, the Act has been used to address shortages of commodities such as wheat, sugar, and pulses. It was also enforced during the COVID-19 lockdown to curb hoarding, profiteering, and black-market activities involving several essential goods
|
Essential commodities are goods that are necessary for daily life and whose shortage can affect the public. Under the Act, the Central Government can declare any commodity as essential. Common examples include:
|
3. Why is this law invoked now?
- Amid military strikes by the United States and Israel, Iran has responded by launching attacks on oil-producing countries in the Persian Gulf that host U.S. military bases and by targeting vessels passing through the Strait of Hormuz.
- Although nearly one-fifth of the world’s oil trade moves through this strategic maritime route, the immediate concern for Indian consumers has been the potential disruption in the supply of Liquefied Petroleum Gas (LPG), commonly used as cooking fuel.
- Government initiatives such as the Pradhan Mantri Ujjwala Yojana significantly expanded LPG access in India, raising household coverage from around 62% in 2016 to almost universal access today.
- However, domestic production has not grown at the same pace as demand. In 2024–25, Indian refineries produced about 12.8 million metric tonnes of LPG, meeting only around 41% of the country’s annual requirement of 31.3 million tonnes, according to data from the Petroleum Ministry.
- The remaining demand is met through imports, nearly 90% of which pass through the Strait of Hormuz.
- Apart from LPG, Liquefied Natural Gas (LNG) is also used in Indian households through pipeline networks, as well as for transportation and various commercial applications.
- Of India’s daily gas consumption of roughly 189 million metric standard cubic meters, about 52% is produced domestically.
- Meanwhile, approximately one-quarter of the total demand is satisfied through imports from the Persian Gulf
4. How does order affect LPG Production?
- On March 5, the government instructed all oil refineries across India to divert their propane and butane outputs toward LPG production instead of using them for petrochemical manufacturing.
- A follow-up directive issued on March 9 expanded the scope of this order to include oil refineries and petrochemical units located in Special Economic Zones (SEZs).
- It further clarified that propylene, butene, and other components from the C3 and C4 hydrocarbon streams must also be utilised solely for LPG production.
- The directive applies not only to public sector refiners such as Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum, but also to other entities including Chennai Petroleum Corporation, Oil and Natural Gas Corporation, and Numaligarh Refinery Limited.
- In addition, private-sector refiners like Reliance Industries and Nayara Energy have also been brought under this order.
- According to the government, these measures have already boosted domestic LPG production by about 25%. Nevertheless, a significant portion of the country’s demand—roughly half—still needs to be met through imports.
- The directive also mandates that all LPG output be supplied exclusively to Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum, which have been instructed to prioritise distribution of cylinders to household consumers.
- As a result, reduced supply to commercial establishments has led several restaurants, hostels, and hotels to temporarily close or scale down their operations
5. Regulation of Natural Gas Supply
- The directive issued on March 9 regarding natural gas does not alter production levels; instead, it introduces a priority-based system for allocating gas supplies, superseding existing contractual arrangements.
- Under this framework, the highest priority is assigned to piped natural gas supplied to households, compressed natural gas used in transportation, gas required for LPG production, and fuel for pipeline compressors.
- These sectors will receive supplies equivalent to 100% of their average consumption during the previous six months, subject to overall availability.
- Fertilizer producers will be allocated about 70% of their usual requirements, although this proportion may be revised if ongoing conflict continues to disrupt supply chains during the kharif sowing season.
- Meanwhile, sectors such as tea processing, manufacturing, and other industries will receive up to 80% of their typical supply.
- Certain petrochemical units operated by Oil and Natural Gas Corporation, GAIL, and Reliance Industries may experience partial or complete reductions in liquefied natural gas (LNG) supplies. Additionally, natural gas allocations to oil refineries are expected to fall to around 65% of their normal consumption levels
|
For Prelims: Essential Commodities, liquefied natural gas (LNG), Special Economic Zones (SEZs)
For Mains: GS II - Policy and Governance
|
|
Previous Year Questions
1.Which of the following statements is/are correct about the Strait of Hormuz?
Select the correct answer using the code below: (a) 1 and 2 only Answer: (a) 2.With reference to Liquefied Natural Gas (LNG), consider the following statements:
Which of the statements given above are correct? (a) 1 only Answer: (b) 3.Consider the following statements:
Which of the statements given above is/are correct? (a) 1 only Answer: (c) |
Source: The Hindu
