Daily Current Affairs (DCA) 29 March, 2025

Daily Current Affairs Quiz
29 March, 2025

International Affairs

1. India Unlikely to Opt for Across-the-Board Tariff Reduction

Key Insights

• No Blanket Tariff Cuts: India is unlikely to implement a universal tariff reduction; instead, it may ease non-tariff barriers to navigate reciprocal tariff challenges.
• Potential U.S. Tariff Increase: If the U.S. imposes reciprocal tariffs, India’s average import tariff could rise to 15.7% from 2.7%, affecting almost all exports.
• Alternative Approach: India may expand purchases from the U.S. to offset potential tariff hikes.

India-U.S. Trade Tariff Gap

• U.S. Share in India’s Exports: 18% of India’s merchandise exports go to the U.S.
• India’s Share in U.S. Imports: Just 1.6% of total U.S. imports come from India.
• Tariff Differential: India imposes 6.5% higher tariffs on U.S. goods than vice versa, the highest among emerging economies (Nomura report).

Impact on Agriculture Exports

• High Tariff Gap
  • India charges an average 40% tariff on U.S. agricultural imports.
  • The U.S. imposes only a 2.9% tariff on Indian agri exports.
• Projected Tariff Impact: India could face a 2.3% increase in weighted import duty on agricultural products.
• Barclays Analysis: India may not need to reduce tariffs on some agri products despite the risk of reciprocal tariffs.

India is likely to strategically adjust non-tariff trade policies rather than lower import tariffs across the board. With rising U.S.-India trade tensions, policy shifts could focus on balancing imports and exports to maintain a stable trade relationship while protecting key domestic industries.

2. US Reciprocal Tariffs

Key Developments

• US Tariff Hikes:
  • 25% import duties on steel & aluminum (March 12, 2025).
  • 25% tariffs on automobiles (effective April 3, 2025).
• Countries Affected: China, Mexico, and Canada — accounting for 50% of US imports (~$3 trillion).
• Potential Impact on India:
  • Opportunity to capture market share in sectors where these countries dominate.
  • Some Indian sectors may face challenges, but specifics are yet to be detailed by NITI Aayog.

Trump’s Stance on India

• Previously firm on no special treatment due to India’s high tariffs.
• Recent Softening: Stated that some countries may get lenient tariff treatment starting April 2.

NITI Aayog’s Trade Analysis

• India’s Limited Presence in Major Markets:
  • EU, Northeast Asia, North America, and ASEAN account for 77% of global trade and 74% of global imports.
  • However, India’s trade with these regions is just 8%, fulfilling only 6% of their import demand.
• India’s Key Export Sectors & Competitors:
  • Electrical machinery, mineral fuels, nuclear reactors, and mechanical appliances.
  • China & the US are major competitors, with China dominating in electrical machinery & nuclear reactors.
  • India holds only a 12% share in these high-demand import categories.

India’s Strengths & Weaknesses

• Strong trade presence (44%) in South Asia, East Africa, and Southern Africa, but these regions contribute only 2% to global trade.
• Textile & Apparel Exports: Stagnant at $40 billion for six years, growing at just 0.8% annually (vs. global growth of 3.5%).

The US tariff shifts present a mixed bag for India. While Chinese, Mexican, and Canadian exports to the US may decline, India has an opportunity to expand its market share. However, low integration with high-demand regions and sluggish textile growth remain concerns. A strategic push in key export categories is crucial for India to capitalize on emerging trade opportunities.

National Affairs

1. Light Combat Helicopters

Context:

India’s Defence Ministry Signs ₹62,700 Crore Deal for 156 Light Combat Helicopters

Key Highlights

• Contract Signed with HAL: The Defence Ministry signed two contracts with Hindustan Aeronautics Ltd. (HAL) for the procurement of 156 indigenous Light Combat Helicopters (LCH) and associated training equipment.
• Total Cost: Over ₹62,700 crore (excluding taxes).
• Helicopter Allocation:
  • 90 LCHs for the Indian Army.
  • 66 LCHs for the Indian Air Force (IAF).
• Approval & Delivery Timeline:
  • Final approval from the Cabinet Committee on Security (CCS) before signing.
  • Delivery begins in the third year and continues over five years.

Indigenous Capabilities & Economic Impact

• The LCH is India’s first indigenously designed and developed combat helicopter, capable of operating above 5,000 metres.
• 65% indigenous content expected during execution.
• Over 250 domestic companies, mainly MSMEs, involved in production.
• Project to generate 8,500 direct and indirect jobs.

Additional Defence Contracts & Future Deals

• Wet Leasing of Flight Refueller Aircraft (FRA):
  • Contract signed with Metrea Management for one KC-135 refueller aircraft.
  • Aircraft to be delivered within six months for air-to-air refuelling training of IAF and Navy pilots.
• Upcoming LCA-Mk1A Order:
  • A separate order for 97 Light Combat Aircraft (LCA)-Mk1A is expected in the coming months.

Existing LCH Deployments

• 15 Limited Series Production (LSP) models already inducted at ₹4,264 crore.
• Indian Air Force:
  • Inducted LCH in October 2022 into 143 Helicopter Unit ‘Dhanush’ at Jodhpur Air Force Station.
• Indian Army:
  • First LCH squadron raised on June 1, 2022, in Bengaluru, later moved to Misamari, Assam.

This procurement enhances India’s defence capabilities, particularly for high-altitude combat operations. The emphasis on indigenous production aligns with the Atmanirbhar Bharat initiative, strengthening domestic aerospace industries while ensuring self-reliance in military aviation.

PIB

2. Indian Ports Bill 2025

Context:

Union ports, shipping and waterways minister Sarbananda Sonowal introduced the Indian Ports Bill 2025 in the Lok Sabha, proposing several amendments to the 117-year-old legislation.

Purpose of the Bill

• Repeals the Indian Ports Act, 1908 to modernize port regulations.
• Aligns with international maritime obligations while considering domestic priorities.
• Promotes sustainable port development for optimal coastline utilization.

Major Provisions

• Classification of Mega Ports
  • Ports may be designated as “mega ports” based on government-set criteria.
• Establishment of Maritime State Development Council (MSDC)
  • A central body to ensure a competitive, efficient, and growth-oriented port sector.
• Ownership & Control Regulations
  • Mandatory central government clearance for any significant ownership/control changes.
• New Dispute Resolution Mechanism
  • State-level Dispute Resolution Committees will handle port-related disputes.
  • Bars civil courts from jurisdiction over such disputes.
• Enhanced Powers for Port Conservators
  • Improved safety and conservation measures for ports.

Concerns & Opposition

• State Control vs. Centralization
  • K. Radhakrishnan (CPI-M) opposed the Bill, arguing it centralizes power and encroaches upon state rights over ports.

The Indian Ports Bill 2025 aims to modernize port governance, streamline operations, and integrate international maritime best practices, but faces criticism for potential centralization of control over state-run ports.

BS

3. Crore Electronics Component Manufacturing Scheme

Context:

Cabinet Approves ₹22,919-Crore Electronics Component Manufacturing Scheme

Key Highlights

• Scheme Approval: The Union Cabinet approved a ₹22,919-crore scheme to boost electronics component manufacturing over six years.
• Objective: Enhance domestic value addition in electronics manufacturing, shifting focus from finished goods to components and sub-assemblies.

Key Differences from Past Schemes

• No Production-Linked Incentive (PLI): Unlike past initiatives, this scheme does not reward incremental production.
• Turnover & Employment-Based Incentives: Manufacturers will receive incentives based on factory turnover and job creation rather than production output.

Expected Impact

• Investment Generation: ₹59,350 crore in new investments.
• Production Boost: Expected to drive ₹4,56,500 crore in electronics production.
• Employment Creation: 91,600 direct jobs to be generated.

Focus Areas

• Passive Components & Sub-Assemblies:
  • Controllers for displays and phone cameras.
  • Bare components like circuit boards, hardware enclosures, lithium-ion batteries.
• Active Components: Includes semiconductors and other critical parts.

This scheme marks a strategic shift towards strengthening India’s electronics supply chain by localizing key component manufacturing. It aligns with the government’s goal of reducing import dependence and enhancing India’s position in the global electronics ecosystem.

TH

4. Gig Workers’ Registration on eShram

Key Developments

• Over 70,000 gig workers across 36 states/UTs have registered on the eShram portal to access social security and healthcare benefits.
• Ten major e-commerce platforms, including Zomato, Uber, Blinkit, Swiggy, Ola, and Rapido, have onboarded their workers.
• The Parliamentary Standing Committee on Labour estimates that 35 lakh more gig workers will be eligible to register in FY26.

Significance of eShram for Gig Workers

• Social Security Access: Ensures financial support, insurance, and healthcare for gig workers, who typically lack formal employment benefits.
• Formalization of the Gig Economy: Helps track and integrate gig workers into structured labor welfare programs.
• Policy Framework for Aggregators: Encourages platforms to take greater responsibility for worker welfare.

Challenges & Recommendations

1. Low Registration Numbers: Despite millions of gig workers in India, only 70,000 have registered so far. The government must accelerate awareness campaigns and simplify the registration process.
2. Aggregator Onboarding: More platforms must be mandated to onboard workers, ensuring wider coverage.
3. Improved Benefits Structure: Expanding the scope of healthcare, pension, and accident insurance under eShram will enhance its attractiveness for gig workers.

The onboarding of major e-commerce platforms on eShram is a crucial step toward ensuring social security for gig workers. However, wider participation and better benefit structures are essential for meaningful impact.

TET

5. India’s Carbon Market Expansion

Key Developments

• The government has approved detailed procedures for the offset mechanism under the Indian Carbon Market (ICM).
• Eight sectors have been identified, including renewable energy, green hydrogen, industrial energy efficiency, landfill methane recovery, and mangrove afforestation/reforestation.
• The offset mechanism, introduced in December 2023, allows non-obligated entities to earn carbon credits through voluntary climate mitigation projects.
• This step operationalizes India’s Carbon Credit Trading Scheme, first notified in June 2023, strengthening the institutional framework for carbon markets.

Significance of the Offset Mechanism

• Encourages Private Sector Participation: Businesses and industries outside compliance obligations can now actively contribute to climate action.
• Diversifies Carbon Credit Generation: Inclusion of mangrove afforestation, green hydrogen, and energy efficiency ensures a broader impact beyond traditional renewable energy projects.
• Strengthens India’s Climate Commitments: Aligns with India’s Net Zero target for 2070 by incentivizing low-carbon technologies.
• Potential Market Growth: A robust voluntary carbon market could attract domestic and international investment in emission reduction projects.

Challenges & Considerations

• Verification & Transparency: Ensuring that carbon credits are accurately measured and verified will be crucial to prevent greenwashing.
• Pricing & Demand for Carbon Credits: A strong demand for voluntary credits is needed to make the market financially viable.
• Sector-Specific Regulations: Clear methodologies and compliance guidelines are essential for businesses to participate effectively.

The government’s approval of the offset mechanism is a critical step in expanding India’s carbon market. By enabling non-obligated entities to earn carbon credits, this move enhances India’s climate strategy while unlocking new opportunities in sustainable industries.

TET

6. Women’s Workforce Participation Rises to 25% in 2024: MoSPI Report

Key Findings

• Women’s workforce participation increased to 25% in 2024, up from 21.8% in 2019.
• Men’s participation (aged 15-59) also rose to 75% from 70.9% in the same period.
• Overall, employment-related activity participation increased to 49.9% in 2024 from 46.4% in 2019.
• Despite these gains, women continue to shoulder unpaid domestic and caregiving responsibilities disproportionately.

Gender Gap in Unpaid Work

• 92.9% of women participated in unpaid domestic services, compared to 30.4% of men.
• Women spent 305 minutes per day on such activities, while men spent only 86 minutes.
• Unpaid caregiving: Women devoted 140 minutes daily, nearly double the 74 minutes spent by men.

Youth Workforce Trends (15-29 Age Group)

• Overall employment participation: Rose to 35.3% in 2024, from 34.1% in 2019.
• Male youth participation: 56.3%
• Female youth participation: 14.9%
• Time spent on unpaid domestic work:
  • Young women: 280 minutes/day
  • Young men: 87 minutes/day

Education Trends

• Children (6-14 years) engaged in formal learning:
  • Rural areas: 71.6%
  • Urban areas: 68.8%

Analysis & Implications

• Improving Women’s Workforce Participation
  • A 3.2 percentage point rise in women’s employment participation signals progress but remains below global averages.
  • Factors such as economic growth, government policies, and flexible work models likely contributed to this increase.
• Persistent Gender Disparities in Unpaid Work
  • Women continue to spend significantly more time on domestic chores and caregiving, limiting their participation in the formal economy.
  • The 10-minute reduction in daily unpaid domestic work since 2019 suggests a slow but positive shift.
• Youth Workforce Participation: Slow Progress for Women
  • While male participation in employment remains high, women’s participation at 14.9% remains concerningly low.
  • Addressing educational skilling, social norms, and workplace inclusivity is crucial to improve women’s economic engagement.
• Education Access & Workforce Readiness
  • The high participation of children in formal education is a positive indicator for future workforce readiness.
  • However, the rural-urban gap in educational participation suggests disparities in access and quality of education.

The report highlights a steady rise in workforce participation for both men and women, yet deep-rooted gender imbalances persist. Bridging the unpaid work gap, expanding skilling programs, and improving workplace inclusivity will be crucial in boosting women’s economic participation in the long run.

Banking/Finance

1. RBI Deputy Governor Warns NBFCs on Risk Management & Fair Lending

Key Takeaways from Swaminathan J’s Address

• NBFCs Should Not Exceed Risk Absorption Capacity:
  • Risk-taking should be prudent and well-planned.
  • Lending and recovery must be fair and ethical.
• Call for Strong Grievance Redress Mechanism:
  • Ensuring transparency and customer protection in lending and recovery.
• Expectations from Auditors:
  • Maintain audit rigor.
  • Uphold objectivity, transparency, and ethics in financial reporting.
• Part of RBI’s Supervisory Engagements:
  • Ongoing dialogues with regulated entities to strengthen governance and compliance.

RBI is reinforcing risk management discipline among NBFCs while pushing for fair lending practices and strong audit standards. This aligns with the broader goal of ensuring financial stability and consumer protection in India’s lending ecosystem.

BS

2. NSE Submits Response to SEBI on IPO Readiness

Background & Context

• The National Stock Exchange (NSE) has sent a 16-page response to the Securities and Exchange Board of India (SEBI).
• NSE is seeking approval to file its draft red herring prospectus (DRHP) for listing.
• SEBI had earlier flagged concerns regarding governance, legal disputes, technology glitches, and key personnel compensation gaps.

Key Issues Raised by SEBI

• Technology & Governance Concerns
  • Cited instances of technological glitches and pending reviews from FY25.
  • Questioned NSE’s handling of IT failures and measures to prevent future disruptions.
• Public vs. Commercial Interest
  • SEBI emphasized that NSE should prioritize public-interest functions over commercial gains.
  • Highlighted resource allocation issues in this regard.
• Compensation & Management Disparities
  • Raised concerns over the compensation gap between the Managing Director (MD) and Key Managerial Personnel (KMPs).
  • Asked for a detailed roadmap on how NSE plans to address this imbalance.
• Clearing Corporation & Ownership Structure
  • Queried NSE’s compliance with ownership regulations regarding clearing corporations.

NSE’s Response & Justifications

• Technology & Infrastructure Upgrades
  • Outlined measures to strengthen technology for better reliability and scalability.
  • Highlighted ongoing initiatives to enhance system resilience.
• Prioritizing Public Interest
  • NSE stated that 67% of total employee expenses are allocated to public-interest verticals.
• Compensation & Management Issues
  • Defended its compensation structure but indicated willingness to address concerns if required.
• Clearing Corporation Compliance
  • NSE asserted it fully complies with SEBI’s ownership regulations, citing examples of other exchanges.
• Settlement of Pending Legal Matters
  • Expressed interest in resolving outstanding issues amicably via SEBI’s settlement mechanism.
  • Awaiting SEBI’s final FY24 annual inspection report before addressing any further deficiencies.

Next Steps

• NSE has been awaiting IPO approval since 2016, with delays due to regulatory concerns.
• The latest response aims to satisfy SEBI’s requirements and clear the path for listing.
• SEBI’s decision will be crucial in determining whether NSE can proceed with its IPO filing.

BS

3. BSE Shares Surge 17% as SEBI Limits Derivatives Expiry Days

Key Drivers Behind BSE’s Rally

• SEBI’s New Rules on Derivatives Expiry
  • SEBI limited index derivatives expiries to just two days per week (Tuesdays or Thursdays).
  • This was seen as benefiting BSE, as NSE had an advantage with multiple expiries.
  • NSE deferred its plan to shift index derivatives expiry to Monday, originally set for April 4.
• BSE’s Growing Market Share
  • Over the last two months, BSE’s market share jumped from 13% to 19% (QoQ).
  • Options premium volume surged 30% quarter-on-quarter.
  • More brokers and high-frequency traders are now preferring BSE.

Market Reactions & Analyst Views

• BSE stock surged 17% on Friday, marking its best single-day gain in six months, closing at ₹5,438.
• Analysts previously downgraded BSE earnings estimates due to NSE’s shift, but SEBI’s rule change reversed sentiment.

Impact of SEBI’s Decision

• Uniform Expiry Days Across Exchanges
  • BSE and NSE must choose either Tuesday or Thursday for derivatives expiries.
  • This prevents exchanges from changing expiry days multiple times in a year.
• Market Integrity & Risk Management
  • SEBI’s move aims to reduce concentration risk and maintain market stability.
  • High derivatives trading volumes on expiry days led to concerns over systemic stress.
• Challenges for New Entrants
  • Exchanges like NCDEX and MSE were planning to introduce weekly index options.
  • SEBI advised them to diversify and not rely solely on derivatives trading.

SEBI Eases Intraday Monitoring Rules for Index Derivatives

• New rules were set to take effect from April 1 but faced industry pushback.
• SEBI issued a circular on Friday stating breaches of limits will not attract penalties for now.
• New intraday monitoring system:
  • Exchanges will take at least four random snapshots of positions daily.
  • Industry bodies raised concerns over traders’ ability to comply with current position limits.
• SEBI may shift to delta-based or futures-equivalent limits, rendering existing preparations obsolete.

Outlook

• BSE benefits from SEBI’s move, narrowing its gap with NSE in derivatives trading.
• More brokers and traders shifting to BSE could drive further stock gains.
• Intraday monitoring rule relaxation provides temporary relief but could change with new frameworks.
• The competition between BSE and NSE will intensify, shaping India’s derivatives market in the coming months.

BS

4. RBI Urges NBFCs to Ensure Fair Lending and Strong Redressal Systems

Key Highlights

• RBI Deputy Governor J Swaminathan emphasized the need for fair lending practices and ethical recovery mechanisms.
• NBFCs must establish strong grievance redressal systems to protect borrowers from unfair lending practices.
• Risk-taking should remain within the financial capacity of the entity and not exceed its risk absorption capability.

Regulatory Concerns

• High-interest rates charged by some NBFCs have drawn scrutiny.
• Recent lending curbs were imposed on Navi Finserv, Arohan Financial Services, and DMI Finance due to allegations of usurious interest rates.
• These restrictions were lifted after corrective measures were taken by the firms.

Implications for NBFCs

• Increased Regulatory Oversight
  • RBI is actively monitoring lending practices to curb exploitative interest rates.
  • NBFCs need to strengthen compliance frameworks to avoid regulatory actions.
• Focus on Customer Protection
  • Implementation of robust grievance redressal systems will be crucial.
  • Ensuring transparent loan terms and ethical recovery practices will enhance customer trust.
• Sustainable Risk Management
  • NBFCs must ensure their lending strategies align with their financial stability.
  • Over-leveraging and aggressive lending could attract regulatory penalties.

With RBI tightening its grip on NBFC lending norms, firms must strike a balance between profitability and consumer protection. Strengthening governance, adopting fair lending practices, and enhancing transparency will be critical in maintaining regulatory compliance and long-term sustainability.

TET

Economy

1. PAC’s 19th Report on GST Implementation

Key Findings and Criticism

• Revenue Decline: The report highlights a 2% drop in indirect tax revenue between FY18 and FY20, before the COVID-19 pandemic.
• Compensation Fund Issues: The non-auditing and non-finalisation of the States’ Compensation Fund for over six years has caused financial strain.
• Lack of Transparency: The Centre failed to furnish the Compensation Fund Account to the Comptroller and Auditor General (CAG), delaying payments to States.
• Centralisation Concerns: GST’s structure has diminished fiscal autonomy for revenue-heavy States, especially those reliant on manufacturing.

GST Compensation and Financial Shortfalls

• The GST (Compensation to States) Act, 2017, promised States 14% annual revenue growth for five years (2017–22), using FY16 as the base year.
• Delays and Non-Payment: Many States reported either delayed or missing compensation, impacting governance.
• The PAC attributes this to the Centre’s indifferent approach.

Audit Discrepancies

• ₹32,577.73 crore in inconsistencies were found in a sample of 10,667 cases.
• The Finance Ministry’s audit approach was termed “lackadaisical” by the PAC.
• A formal mechanism with the CAG was recommended to ensure timely audits and updates.

Recommendations for GST Reform

• The PAC suggests a comprehensive review for a “GST 2.0” to improve the tax regime.
• States demand a larger GST revenue share (70%-80%), up from the current 50%.
• Improved audit mechanisms and transparency are necessary for smoother GST implementation.

The PAC’s report strongly criticizes GST’s structural inefficiencies, lack of transparency, and fiscal centralisation, reinforcing long-standing demands for reforms and greater State autonomy in revenue distribution.

2. India’s Fiscal Deficit Narrows for April-February FY25

Fiscal Deficit Analysis

India’s fiscal deficit for April-February FY25 stood at ₹15.70 trillion, or 85.8% of the revised estimate, compared to ₹17.35 trillion (86.5% of the estimate) in the same period last year. This signals improved fiscal management, with revenue growth outpacing expenditure.

• Lower deficit despite increased spending: The government managed to reduce the fiscal deficit even as total expenditure grew to ₹47.16 trillion from ₹44.90 trillion last year. This suggests better revenue mobilization and efficient fund allocation.
• On track for fiscal consolidation: The government’s target of reducing the fiscal deficit to 4.8% of GDP in FY25 and 4.4% in FY26 appears achievable, provided revenue trends continue and spending remains disciplined.

Revenue Performance and Implications

• Tax Revenue Growth (₹25.57 trillion, 78.8% of the FY25 target)
  • Strong tax collections, particularly from corporate and income taxes, indicate robust economic activity.
  • This aligns with higher GST collections and formalization of the economy, boosting direct and indirect tax revenues.
  • The government is less reliant on borrowing, reducing future debt servicing costs.
• Non-Tax Revenue (₹5.31 trillion, 92.9% of the target)
  • The sharp increase from ₹3.76 trillion last year highlights diversification of revenue sources, including dividends from PSUs, spectrum sales, and RBI surplus transfers.
  • Higher non-tax revenue offsets pressure on fiscal accounts, reducing the need for aggressive tax hikes.

Spending Trends and Policy Direction

• Capital Expenditure (₹10.18 trillion, 79.7% of the FY25 target)
  • The 8% YoY increase in capital spending suggests continued investment in infrastructure, manufacturing, and defense.
  • This aligns with the government’s strategy of boosting long-term growth while maintaining fiscal discipline.
  • Higher capex also implies multiplier effects on GDP, job creation, and private sector participation.
• Revenue Expenditure (₹36.98 trillion, 83.3% of the target)
  • A moderate rise in revenue spending (4.4% YoY) indicates controlled welfare and subsidy expenditure.
  • The government’s approach suggests a shift toward productive spending rather than populist measures.

Key Takeaways & Forward Outlook

• Fiscal Consolidation is on Track
  • Despite global economic uncertainties, India’s deficit reduction efforts are progressing well.
  • Lower fiscal deficit strengthens macroeconomic stability and enhances credit ratings and investor confidence.
• Tax and Non-Tax Revenue Growth is a Positive Sign
  • Sustained growth in collections suggests that India’s tax base is expanding, reducing dependence on deficit financing.
  • Higher non-tax revenues provide additional fiscal room without burdening taxpayers.
• Capital Expenditure Prioritization to Support Growth
  • Higher capex supports India’s manufacturing push, infrastructure development, and economic expansion goals.
  • This is likely to translate into higher GDP growth and private sector investments in the coming years.
• Challenges & Risks
  • Global uncertainties, oil price volatility, and inflation remain potential risks that could impact fiscal projections.
  • Further reforms in expenditure rationalization and tax compliance will be necessary to maintain fiscal discipline.

India’s fiscal position for April-February FY25 reflects a balanced approach between growth and discipline. Revenue buoyancy, higher capital spending, and a controlled fiscal deficit place the economy on a strong footing for future expansion, provided external risks are managed effectively.

3. India’s Core Sector Growth Slows to 5-Month Low in February

Key Highlights

• Core sector growth declined to 2.9% in February 2025, down from 5.1% in January and 7.1% a year ago.
• The slowdown is attributed to an unfavorable base effect and weaker performance in crude oil and natural gas.
• Steel (5.6%) and cement (10.5%) were the primary drivers of growth, with cement benefiting from government capital expenditure.
• Fertiliser output surged 10.2%, the highest in nearly two years, largely due to restocking and base effects.
• Crude oil (-5.2%) and natural gas (-6.0%) saw declines due to lower demand conditions.
• Core sector growth for April-February (FY25) averaged 4.4%, compared to 7.8% in the same period last year.

Sectoral Trends & Analysis

• Steel & Cement Leading Growth:
  • Strong infrastructure spending has kept demand for cement and steel high.
  • Expected to remain stable in the short term, supported by pre-election spending and private sector investment.
• Fertiliser Surge – Temporary Boost?
  • Growth appears driven by restocking rather than structural demand improvement.
  • May moderate in coming months once inventories stabilize.
• Crude Oil & Natural Gas – Structural Decline?
  • Demand slowdown coupled with limited domestic production growth is weighing on the sector.
  • Global crude price movements and energy transition policies could further impact long-term output trends.

Macroeconomic Implications

• Impact on Industrial Production: Core sector industries contribute 40.27% to the Index of Industrial Production (IIP). Slower growth here suggests IIP may also decelerate in the coming months.
• Economic Growth Signal: Lower core sector growth hints at slowing economic momentum, particularly in infrastructure-dependent industries.
• Inflationary Considerations: A dip in refinery products growth (0.8%) could mean stable fuel prices, reducing inflationary pressures.

Outlook & Forecasts

• March Core Sector Growth Projections:
  • India Ratings (Ind-Ra): ~4.0%
  • Bank of Baroda: ~4.5%
• February IIP Forecasts:
  • Ind-Ra: ~3.0%
  • Bank of Baroda: 3.0-3.5%

The slowdown in core sector growth underscores base effects, sector-specific challenges, and evolving demand patterns. While steel, cement, and fertilizers provide resilience, crude oil and natural gas continue to struggle. Going forward, government spending and global demand trends will be key determinants of industrial momentum.

TET

Agriculture

1. Nutrient-Based Subsidy (NBS) for Kharif 2025-26

Approval & Allocation

• ₹37,216 crore allocated for the first half of FY26 (H1FY26).
• 41% increase in per kg subsidy on phosphorus (P) compared to Rabi FY25.
• Total fertilizer subsidy for FY25 revised to ₹1.91 trillion, up 14% from the budget estimate of ₹1.68 trillion.

Impact on DAP & Other Fertilizers

• Despite the increase, companies still face a ₹1,000 per tonne loss on DAP imports at current prices.
• Phosphorus subsidy increase benefits multiple fertilizers beyond DAP, including NP and NPK grades.
• DAP subsidy raised from ₹25,411 per tonne to ₹27,800 per tonne for Kharif 2025.

Market & Industry Reactions

• Government aims to stabilize fertilizer prices—no hike in DAP retail rates since 2014, absorbing costs via subsidies.
• ICRA estimates losses on DAP imports will shrink from ₹4,000 per tonne to ₹1,000 per tonne due to revised subsidy rates and rupee appreciation.

Nutrient-Based Subsidy (NBS) Rates for Kharif 2025-26 (₹/kg)

Nutrient	Kharif FY25	Rabi FY25	Kharif FY26	% Change YoY (Kharif FY25 vs. FY26)	% Change (Rabi FY25 vs. Kharif FY26)
Nitrogen (N)	47.02	43.02	43.02	-8.51%	0.00%
Phosphorus (P)	28.72	30.8	43.6	51.81%	41.56%
Potassium (K)	2.38	2.38	2.38	0.00%	0.00%
Sulphur (S)	1.89	1.76	2.61	38.10%	48.30%

• The higher phosphorus subsidy reduces industry losses and benefits multiple fertilizers.
• The total fertilizer subsidy for FY26 is expected to remain high given volatile global input prices.
• Potential price reductions in global markets could further ease the burden on fertilizer companies.

Facts To Remember

1 Junta seeks aid as 7.7-magnitude earthquake kills 144 in Myanmar

A huge earthquake killed nearly 150 people and injured hundreds across Myanmar and Thailand on Friday, with dozens trapped in collapsed buildings and the death toll expected to rise.

2. Nod for ₹37,216-cr. fertilizer subsidy during kharif season

The Union Cabinet, on Friday, approved the nutrient-based subsidy rates for the upcoming kharif season on phosphatic and potassic (P&K) fertilizers. The budgetary requirement for this subsidy will be ₹37,216.15 crore. 

3. SBI´s Setty elected Indian Banks´ Association chairman

CS Setty, chairman, State Bank of India isa new chairman of Indian Banks´ Association (IBA). He succeedsMV Rao, managing director and chief executive, Central Bank of India.

4. RBI may revert to fixed daily funding amid liquidity woes

Central GST (CGST) field offices will remain open on March 2931, the Central Board of Indirect Taxes and Customs (CBIC) said on Friday.

5. ISRO announces successful completion of 1,000-hour life test on its 300 Milli Newton Stationary Plasma Thruster

Indian Space Research Organisation (ISRO) has announced the successful completion of a 1,000-hour life test on its 300 Milli Newton Stationary Plasma Thruster, that is developed for induction in the Electric Propulsion System of satellites.

6. Manav Thakkar Becomes First Indian to Reach Final Eight of WTT Star Contender

In Table Tennis, India’s Manav Thakkar created history by becoming the first Indian to qualify for the final eight of a WTT Star Contender event.

7. Elon Musk Sells X to xAI in $33 Billion Deal

Tech billionaire Elon Musk has sold social media site X to his own xAI artificial intelligence company in a 33 billion US dollars deal, the billionaire announced last night.

8. Madhya Pradesh Govt Procures 5.80 Lakh MT Wheat at MSP

Madhya Pradesh government is procuring wheat at the Minimum Support Price, MSP and farmers are also selling their produce enthusiastically.

9. Manisha Bhanwala clinches India’s first gold medal in Asian Wrestling Championship

In the Asian Wrestling Championship-2025, Manisha Bhanwala clinched India’s first gold medal since 2021 edition, while Antim Panghal settled for a bronze at Amman in Jordan on Friday night.