Short notes on Current Affairs 30.01.2026

Economic Survey 2025–26

Overall Assessment by the Economic Survey 2025–26

• Presents a positive outlook for India’s domestic growth while warning of serious global economic risks.
• India’s medium-term growth forecast raised to ~7%, from the earlier estimate of 6.5%.
• At the same time, the Survey flags a 10%–20% probability of a global crisis worse than the 2008 financial crisis in 2026.
• Even the most optimistic global scenario is described as fragile and increasingly insecure.

India’s Growth Outlook

• Medium-term potential growth: ~7%, reflecting improved structural fundamentals.
• Current year (FY 2025–26):
  • Government growth estimate: 7.4%
  • Q3 (Oct–Dec 2025) nowcast: ~7%
• FY 2026–27 growth projection: 6.8%–7.2%
• Growth upgrade is attributed to sustained reform momentum rather than cyclical factors.

Key Drivers of Higher Growth Potential

• Capital formation
  • Strong public investment in physical and digital infrastructure.
  • Manufacturing capacity expansion supported by Production-Linked Incentive (PLI) schemes.
• Labour participation and efficiency
  • Rising formalisation of employment.
  • Better utilisation of labour and capital.
• Structural reforms
  • Liberalisation of FDI norms.
  • Logistics and supply-chain reforms.
  • Simplification of tax laws.
  • Targeted measures to ease credit constraints for MSMEs.
• Financial and institutional improvements
  • Stronger corporate and banking sector balance sheets.
  • Improved tax administration and compliance.

Global Economic Outlook for 2026: Three Scenarios

1. Worst-Case Scenario (10%–20% probability)

• A global crisis potentially worse than the 2008 financial crisis.
• Triggered by simultaneous financial, technological, and geopolitical stresses.
• AI-related investments identified as a major emerging risk:
  • Highly leveraged funding structures.
  • Dependence on optimistic execution timelines.
  • Narrow customer bases and long-term capital commitments.
• A correction in AI investments could:
  • Tighten global financial conditions.
  • Increase risk aversion.
  • Spill over into broader capital markets.
• If combined with geopolitical escalation or trade disruptions:
  • Sharp contraction in global liquidity.
  • Sudden weakening of international capital flows.
  • Shift toward defensive and protectionist economic policies.

2. Best-Case Scenario (40%–45% probability)

• Global conditions of 2025 continue into 2026.
• Stability persists, but the system becomes more fragile and less secure.
• Growth remains subdued and vulnerable to shocks.

3. Disorderly Multipolar Breakdown (40%–45% probability)

• Intensifying strategic and geopolitical rivalry.
• Russia–Ukraine conflict remains unresolved in a destabilising manner.
• Breakdown of collective security and trade arrangements.
• Greater global fragmentation and uncertainty.

Risks and Implications for India

• India is relatively better positioned than most economies across all scenarios.
• However, common risks remain:
  • Disruption of capital inflows.
  • Pressure on the rupee.
  • Potentially long-lasting external sector stress.
• Risks may extend beyond a single year and affect medium-term stability.

Policy Imperatives Highlighted by the Survey

• India must:
  • Sustain investor confidence.
  • Increase export earnings in foreign currency.
  • Manage the inevitable rise in imports that accompanies income growth.
• External resilience is critical despite progress in indigenisation and domestic capacity building.

Core Message of the Survey

• India’s growth story is structurally stronger than before, supported by reforms and investment.
• Global economic conditions remain fragile and increasingly risky.
• The primary threat is not slow growth but financial instability driven by leveraged tech investments and geopolitical tensions.

Unconditional Cash Transfers

Context and Political Economy

• The Economic Survey 2025–26 takes a strong stance against unconditional cash transfers (UCTs), including schemes targeted at women.

Changing Position of the Economic Survey

• The Survey contrasts with its 2024–25 edition, which had acknowledged:
  • Positive short-term effects of cash transfers and targeted loans
  • Improved consumption among poorer and lower-income households
  • Support for basic needs and debt repayment
• The current Survey shifts focus from short-term welfare gains to long-term fiscal and growth risks.

Scale and Growth of Unconditional Cash Transfers

• Aggregate spending on UCT programmes (FY 2025–26):
  • Estimated at ₹1.7 lakh crore, particularly focused on women beneficiaries.
• Expansion across States:
  • Number of States implementing UCTs increased more than five-fold between 2022–23 and 2025–26.
  • Around half of these States are in revenue deficit.

Fiscal Impact of Cash Transfers

• According to a cited study:
  • UCTs account for 0.19%–1.25% of State GDP.
  • They constitute 0.68%–8.26% of total State budgetary expenditure.
• These figures indicate a significant and growing fiscal burden on State finances.

Rationale and Critique of UCTs

• Arguments in favour (acknowledged by the Survey):
  • Provide immediate income support.
  • Help women meet unmet health and personal needs.
  • Viewed by some as compensation for women’s unpaid contribution to GDP.
• Concerns raised by the Survey:
  • Rapid scale-up and persistence of UCTs strain fiscal sustainability.
  • Lack of linkage with:
    • Employment generation
    • Skill development
    • Human capital formation
  • Risk of weakening medium-term growth prospects.

Changing Composition of State Expenditure

• Revenue expenditure dominance:
  • Accounts for 84% of total State spending (2023–24), marginally lower than 86% in 2018–19.
• Within revenue expenditure:
  • Growing tilt towards:
    • Unconditional cash transfers
    • Other committed expenditures (rigid in nature)

Fiscal Trade-offs Faced by States

• Increased spending on UCTs creates a trade-off:
  • Either cut back on social and physical infrastructure spending
  • Or raise fiscal deficits
• However:
  • Higher deficits would further weaken State finances.
  • Fiscal space is already constrained by limited revenues.

Structural Issues in Programme Design

• Many UCT schemes:
  • Lack sunset clauses
  • Lack periodic review mechanisms
• This increases rigidity in revenue expenditure, making adjustment difficult during fiscal stress.

Impact on Capital Expenditure and Growth

• Capital expenditure:
  • Has a stronger and more durable impact on growth compared to revenue spending.
• Under fiscal pressure:
  • Capital expenditure is often reduced first.
• This leads to:
  • Weaker infrastructure creation
  • Adverse implications for medium-term economic growth

Core Message of the Survey

• While unconditional cash transfers offer short-term welfare benefits, their unchecked expansion:
  • Threatens fiscal sustainability
  • Crowds out productive investment
  • Risks undermining long-term growth
• The Survey calls for a rebalancing of State expenditure priorities, favouring:
  • Investment in infrastructure
  • Employment generation
  • Skills and human capital development

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Structural Flaws in MGNREGA – Economic Survey 2025-26

Context and Policy Shift

• The Economic Survey 2025–26 defends the scrapping of MGNREGA, a landmark rural employment scheme launched in 2005.
• It introduces the Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025 as a “comprehensive legislative reset”.
• The Survey argues that while MGNREGA played an important historical role, it is no longer suited to current rural economic realities.

Rationale for Scrapping MGNREGA

• MGNREGA helped:
  • Stabilise rural incomes
  • Provide livelihood security
  • Create basic rural infrastructure
• However, the Survey claims the programme has long suffered from deep structural weaknesses that reforms could no longer fix.

Improved Rural Economic Conditions

• The Survey cites NABARD’s Rural Economic Conditions and Sentiments Survey (RECSS), November 2025, indicating:
  • Broad-based strengthening of rural economic fundamentals
  • Robust rural consumption
  • High income growth
  • Rising investments
  • Improved access to formal credit
  • Lower inflation perceptions
  • Better loan repayment capacity
  • High satisfaction with rural infrastructure
• Another research study cited shows:
  • Rural consumption at a 17-quarter high
  • Growth driven by both agricultural and non-agricultural real wages

Declining Demand for MGNREGA

• Person-days generated under MGNREGA declined sharply:
  • 389.09 crore (2020–21, pandemic peak)
  • 183.77 crore (2025–26, up to Dec 31, 2025)
  • Decline of over 53%
• The Survey links this decline to:
  • Falling rural unemployment (from 3.3% in 2020–21 to 2.5% in 2023–24)
  • Greater availability of non-farm and alternative employment opportunities
• Conclusion drawn: households are increasingly finding work outside MGNREGA.

Counter-Arguments by Activists and Unions

• Workers’ groups argue that:
  • Demand for MGNREGA was artificially suppressed
  • Budget allocations were inadequate
  • Technological requirements, such as mandatory digital attendance, created barriers for workers
• They contest the claim that declining demand reflects improved employment conditions alone.

Structural Issues Identified in MGNREGA

• The Survey highlights several persistent implementation problems:
  • Mismatch between financial expenditure and physical work progress
  • Works sanctioned but not executed on the ground
  • Use of machines in labour-intensive works, violating programme norms
  • Frequent bypassing or manipulation of digital attendance systems
• These issues contributed to:
  • Accumulated misappropriation over time
  • Weak accountability mechanisms

Limitations in Employment Guarantee Delivery

• Only a small proportion of households managed to complete the guaranteed 100 days of work, especially in the post-pandemic period.
• This indicates that the core promise of the programme was not being met for most beneficiaries.
• The Survey concludes that MGNREGA’s design and architecture have reached their limits.

Women’s Participation

• Women’s participation increased significantly:
  • From 48% in 2013–14
  • To 58.1% in 2024–25
• Despite this achievement, the Survey argues that gender gains alone cannot offset systemic inefficiencies.

Need for Re-examining Rural Employment Policy

• Improved rural conditions and reduced dependence on MGNREGA necessitate:
  • A reassessment of employment guarantee objectives
  • Alignment with changing rural labour markets
• The new Act is positioned as:
  • Better aligned with contemporary rural needs
  • Focused on livelihoods and employment beyond short-term wage work

Core Message of the Economic Survey

• MGNREGA was effective in its time, especially during crises like the pandemic.
• Structural inefficiencies, declining utilisation, and improved rural economic conditions justify a policy reset rather than incremental reform.
• The new rural employment framework aims to address:
  • Changing employment patterns
  • Accountability gaps
  • Long-term livelihood generation

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Fiscal Performance of Central & State Government – Economic Survey 2025-26

Core Argument of the Economic Survey 2025–26

• The Economic Survey argues against an immediate return to rigid fiscal deficit targets under the FRBM Act.
• It supports delaying strict fiscal consolidation to allow the Centre greater flexibility in responding to:
  • Volatile geopolitical conditions
  • Unpredictable geoeconomic shocks
• Emphasis is placed on pragmatic fiscal management rather than strict numerical adherence.

Centre’s Fiscal Performance

• The Survey highlights that the Centre has:
  • Honoured its post-pandemic fiscal consolidation commitment
  • Reduced fiscal deficit from 9.2% of GDP in 2020–21 (pandemic peak)
  • Targeted to reach 4.4% of GDP in 2025–26
• This aligns with the Finance Minister’s pledge to halve the pandemic-era deficit within five years.
• The Survey notes this achievement is significant because:
  • It was not mandated by law
  • It was achieved alongside improved quality of expenditure, with a strong focus on capital spending.

FRBM Act and Fiscal Targets

• The FRBM Act’s original target:
  • Fiscal deficit of 3% of GDP by March 2020
• This target has:
  • Been repeatedly deferred
  • Been achieved only once since the Act’s enactment in 2003
• The Survey acknowledges the perception that:
  • Reinstating the FRBM framework would improve fiscal credibility
• However, it cautions that:
  • Committing to rigid targets in uncertain times risks non-delivery
  • Missed targets can damage credibility more than flexible but realistic commitments

Rationale for Fiscal Flexibility

• The Survey argues that:
  • Global uncertainty necessitates policy freedom
  • Governments should commit only to achievable fiscal paths
• Fiscal credibility, according to the Survey:
  • Was weakened by repeated failures to meet FRBM targets in the past
  • Has been gradually restored post-COVID through sustained fiscal discipline
• Preserving this regained trust among:
  • Financial markets
  • Credit rating agencies
    is presented as a key policy priority.

States’ Fiscal Position: A Warning Note

• While praising the Centre’s fiscal prudence, the Survey raises concerns about State finances.
• Key trends highlighted:
  • Number of revenue-surplus States declined from 19 (2018–19) to 11 (2024–25).
  • Collective revenue deficit of States increased from:
    • 0.1% of GDP → 0.7% of GDP
• This deterioration is attributed to:
  • Lower revenue growth
  • Higher revenue expenditure
  • Increased spending on cash transfer schemes

Asymmetric Fiscal Discipline

• The Survey implicitly highlights a divergence:
  • Centre: Improving fiscal discipline and expenditure quality
  • States: Worsening revenue balances and rising deficits
• Suggests the need for:
  • Greater fiscal discipline at the State level
  • Reassessment of expenditure priorities, especially revenue-heavy commitments

Key Takeaway

• The Survey advocates a balanced fiscal strategy:
  • Credible and sustained deficit reduction
  • Without rigid adherence to outdated targets
• Fiscal rules should:
  • Adapt to changing global realities
  • Preserve hard-earned market confidence
• At the same time, State-level fiscal stress poses a growing risk to overall macroeconomic stability.

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Uneven Distribution of Secondary Education – Economic Survey 2025-26

1. Uneven Distribution of Schools

• Only 17% of rural schools provide secondary education.
• Around 38% of urban schools offer secondary education.
• This uneven distribution is a key barrier to achieving NEP 2020’s target of increasing Expected Years of Schooling (EYS) from 13 to 15 years.
• Contributes to a high number of out-of-school adolescents, particularly in secondary school age (14–18 years).

2. Secondary School Enrollment & Dropouts

• Net Enrolment Ratio (NER) for secondary age: 52.2%, highlighting poor retention beyond Grade VIII.
• Out-of-school adolescents (14–18 years): nearly 2 crore.
• Primary reasons for dropout:
  • 44% leave to supplement household income.
  • Gender-specific trends:
    • 67% of boys drop out for economic reasons.
    • 55% of girls drop out due to domestic/care responsibilities.
• Vocational/skills training gap:
  • Only 0.97% of adolescents have received institutional skilling.
  • 91.94% have received no formal skills training.

3. NEP 2020 Goals

• Target EYS: 15 years under the 5+3+3+4 schooling structure (ages 3–18).
• Challenges:
  • Retaining students beyond Grade VIII.
  • Integrating school-based vocational education.
  • Addressing economic pressures that force adolescents out of school.

4. Higher Education Development

• Premier Institutions:
  • IITs: 23 in India + 2 international campuses (Zanzibar & Abu Dhabi).
  • IIMs: 21
  • AIIMS: 20
• State institutions dominate: Over 81% of higher education enrolments are in state-run institutions.
• Policy directions:
  • Build state capacity in higher education.
  • Promote academia-industry collaboration.
  • Focus on internationalisation of higher education.
• Legislation: Viksit Bharat Shiksha Adhishthan Bill, 2025 aims to replace fragmented regulations and streamline governance.

5. Economic and Social Context

• Economic pressures are the leading cause of adolescent dropout.
• Girls face additional challenges due to domestic and care responsibilities.
• Improving access to secondary education and vocational skills is critical for transforming human resources into high-quality human capital.
• Gains in school enrollment, higher education expansion, and innovation index improvements are seen as evidence of reform progress under PM Modi’s “reform express.”

6. Key Insights

• Structural inequity: Rural students have far less access to secondary education than urban peers.
• Dropouts are economically and socially driven, not purely academic.
• Skills gap: Majority of adolescents receive no institutional skills training.
• NEP 2020 implementation requires:
  • Expanding secondary school infrastructure.
  • Retention strategies for adolescents.
  • Integration of vocational training.
• Higher education priorities: Capacity building, internationalisation, and policy simplification to align with economic and global needs.

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Critical Minerals – Economic Survey 2025-26

1. Strategic Importance of Critical Minerals

• Metals such as lithium, cobalt, nickel, copper, and rare earth elements are identified as new strategic choke-points in the global transition to a low-carbon economy.
• These minerals are crucial for clean energy technologies including batteries, electric vehicles, renewable energy systems, and energy storage.
• Control over these resources increasingly shapes:
  • Energy security
  • Industrial competitiveness
  • Geopolitical power

2. Geopolitical and Trade Dimensions

• Several source countries have imposed export restrictions on critical minerals.
• Such restrictions demonstrate how mineral-rich countries can use these resources as strategic leverage in global trade and geopolitics.
• Dependence on limited suppliers increases vulnerability for mineral-importing nations.

3. Response of Advanced Economies

• Advanced economies are promoting “standards-based critical mineral markets”.
• These standards emphasise:
  • Environmental sustainability
  • Traceability
  • Governance and responsible sourcing
• While the objectives are legitimate, compliance requires significant investment, especially in technology, monitoring, and certification systems.

4. Cost Burden of Standards

• Compliance with sustainability and governance standards involves:
  • High upfront capital costs
  • Ongoing operational and reporting expenses
• These costs can act as entry barriers, particularly for developing and emerging economies with limited financial and institutional capacity.

5. Challenges for Developing Countries

The Economic Survey identifies three broad risks:

• Barrier to Market Entry
  • High compliance costs may exclude developing countries from participating effectively in global critical mineral markets.
• Asymmetrical Standards Enforcement
  • Standards may be narrowly defined or selectively enforced, disadvantaging developing countries.
  • Risk of being locked into low-value segments of global supply chains.
• Limited Value Addition
  • Developing countries may remain exporters of raw materials, while
  • Processing, refining, and manufacturing remain concentrated in advanced economies.

6. Sustainability Premium and Global Inequality

• Sustainability-driven standards can create a “sustainability premium”, raising mineral prices.
• Without parallel support in:
  • Finance
  • Technology transfer
  • Capacity building
• The higher costs of minerals can slow the global energy transition and disproportionately impact emerging economies.

7. Broader Implications

• The current trajectory risks reinforcing global economic asymmetries in the green transition.
• A low-carbon transition without inclusive support mechanisms may:
  • Increase costs for developing countries
  • Undermine equitable and timely climate action
• The Survey implicitly calls for balanced global frameworks that combine sustainability goals with fairness and development needs.

Key Takeaway

• Critical minerals are central to the clean energy transition, but unequal standards and cost burdens risk turning sustainability into a new form of trade and technological exclusion for developing countries unless global cooperation, finance, and capacity-building are strengthened.

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WaveX – India AI Impact Summit 2026.

Context & Announcement

• WaveX has invited applications from startups to participate in the India AI Impact Summit 2026.
• The Summit is being organised by the Ministry of Electronics and Information Technology (MeitY), Government of India.
• Dates & Venue: 16–20 February 2026, Bharat Mandapam, New Delhi.
• The Summit is positioned as a national-level platform to showcase AI innovations and strengthen collaboration across India’s AI ecosystem.

Purpose of India AI Impact Summit 2026

• To showcase innovative Artificial Intelligence solutions developed by Indian startups and institutions.
• To foster collaboration among startups, policymakers, industry leaders, investors, and global stakeholders.
• To strengthen India’s position in the global AI innovation landscape.
• To facilitate structured engagement between emerging startups and key ecosystem players.

Role of WaveX at the Summit

• WaveX will curate and facilitate a dedicated Startup Exhibition Programme.
• Selected startups will receive:
  • Opportunities to exhibit AI-driven products and solutions
  • Exposure to a national and international audience
  • Platforms for business networking and collaboration
• Special focus on startups operating in the AVGC-XR (Animation, Visual Effects, Gaming, Comics & Extended Reality) segment using AI technologies.

MIB Pavilion: Sectoral Focus

• AI startups in the media and entertainment sector will be showcased at the Ministry of Information & Broadcasting (MIB) Pavilion.
• The Pavilion will function as a central hub for emerging AI technologies in creative industries.
• Key engagement opportunities include interaction with:
  • Policymakers
  • Industry leaders
  • Investors
  • Global technology and media stakeholders
• Emphasis on cross-sector collaboration between creative industries and advanced technologies.

Expected Impact

• The Summit is expected to:
  • Strengthen India’s AI startup ecosystem
  • Encourage commercialisation and adoption of AI solutions
  • Promote innovation-led growth in media, entertainment, and language technologies
  • Position India as a hub for responsible and applied AI innovation

About WaveX: Institutional Framework

• WaveX is the startup accelerator platform under the WAVES initiative of the Ministry of Information & Broadcasting.
• It focuses on fostering innovation in:
  • Media and entertainment
  • AVGC-XR
  • Language and communication technologies
• WaveX acts as a bridge between startups, government institutions, and industry leaders.

WaveX Support Ecosystem

• Supports startups through:
  • Focused hackathons
  • Structured incubation programmes
  • Mentorship and industry integration
  • Access to national platforms and policy networks
• Strategic partnerships with:
  • T-Hub Hyderabad
  • IIT Delhi

Incubation Infrastructure

• WaveX operates across nine incubation centres in India:
  • IICT Mumbai
  • FTII Pune
  • SRFTI Kolkata
  • IIMC Delhi
  • IIMC Aizawl
  • IIMC Amravati
  • IIMC Dhenkanal
  • IIMC Kottayam
  • IIMC Jammu
• This network ensures geographical spread, regional inclusion, and sector-specific incubation.

Overall Assessment

• The initiative reflects the government’s strategy to:
  • Integrate AI with creative and media industries
  • Support startup-led innovation through targeted platforms
  • Promote public–private collaboration in emerging technologies
• WaveX’s role at the India AI Impact Summit 2026 underscores a convergent approach combining technology, creativity, entrepreneurship, and policy support.

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