R2R SSB BATCHES START EVERY 1ST & 15TH of month. Referred articles were published in The Hindu.

1: University Under Attack: Undermining Academic Freedom and Quality in India

Background

• Universities in India are facing an unprecedented challenge, similar to those faced by the United States over the last three decades.
• In 2023, the Trump administration's policies impacted US education, hindering the free flow of ideas and the exchange of human capital.
• The Trump administration's proposed $3.2 billion cuts to Harvard's grants and contracts raise concerns about political disagreements influencing academic freedom.
• The growth of India's higher education sector is not accompanied by corresponding reforms in quality.
• Many institutions prioritize enrolment numbers over quality, leading to a decline in educational standards.
• The University Grants Commission (UGC) and the Ministry of Education are not doing enough to address these issues.
• India's higher education system is seen as a model to emulate, yet it struggles with quality and social relevance.

• There is inherent tension between the social role of universities and their focus on knowledge creation.
• Universities must evolve to meet existing societal challenges, as they are often expected to reproduce existing social structures.
• To foster true creative roles, academia requires autonomy.
• What makes societies dynamic is usually found in creative practices that involve play and the unexpected.
• While many university leaders recognize the need for change, they often prioritize security and stability over fostering innovation.
• The growth of higher education in India is largely focused on increasing enrolment, neglecting quality.
• Universities are becoming targets of attack for political reasons, raising concerns about academic freedom.
• India needs to produce a module for manufacturing democracy and fostering a robust system that delivers on quality.
• The system needs to change the course of education, increasing quality.
• Autonomy is needed for universities to produce excellent academics who generate new knowledge.
• Academics need autonomy to develop their own views, which guide their research and help them develop their original ideas.
• Higher education often faces political interference, with decisions being made by external authorities rather than academic merit.
• This undermines the autonomy of universities and makes them vulnerable to political agendas.
• Higher education institutions in India are often seen as prioritizing stability over quality, leading to less innovation.
• The focus on "bureaucrat-oriented" research discourages innovative thinking.
• Creating truly creative roles requires autonomy, and the system needs to allow academics to challenge the norm.
• Autonomy as impediment is a new argument stating that academia is an impediment to progress.
• The argument that the current system is not suited for innovation leads to new policies that will limit academic freedom.
• Funding for academic excellence is being pressured, with government funding being reduced and universities facing political pressure.
• Foundations are not receiving sufficient funding, impacting research and development.
• The government has reduced funding for public universities, with 1994 data showing a significant decline.
• The decline in funding affects research, innovation, and global competitiveness.
• The U.S. and China have developed a long-term agenda for global leadership in education and research.
• India needs to learn from these countries and create a system of independent universities and research institutes.
• The leadership of key institutions is limiting innovation due to adherence to old ideologies.
• Academic freedom is being undermined through political interference and insufficient funding.
• The traditional focus on rote learning continues to hinder the development of critical thinking.
• The existing short-term mindset suppresses innovation and growth.
• Many institutions are not moving forward with new ideas, leading to a decline in quality.

• Academic freedom and autonomy are essential for fostering quality education and research.
• India needs to increase funding for research and development in universities.
• The government should prioritize quality over quantity in higher education.
• Universities must be allowed to challenge existing norms and foster innovation.
• India should learn from successful models like the U.S. and China to develop a robust and independent higher education system.

Background

• India continues to lead in grassroots crypto adoption, ranking second globally in the "Geography of Crypto" report by Chainalysis (2024).
• A NASSCOM report finds that Indian retail investors poured $6.6 billion into crypto assets and predicts the industry could create over eight lakh jobs by 2030.
• India is emerging as a global hub for the fastest-growing web3 developer cohorts.
• This vibrancy is seen despite the "rocky journey" of crypto, known as Virtual Digital Assets (VDAs), within the domestic regulatory and policy landscape.
• The Supreme Court of India questioned the absence of clear regulation in India, calling it a "banning by shutting your eyes to ground reality."
• This observation highlights the dissonance between VDA reality and VDA policy, creating significant challenges for regulators and market players.

• Navigating India's VDA regulatory gaps is challenging due to strict capital controls and tightly regulated payment systems.
• It is difficult to reconcile these frameworks with the decentralized nature of VDAs.
• The Reserve Bank of India (RBI), as the domestic regulator of monetary policy, expressed concerns about the potential threats of crypto as early as 2013.
• The RBI highlighted the risks associated with the lack of authorization from any central bank or monetary authority.
• Despite this warning, the market saw unassailed growth in India, leading the RBI to issue a second circular in 2018, barring financial institutions from dealing with VDA-related entities.
• This restriction was short-lived, with the Court overturning the circular in 2020.
• The government then turned to prohibitive taxation policies as a stop-gap measure while appropriate regulations were formulated.
• In 2022, India implemented two key tax policies for VDAs under the Income Tax Act: a flat tax deducted at source (TDS) on VDA transactions exceeding ₹10,000 under Section 194S, and a 30% capital gains tax under Section 115BB, which disallows loss offsetting.
• These measures were designed to enhance transparency and curb speculation, but their effectiveness has been limited.
• Estimates indicate that between July 2022 and December 2023, Indians traded over ₹1.03 trillion worth of VDAs on non-compliant platforms, with only 9% of the estimated ₹1.12 trillion in VDAs held on domestic exchanges.
• Offshore trading resulted in a loss of ₹2,488 crore in uncollected VDA tax revenue for India.
• Between December 2023 and October 2024, Indians traded over ₹2.63 trillion on offshore platforms.
• The cumulative uncollected TDS from offshore exchanges since July 2022 is estimated to exceed ₹60 billion, with the nine blocked exchanges accounting for over 60% of this trading volume.
• Efforts to block access to non-compliant platforms, such as URL blocking, had limited success.
• Trade volumes on blocked exchanges rebounded after temporary declines, and web traffic to these platforms rose by 57%.
• Users continued to bypass restrictions using virtual private networks (VPNs), mirror platforms or servers, and by migrating to other non-compliant exchanges.
• The Financial Stability Board and the Financial Action Task Force advocate for comprehensive and risk-based regulation that is harmonized with international standards.
• These frameworks and regulations rely on domestic, compliant intermediaries or Virtual Asset Service Providers (VASPs) that act as the bridge and eyes and ears for regulators.
• These intermediaries facilitate the alignment of the VDA industry with existing laws and enforcement of policies, and enhance visibility over the ecosystem.
• India's existing policy regime, which inadvertently pushes VDA users to offshore, non-compliant platforms, raises the country's ability to mitigate risks.
• In comparison, Indian VASP platforms are sharpening their tech and maturing rapidly, showing a willingness to comply with regulations.
• The Financial Intelligence Unit-India has been instrumental in strengthening anti-money laundering and counter-terror financing controls, earning positive feedback from the Financial Action Task Force (FATF).
• The aftermath of the devastating hack in 2024, which wiped out $230 million, further showcased proactive measures by Indian exchanges.
• Many stepped up efforts such as enhancing cybersecurity measures, setting up dedicated insurance funds, and unifying and developing an industry-wide cybersecurity guideline.

• A holistic and pragmatic regulatory framework is necessary to foster growth while mitigating risks.
• The government should take a decisive action to create a comprehensive legal and regulatory framework that supports the VDA industry.
• Collaboration between regulators, industry players, and international bodies is crucial for effective VDA regulation.
• India should leverage its position in the crypto space to become a leader in global VDA regulation and innovation.

Background

• Data on India's economic performance in 2024-25 showed an optimistic outlook, with robust growth in the fourth quarter.
• However, low annual growth figures and more than a healthy dose of disappointment temper the optimism.
• The Q4 growth of 7.4% was considerably higher than expected and the fastest seen in an otherwise dismal financial year.
• The main drivers were the construction sector and the agriculture sector, showing strong growth.
• Services also showed steady growth.
• The manufacturing sector, on the other hand, grew at just 4.8%, down from 11.3% in Q4 of the previous year.
• There is a reality check hiding in the aggregate numbers.
• The GDP growth rate of 7.4% was largely due to a 12.5% growth in indirect taxes.
• This tax component inflated the GDP growth, as it does not reflect actual economic activity.
• The "Maha Kumbh effect" on consumption expenditure did not materialize.
• Growth in Private Final Consumption Expenditure in Q4 – the Kumbh quarter – came in at 6%, the slowest in five quarters.
• Capital formation, however, grew robustly at 9.4%, as the government fulfilled its sluggish capital investments.

• Government officials and Union Ministers have expressed their satisfaction at the 6.5% growth in 2024-25, stating it is the slowest since the pandemic.
• This growth is not bad in the context of a "growth-scarce" global environment.
• However, this is not good enough for India, as the race to grow faster than the rest of the world has begun.
• India's growth needs to be kept pace with the country's growing requirements.
• The Modi government, with its sights set on a 'Viksit Bharat' by 2047, must be held to a higher standard in line with its aspirations.
• The Economic Survey points out that to achieve "sustained economic growth of close to 8% every year for at least a decade," India is decidedly moving very slowly.
• Chief Economic Adviser V. Anantha Nageswaran stated that India is entering a phase of low inflation and stable growth.
• This stability can be good, but it implies lower chances of growth slowing.
• This implies growth is unlikely to accelerate significantly either.
• The government needs to consider whether this is truly a satisfactory situation for a transitioning economy.

• India needs to move towards a faster and more sustainable growth trajectory to transition into a developed economy.
• The government must prioritize structural reforms to boost manufacturing and private investment.
• A focus on quality of growth, not just headline numbers, is essential for long-term prosperity.
• Clear and ambitious policies aligned with the 'Viksit Bharat' (Developed India) 2047 vision are crucial.

Background

• The International Monetary Fund (IMF) recently projected that India will emerge as the fourth largest economy globally by 2025.
• This notable milestone, often compared solely on absolute Gross Domestic Product (GDP), offers limited insight into the lived realities of people.
• Absolute GDP figures are useful for measuring the size of an economy, but they do not capture how wealth is distributed, how developed people's countries are, or how they are living.
• They mask disparities in population size, cost of living, and income inequality.
• A country can have a large economy, but if that doesn't necessarily translate into prosperity or improved living standards for its people, it's problematic.
• For instance, India's absolute GDP is expected to increase from $3.7 trillion to $4.187 trillion in 2025, but its per capita income is only $2,987.
• Poland, a comparison country, will have a much lower GDP but a higher per capita income of $13,293 in 2025.
• This highlights that a country's size does not equate to the well-being of its citizens.

• First, consider the nature of employment. As shown in Charts 2A, 2B, and 2C, in 2023, nearly 84% of India's workforce was employed in agriculture.
• In contrast, the figure in both Poland and Japan fell below 10%, with a corresponding rise in employment in the industrial and services sectors.
• For the regular employment front, the share of workers in salaried workers was 24.5% in 2023, compared to 91% in Japan and 80.1% in Poland.
• A large part of India's population continues to rely on low-income, informal agricultural work, indicating a lack of high-quality employment.
• The gross enrolment rate in college education, after completion of secondary school, was 32.7% in India in 2022, compared to close to 80% in Japan and Poland.
• On the health front, the life expectancy of a person was 72 years for an average Indian in 2023, compared to 84 years in Japan and 78.5 years in Poland.
• Access to adequate healthcare is also reflected in a country's infant mortality rate, with 15.8 deaths per 1,000 live births.
• Over 1,000 years of age, while the IMR in all the mentioned countries fell between 2000 and 2023, India's IMR remains at 24.5, while Japan and Poland both recorded less than five deaths per 1,000 live births.
• The Human Develop Index (HDI) is a composite measure that assesses a country's overall achievement in health, education, and standard of living.
• The HDI is expressed as a number between 0 and 1, with 1 indicating high human development.
• India's HDI is 0.685 in 2022, showing "medium development," while the HDIs of Japan and Poland crossed the 0.9 mark, indicating "very high human development."

• India needs to focus on improving human development indicators such as education, healthcare, and employment quality, rather than solely on GDP growth.
• Investing in skill development and formal employment will be crucial for enhancing per capita income and improving living standards.
• The government should implement policies that promote inclusive growth and reduce disparities across various segments of the population.
• Learning from countries like Japan and Poland, which have achieved higher living standards despite smaller economies, can provide valuable insights for India's development path.

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NEWS IN NUMBERS

In May, gross GST collections increased by 16.4%. Over 1,194 migrants crossed the Channel into the U.K. Power consumption dipped 4% compared to last year. The RBI imposed 353 penalties in FY25. In France, 559 people were arrested during Champions League celebrations.