GS Paper III 2023

Manufacturing has stayed near 15-17% of GDP against the 25% goal of the National Manufacturing Policy, and MSMEs form its widest base of firms and jobs; a faster growth path needs both to expand.

Why manufacturing and MSMEs matter

• Factories absorb workers leaving farms at scale; MSMEs provide most labour-intensive employment and feed larger firms through supply chains.
• Manufacturing exports and productivity gains lift growth faster than services alone can.

Present policies: the push

• Make in India and PLI schemes across 14 sectors reward incremental output; new manufacturing units get a concessional tax rate.
• PM Gati Shakti and the National Logistics Policy attack logistics cost, a long-standing handicap.
• For MSMEs: the 2020 investment-plus-turnover definition, Udyam registration, ECLGS and CGTMSE credit guarantees, a Fund of Funds for equity and TReDS for receivables.
• MSE-CDP cluster development, ZED certification, PMEGP for new units and the World Bank-assisted RAMP programme for competitiveness.

Where they fall short

• PLI benefits flow mainly to large firms, and most MSMEs stay outside global value chains.
• Delayed payments, thin credit, informality, compliance burden and low technology persist.

Way forward

• Tie PLI beneficiaries to MSME sourcing, enforce timely payment, deepen formalisation through Udyam, and fund technology and skill upgrades.

Incentives to large firms alone will not lift manufacturing's share; scale, technology and formalisation of MSMEs will decide whether the sector becomes India's growth engine.

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India has built digital public infrastructure at a scale few countries match, from Aadhaar and UPI to direct benefit transfer, yet the gains remain uneven across regions, incomes and firms.

Status of digitalisation

• Payments: by 2023 UPI was handling about ten billion transactions a month, making small digital payments routine even for street vendors.
• Governance and markets: Aadhaar-based e-KYC and DBT, DigiLocker, GeM for public procurement, Account Aggregator for consent-based data sharing and ONDC for open e-commerce.

Problems

• Digital divide: unequal internet and smartphone access along rural-urban, gender and income lines, weak connectivity in remote areas and low digital literacy.
• Trust deficit: rising online fraud, cyber attacks and data breaches, with thin grievance redress and unclear liability for victims.
• Structural limits: a large cash-based informal economy, adoption costs for small firms, few local-language services and privacy safeguards still maturing.

Improvements

• Access: complete BharatNet to every gram panchayat, make devices and data affordable, and scale digital literacy through PMGDISHA.
• Usability: vernacular and voice-based interfaces so first-time users can transact without an intermediary.
• Safety: strengthen CERT-In, fix clear fraud-liability and grievance rules, and implement data protection fully.
• Adoption: nudge small merchants towards digital acceptance with low-cost tools and credit linked to their transaction records.

The platforms have been built; digitalisation will be inclusive only when access, skills and safeguards grow at the same pace.

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For a small farmer, timely information is an input as vital as seed and water; e-technology delivers it cheaply and at scale, from sowing to sale.

In production

• Advisory: Soil Health Cards guide fertiliser use; Meghdoot, mKisan and the Kisan Call Centre deliver weather and crop advisories; FASAL uses remote sensing for crop assessment.
• Precision farming: drones for spraying and field monitoring, sensors, satellite imagery and AI tools that optimise irrigation, nutrients and pest control.
• Inputs and risk: DBT for subsidies, PM-KISAN transfers, Kisan Credit Card credit, and remote-sensing-aided loss assessment for crop insurance claims.

In marketing

• Price discovery: e-NAM links mandis for online bidding, widening the buyer pool beyond local traders.
• Finance and storage: electronic negotiable warehouse receipts let farmers borrow against stored grain instead of distress-selling at harvest.
• Market access: ONDC and mobile apps connect farmers and FPOs directly to buyers; Agmarknet gives daily prices; QR-based traceability opens premium and export markets.

Limits and the bridge

• Patchy connectivity, low digital literacy, small holdings and device costs restrict uptake; FPOs, Common Service Centres and vernacular services can carry the last farmer along.

Technology raises farm incomes when connectivity, skills and collective institutions such as FPOs reach the last farmer.

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Land reform set out to undo a colonial agrarian order of absentee landlords, insecure tenants and landless labour.

Objectives

• Remove exploitative intermediaries, give the tiller ownership and security, reduce inequality in landholding, raise productivity and advance social justice in the village.

Measures

• Abolition of zamindari; tenancy reform with security of tenure and fair rent; ceilings on holdings with redistribution of surplus land; consolidation of fragmented holdings; and updating of land records.

Ceilings on economic criteria

• Productivity: small farms use land and family labour more intensively, so redistribution can raise output per hectare while cutting rural poverty, serving equity and efficiency together.
• Scale: ceilings cap economies of scale and mechanisation and encourage fragmentation, so their gains depend on complementary credit, inputs and markets.
• Implementation: benami transfers and family partitions evaded ceilings, leaving little surplus land to distribute; the equity gain was real but limited.
• Today: the average holding is about one hectare and most farms are marginal or small, so ceilings no longer bind; secure tenure, leasing and consolidation matter more.

What works now

• Legalise leasing on the lines of the Model Land Leasing Act 2016, digitise records under DILRMP, promote cooperative farming and FPOs for scale, and secure women's land rights.

Ceilings served equity in their time; on economic criteria today, productivity depends on secure tenure, flexible land use and scale achieved through cooperation.

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Artificial Intelligence refers to machines that learn from data to perform tasks needing human intelligence, such as recognising patterns, predicting and deciding; unlike fixed rule-based software, machine-learning and deep-learning models improve as they see more data.

AI in clinical diagnosis

• Imaging: models read X-rays, CT scans, retinal and pathology images to flag tuberculosis, cancers and diabetic retinopathy early, often before symptoms appear.
• Prediction: algorithms mine patient records to estimate the risk of complications and prompt timely intervention.
• Reach: decision support where specialists are scarce, faster triage and lower cost, a real gain for rural India.

Threat to privacy: yes, a real one

• Health data is the most sensitive personal data; the November 2022 attack on AIIMS Delhi's servers showed how exposed it is.
• Re-identification of anonymised datasets, commercial misuse by insurers or advertisers, and consent taken without understanding are live risks.
• Allied concerns: bias from unrepresentative training data, unclear accountability for a wrong diagnosis and over-reliance on the machine.

Safeguards

• The DPDP Act 2023 for consent and purpose limitation; consent-based sharing under the Ayushman Bharat Digital Mission; ICMR's ethical guidelines for AI in health; anonymisation, security audits and a doctor's final say.

AI should assist the clinician, not replace her, and be adopted only with firm consent, security and accountability norms.

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India imports most of its crude oil, so fuels that microbes make from farm, animal and urban waste offer energy security and waste management in one stroke.

Microbial routes to fuel

• Biogas: methanogenic bacteria digest cattle dung, crop residue, food and sewage waste without oxygen; the methane serves as cooking gas, power or compressed biogas, supported by GOBARdhan and SATAT.
• Bioethanol: yeast ferments sugarcane juice, molasses and grain into ethanol; petrol blending reached 10% in 2022 and 20% is targeted for 2025-26.
• Second-generation ethanol: cellulose-degrading microbes and enzymes turn paddy straw and other residue into ethanol, as at the Panipat 2G plant, cutting stubble burning as well.
• Biodiesel: oil-rich microalgae and other microbes produce lipids that can be converted into biodiesel; used cooking oil is another feedstock.
• Biohydrogen: fermenting bacteria release hydrogen from organic substrates, a clean fuel for the future.
• Microbial fuel cells: bacteria oxidising organic waste generate electricity directly, useful alongside sewage treatment.
• Enhanced oil recovery: microbes injected into ageing wells loosen trapped crude and raise output.

Limits

• Food-versus-fuel competition, high cost and low yields of advanced routes, and feedstock collection logistics; R&D, assured offtake and price support are needed.

Microbial fuels can meet only part of the shortage, but a waste-to-energy focus makes them sustainable, decentralised and climate-friendly.

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A dam breach releases a flood wave with almost no warning, and the downstream valley bears the worst of it.

Causes of dam failure

• Hydrological: overtopping when a flood exceeds spillway capacity; extreme rainfall under climate change makes older design floods obsolete.
• Structural and geotechnical: seepage and piping through the embankment or foundation, weak foundation rock, and poor design or construction quality.
• Ageing and neglect: deteriorated concrete, silted reservoirs that shrink the flood cushion, jammed gates and outlets, and weak inspection and maintenance.
• External triggers: earthquakes, landslides into the reservoir that send waves over the crest, and cascading failure down a chain of dams.
• Operational lapses: delayed gate operation, no emergency action plan or downstream warning, and poor reservoir regulation during the monsoon.

Two large failures

• Machchhu-II dam, Morbi, Gujarat (1979): overtopped in heavy rain, sending a wall of water into Morbi town.
• Teton dam, USA (1976): failed through piping while the reservoir was being filled for the first time.

Lessons

• The Dam Safety Act 2021 creates national and state authorities; periodic safety reviews, Emergency Action Plans, DRIP rehabilitation and real-time flood forecasting must follow.

Prevention lies in design margins, regular inspection and rehearsed emergency plans, not in relief after the flood.

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Oil pollution is the release of petroleum hydrocarbons into the sea from tanker accidents, ship operations, offshore drilling, pipelines and run-off from land.

Impacts on the marine ecosystem

• Smothering: oil coats seabirds and marine mammals and destroys their insulation; slicks smother plankton, fish larvae and shellfish and block light and oxygen exchange.
• Chronic toxicity: hydrocarbons enter the food chain, taint seafood, reduce fertility and persist in sediments for years.
• Habitat loss: mangroves, coral reefs, seagrass beds and mudflats, the nurseries of marine life, are hit hardest and recover slowly.

Why India is especially vulnerable

• Exposure: a coastline of about 7,500 km, and crude imports carried by sea through some of the busiest shipping lanes in the world.
• Livelihoods: fishing and coastal tourism support millions; a spill closes fishing grounds and beaches for months.
• Sensitive sites: the Sundarbans mangroves, Gulf of Mannar and Lakshadweep corals, Chilika lagoon and the Andaman waters; the Ennore spill (2017) off Chennai showed how quickly damage spreads.

Response

• MARPOL and OPRC obligations, the National Oil Spill Disaster Contingency Plan led by the Coast Guard, port reception facilities and polluter-pays liability.

Prevention, surveillance and ready contingency capacity cost far less than the long clean-up and the loss of coastal ecosystems and livelihoods.

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Militancy feeds on alienation, so lasting peace in Jammu and Kashmir depends on trust as much as on force.

Why hearts and minds matter

• An alienated population shelters militants and supplies recruits; trust in the state dries up both and turns residents into sources of intelligence.

Measures adopted

• Political and administrative: after Article 370 was read down in August 2019, the first District Development Council elections in 2020 completed the three-tier panchayat system and brought decisions closer to villages.
• Development: the Prime Minister's Development Package (2015), the Industrial Development Scheme (2021), road and rail infrastructure, and a tourism revival that creates local jobs.
• Youth: Himayat for skilling and placement, Udaan, the Prime Minister's Special Scholarship Scheme, Army Goodwill Schools, sports and cultural exchanges.
• Security with outreach: the Army's Operation Sadbhavana (schools, medical camps, women's skilling), community policing, and a surrender and rehabilitation policy.
• Governance: DBT-based welfare, grievance redress, and rehabilitation of displaced Kashmiri Pandits and border villagers.

Limits

• Internet shutdowns, AFSPA-related grievances, youth unemployment and online radicalisation erode trust; outreach must be sustained and rights-sensitive.

Security operations create the space; consistent governance, jobs and respect for rights fill it with trust.

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Cheap, low-flying drones now ferry arms, narcotics and cash across the Punjab and Jammu borders, slipping past the fence and ground patrols.

The threat

• Payloads of arms, explosives, heroin and cash feed terror modules and narco-networks; the June 2021 drone attack on the Jammu air force station showed their offensive use.

Measures being taken

• Technology: radars, radio-frequency detectors, jammers and anti-drone systems, including one developed by DRDO, deployed with the BSF and other forces.
• Operations: BSF night patrols, joint intelligence with Punjab Police, search and recovery drives, and village-level vigilance to report drops.
• Regulation: the Drone Rules 2021 with registration, the Digital Sky platform, geofencing and no-fly zones around sensitive installations.
• Law and diplomacy: prosecution under UAPA, the Arms Act and the NDPS Act; the issue raised with Pakistan through diplomatic channels and border-force meetings.

Assessment

• Detection remains patchy along a long border, and drones grow cheaper and more autonomous; an indigenous counter-drone grid, trained manpower and sustained R&D are still catching up.

A layered defence of detection, neutralisation, regulation and intelligence, built on indigenous technology, is the way to keep the border skies secure.

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Structural unemployment arises when workers' skills and locations do not match the jobs the economy creates; it is a mismatch, not a passing downturn.

Why India's unemployment is structural

• A large workforce remains in low-productivity farming while factory jobs grow too slowly to absorb those who leave it.
• Skills mismatch: what schools and colleges teach diverges from what employers need, leaving educated youth waiting for suitable work.
• Informality: most workers are self-employed or casual, so joblessness surfaces as underemployment rather than open unemployment.

How unemployment is measured

• The National Statistical Office's Periodic Labour Force Survey (PLFS) estimates it through household surveys: quarterly for urban areas and annually for rural and urban areas together.
• Definitions: a person is unemployed if seeking or available for work but not working; the unemployment rate is the unemployed as a share of the labour force.
• Reference periods: usual status looks at the preceding year (principal plus subsidiary activity); current weekly status looks at the preceding seven days.
• Result: PLFS 2021-22 put the usual-status unemployment rate for persons aged 15 and above at 4.1%, a low figure for a labour-surplus economy.

Limits of the method

• Subsistence self-employment and unpaid family work count as employment, so underemployment, disguised unemployment and poor job quality stay hidden behind the headline.
• Women's work is under-captured, rural estimates come only yearly, and results below the state level are thin.

Improvements

• Measure underemployment, hours worked, wages and job quality alongside the headcount.
• Count unpaid care work and probe more carefully for women's economic activity.
• Publish monthly or quarterly rural estimates and district-level results.
• Link administrative data such as EPFO and e-Shram with survey estimates.
• Report unemployment by skill and education level to guide skilling policy.

Measuring the quality of work and the skills gap, not only the headcount of the jobless, would let policy target the structural roots of unemployment.

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The care economy of raising children, nursing the old and sick, cooking, cleaning and fetching water keeps the market economy running, yet it is unpaid, uncounted and done mostly by women.

Distinguishing the two

• Care economy: unpaid household and community work, informal and outside GDP, with no wages, contracts or social security; it is valued by need and relationship.
• Monetised economy: goods and services exchanged for money, counted in GDP, with wages, taxes, labour rights and pensions attached.
• Scale of the gap: in the NSO's first Time Use Survey (2019), women who did unpaid domestic work spent about 299 minutes a day on it against 97 minutes for men, time that limits their paid work.

Bringing care into the monetised economy through women's empowerment

• Recognise: regular time-use surveys and satellite accounts that value household work, so care enters national planning.
• Build care infrastructure: creches (the Maternity Benefit Act, as amended in 2017, requires them in larger establishments), Anganwadis, and child and elder care services that create paid care jobs and free women's time.
• Professionalise: skilling and certification for caregivers, nurses and domestic workers, with fair wages and social security.
• Women-led enterprise: SHG and cooperative care enterprises that run creches, home-care and elder-care services, turning unpaid skills into income.
• Enable participation: education, credit, flexible and remote work, safe transport, and DBT accounts in women's names.
• Redistribute: paternity leave, shared housework norms and community services so that care is shared, not merely priced.

Caution

• Monetisation must not confine women to low-paid care jobs; the state, employers and men must share the burden.

Recognising, redistributing and rewarding care work is both a gender-justice agenda and a growth agenda: it enlarges the workforce and values what already sustains it.

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As incomes rise, Indian households eat less coarse cereal and more fruit, vegetables, milk, eggs and pulses; farmers, meanwhile, plant what prices and procurement reward.

Shifts driven by marketing conditions

• MSP and assured procurement made wheat and rice dominant in Punjab, Haryana and western Uttar Pradesh, while coarse cereals and millets lost area even where they suited the soil.
• Cash crops followed markets: cotton, sugarcane and soybean expanded in Maharashtra, Karnataka and Madhya Pradesh where prices, mills and assured cane payments were favourable.
• Newer channels, e-NAM, contract farming, FPOs, agro-processing and export demand for basmati, spices and oilseeds, pull farmers towards high-value crops; APMC restrictions and price risk hold others back.

Shifts driven by consumption

• Demand for fruit and vegetables has expanded horticulture into a fast-growing segment of farm output.
• Growth in dairy and poultry has raised maize acreage for feed; edible-oil demand has pushed oilseeds and oil palm.
• Pulses and edible oils still fall short of demand because they lacked assured markets, leaving India dependent on imports.

Consequences

• Groundwater depletion in the north-west, soil-health decline under cereal monoculture, and import dependence for pulses and edible oil.

Corrections under way

• Crop diversification programmes, MSP and procurement for millets and pulses, the International Year of Millets 2023, missions for oilseeds and oil palm, and micro-irrigation to make diversification water-wise.

A demand-led, water-wise cropping pattern with assured markets for diverse crops would serve farmers and consumers better than one shaped by cereal procurement alone.

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India supports its farmers through cash transfers, subsidised inputs and price support, all of which the WTO's Agreement on Agriculture measures and limits.

Direct subsidies

• PM-KISAN cash transfers to landholding farmers.
• Interest subvention on Kisan Credit Card loans.
• Premium support under crop insurance.
• Direct benefit transfer for some inputs.

Indirect subsidies

• Fertiliser subsidy paid to manufacturers to keep farm-gate prices low.
• Cheap or free farm power and low-priced canal water.
• Subsidised seed and machinery.
• MSP-based procurement of rice and wheat, which holds prices above the market.

Issues raised at the WTO

• The Agreement on Agriculture caps trade-distorting domestic support (Amber Box); developing countries may give such support up to 10% of the value of production (de minimis).
• India's MSP procurement of rice and wheat can breach the cap because support is calculated against fixed 1986-88 reference prices, which inflates the measured subsidy.
• Members allege that stockholding at administered prices distorts trade and leaks into export markets.
• Disputes: Australia, Brazil and Guatemala challenged India's sugar-support measures.

India's stand

• A permanent solution on public stockholding for food security, protection of MSP, a Special Safeguard Mechanism against import surges, and cuts in the far larger subsidies of developed countries.
• The 2013 'Peace Clause' shields existing programmes from challenge, but the 2022 Ministerial Conference brought no permanent solution.

Way forward

• Shift towards decoupled income support (Green Box), rationalise input subsidies that waste power, water and fertiliser, and improve targeting.

India should reform to make its subsidies efficient while defending, with the developing world, its policy space for food security and small farmers.

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Transport is a major source of carbon dioxide and urban air pollution; electrification shifts emissions from millions of tailpipes to power plants that can be cleaned.

How EVs cut carbon emissions

• No tailpipe emissions: EVs release no CO2, NOx or particulates on the road.
• Efficiency: electric motors convert far more of their energy into motion, where combustion engines waste most of it as heat, so energy per kilometre and lifecycle emissions are usually lower even on a coal-heavy grid.
• Cleaner over time: as solar and wind grow in the power mix, every EV already on the road gets greener; smart charging and vehicle batteries can absorb surplus renewable power.
• Regenerative braking recovers energy that combustion vehicles lose.

Key benefits over combustion engines

• Economic: lower running and maintenance cost with fewer moving parts, and reduced dependence on imported crude oil, easing the import bill and strengthening energy security.
• Urban: cleaner air, less noise and better public health in cities.
• Industrial: a new value chain in batteries, motors and electronics, supported by PLI for advanced-chemistry cells and auto components, FAME-II purchase incentives, lower GST on EVs and state EV policies.

Caveats

• High upfront cost, patchy charging networks and range anxiety.
• Coal-heavy electricity limits the gain until the grid decarbonises.
• Dependence on imported battery materials such as lithium, cobalt and nickel, and the need for battery recycling to avoid a new waste stream.

EVs deliver real climate and health gains when paired with clean electricity, public charging and responsible battery recycling.

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Chandrayaan-2 reached lunar orbit in 2019, but its Vikram lander could not complete the final descent; Chandrayaan-3 was built to prove that India can land softly on the Moon.

The main task

• Demonstrate an end-to-end safe and soft landing on the lunar surface, followed by rover roving and in-situ scientific experiments: the step that failed in 2019.

Countries that have achieved it

• The Soviet Union, the United States and China; India became the fourth on 23 August 2023, and the first to land near the lunar south polar region.

Subsystems of the spacecraft

• Propulsion module: carried the lander from Earth orbit to lunar orbit; it hosts the SHAPE payload to study Earth from lunar orbit.
• Vikram lander: throttleable engines, navigation, guidance and control, hazard detection and avoidance sensors, landing legs, power and communication, all strengthened after Chandrayaan-2; payloads RAMBHA-LP (plasma), ChaSTE (surface temperature) and ILSA (seismic activity).
• Pragyan rover: LIBS and APXS to analyse the elemental composition of soil and rocks near the landing site.
• Launch: the LVM3-M4 rocket lifted off from Sriharikota on 14 July 2023 and placed the spacecraft in Earth orbit for its onward journey.

The Virtual Launch Control Centre

• A remote facility at the Vikram Sarabhai Space Centre, Thiruvananthapuram, linked to the launch complex, that receives real-time launch-vehicle data through the countdown and flight.
• Designers monitor the vehicle's health from there and advise the launch team, so decisions rest on the people who built the systems without crowding the launch control room.

The mission proved indigenous landing technology; the lander and rover data from the south polar region add to the world's lunar science.

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Wetlands purify water, recharge aquifers, buffer floods and shelter biodiversity, yet they are among the fastest-degrading ecosystems in India.

The National Wetland Conservation Programme

• Origin and aim: launched by the environment ministry in the mid-1980s to identify priority wetlands, prepare management action plans and fund states for their conservation.
• Activities: survey and demarcation, catchment treatment, pollution abatement and de-silting, biodiversity protection, and community awareness.
• Evolution: merged in 2013 with the National Lake Conservation Plan into the National Plan for Conservation of Aquatic Ecosystems (NPCA), so lakes and wetlands are treated together.
• Regulation: the Wetlands (Conservation and Management) Rules, 2017 adopt 'wise use' with state wetland authorities; 'Amrit Dharohar' (2023) promotes Ramsar sites for conservation and eco-tourism.

Assessment

• Strengths: a centrally funded framework where none existed, management plans for major wetlands, and a Ramsar network that reached 75 sites in August 2022, the largest in South Asia.
• Weaknesses: encroachment and sewage continue; funds are inadequate and state capacity weak; departments work in silos; and many small wetlands remain outside legal protection.

Ramsar sites in India

• Ramsar sites are wetlands designated of international importance under the Convention on Wetlands adopted at Ramsar, Iran, in 1971; India's network is the largest in South Asia.
• Chilika Lake (Odisha), Keoladeo National Park (Rajasthan), Loktak Lake (Manipur), Sundarban Wetland (West Bengal), Wular Lake (Jammu and Kashmir), Harike (Punjab) and Sambhar Lake (Rajasthan).

Wetland protection now needs a basin-wide, community-based and legally enforceable approach, so that the programme's plans become protected water bodies on the ground.

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Rising seas do not act alone: combined with storm surges, erosion and land subsidence, a metre of rise would push the sea into deltas, aquifers and cities around the Indian Ocean.

Impact on India

• Coastal flooding: along about 7,500 km of coastline, the low-lying deltas of the Sundarbans, Mahanadi, Godavari and Krishna, the Kerala backwaters and cities such as Mumbai, Kolkata and Chennai face permanent inundation and more frequent flooding.
• Ecology: mangroves, wetlands and beaches drowned or squeezed against embankments; saltwater intrusion into groundwater and farmland; fisheries damaged as nurseries vanish.
• Economy: ports, coastal roads, power plants and salt pans at risk, with higher storm-surge damage and insurance costs.
• People: displacement from the coasts and from Lakshadweep and the Andaman and Nicobar Islands, loss of fishing and farming livelihoods, and migration pressure on cities.

Impact on the Indian Ocean region

• The Maldives, whose average ground level is only about a metre and a half above the sea, could lose most of its habitable land and freshwater.
• Bangladesh's delta would lose farmland to salinity and flooding, displacing millions and adding pressure on India's border.
• Sri Lanka, Mauritius and Seychelles face shrinking coasts, damaged reefs and tourism, and water stress.
• Regional security: climate migration, disputes over fishing grounds, and questions over maritime zones as coastlines retreat.

The response needed

• Adaptation: Coastal Regulation Zone rules, mangrove restoration, early-warning systems and resilient infrastructure.
• Cooperation: the Coalition for Disaster Resilient Infrastructure, help to island states and shared monitoring, alongside mitigation to slow the rise itself.

India must adapt at home and lead regional cooperation, because the most vulnerable Indian Ocean states cannot face a rising sea alone.

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India's internal security is tested from within and across its borders, by terrorism, insurgency, extremism, organised crime and cyber attacks, so intelligence and investigation must work as one chain.

Internal security challenges

• Cross-border terrorism and infiltration in Jammu and Kashmir, sustained by external support.
• Left-wing extremism in central India and insurgency in parts of the North-East.
• Communal and caste violence, and online radicalisation.
• Emerging: cyber attacks on critical infrastructure, drug trafficking and narco-terror, terror financing and fake currency, and drone and maritime threats.

Central intelligence agencies

• Intelligence Bureau: domestic intelligence and counter-terrorism, tracking modules and radical networks.
• Research and Analysis Wing: external intelligence on threats that originate abroad.
• NTRO: technical intelligence, including satellite and cyber monitoring.
• FIU-IND: financial intelligence on suspicious transactions that fund terror and crime.

Central investigative agencies

• NIA: investigates and prosecutes terror and related offences across states.
• CBI: corruption and serious crime with inter-state or international ramifications.
• ED: money laundering under PMLA and foreign-exchange offences.
• NCB: narcotics trafficking, including its narco-terror links.
• CERT-In and the Indian Cybercrime Coordination Centre (I4C): incident response and coordination against cyber crime.

Coordination

• The Multi Agency Centre pools intelligence from central and state agencies; NATGRID links databases; state Special Branches and police remain the first responders.

Gaps

• Overlapping mandates, weak Centre-State coordination, no statutory basis or parliamentary oversight for the intelligence agencies, and limited cyber capacity.

Statutory clarity, Centre-State and inter-agency coordination and modern technical capacity would turn many agencies into one seamless security response.

Written by Minimalist IAS from facts checked at source (how we verify). UPSC publishes no model answers: compare your structure and coverage with this, then write your own.

Terror groups need money as much as weapons, for recruits, arms, safe houses and propaganda, so choking their funds is central to counter-terrorism.

Major sources of terror funding

• State sponsorship and cross-border support routed through handlers.
• Hawala and other informal value-transfer channels.
• Fake Indian currency notes pushed across the border.
• Drug trafficking and smuggling, especially narco-terror through Punjab and Jammu and Kashmir.
• Extortion by insurgent and Maoist groups.
• Misuse of charities and non-profits, and newer channels: crowdfunding, virtual assets, online payment platforms and shell companies.

Efforts to curtail them

• Law: UAPA, amended in 2004 and 2019, makes terror financing an offence; PMLA 2002 targets laundering, with virtual-asset service providers brought under it in 2023.
• Agencies: FIU-IND tracks suspicious transactions; the NIA's terror-funding and fake-currency cell investigates; ED and NCB act on laundering and narcotics.
• Policy: KYC and reporting norms for banks and payment firms, monitoring of hawala, demonetisation in 2016 against fake currency, and FATF membership since 2010 for peer review.

The No Money for Terror Conference, November 2022

• Aim: the third ministerial conference (18-19 November 2022), after Paris (2018) and Melbourne (2019), reviewed the global regime against terror financing and sought coordinated action among states.
• Objectives: examine global trends in terror financing; map formal and informal fund channels; address emerging technologies such as virtual assets; and deepen international cooperation.
• India offered to host a permanent NMFT secretariat to keep the effort continuous.

Way forward

• Sustained pressure on state sponsors, FATF-style peer review, regulation of virtual assets, and faster intelligence and legal cooperation across borders.

Denying terrorists their money needs strict domestic enforcement and sustained international cooperation, the very agenda the New Delhi conference set.

Written by Minimalist IAS from facts checked at source (how we verify). UPSC publishes no model answers: compare your structure and coverage with this, then write your own.