What to Read in The Hindu Editorial ( Topic and Syllabus wise)

 

Article 1: New reality

Why in news: The new GDP series was introduced to update the base year to 2022–23, improve methodology, incorporate better data sources like GST, ASUSE, PLFS, and provide a more accurate, current picture of India’s economic growth and structure.

Key Details

Base year revised to 2022–23 (from 2011–12), making GDP and GVA estimates more reflective of current economic realities.

Methodological improvements introduced, including the double-deflator method, proportional allocation of multi-sector output, and greater use of GST data.

Improved data sources such as ASUSE and PLFS will replace extrapolations, and better estimation methods will capture agriculture and the informal sector more accurately.

GDP growth for 2025–26 projected at 7.6%, slightly higher than the 7.4% under the old series.

Overall economic size revised downward to ₹345.47 lakh crore (about 3.3% lower), making fiscal deficit targets and the $5 trillion goal more challenging.

Release of the New National Accounts Series

The release of the new national accounts data series marks a significant improvement in India’s economic statistics.

However, the updated data also reveals certain policy concerns that require attention.

Update in Base Year

The base year for GDP and GVA has been revised to 2022–23, replacing the earlier 2011–12 base year.

The revision was long overdue, as the older base year had become increasingly outdated.

Updating the base year ensures that economic data better reflects current production patterns and structural changes in the economy.

Methodological Improvements

The new series incorporates enhanced estimation methods and improved data sources for greater reliability.

Double-Deflator Method

Adoption of the double-deflator approach separately adjusts inflation for:

Intermediate goods

Final products

This improves the accuracy of estimating real value added in production.

Better Sectoral Allocation

Output of multi-sector companies is now allocated proportionately across sectors.

This enhances sector-wise accuracy in economic measurement.

Improved Data Sources

Household sector data will now be sourced annually from:

Annual Survey of Unincorporated Sector Enterprises (ASUSE)

Periodic Labour Force Survey (PLFS)

Earlier, household data relied heavily on extrapolations.

GST data, a rich source of consumption information, is now incorporated.

New estimation methods are introduced for traditionally under-measured sectors:

Agriculture

Informal sector

These improvements aim to provide a more realistic estimate of India’s economic size and growth.

Revised Growth Projections

The new series projects GDP growth of 7.6% for 2025–26, compared to:

7.4% under the old series

While the higher growth rate appears encouraging, the absolute size of the economy has been revised downward.

Revised Economic Size

India’s GDP for 2025–26 is estimated at ₹345.47 lakh crore.

This is approximately 3.3% smaller than estimates under the previous series.

GDP for:

2023–24

2024–25

has also been revised downward by 3.8% each.

Implications for India’s Global Economic Position

Due to downward revisions and rupee depreciation, India is currently a $3.8 trillion economy.

The target of becoming a $5 trillion economy now appears more distant.

Fiscal Policy Implications

A smaller nominal GDP makes it harder for the Centre to:

Reduce the fiscal deficit

Lower the debt-to-GDP ratio

Since fiscal targets are expressed as a percentage of GDP, a reduced denominator makes targets more challenging.

Conclusion

Although the revised data presents some challenges, it is preferable to:

Align fiscal and growth targets with updated and accurate data

Rather than continue relying on outdated economic metrics.

The new series enhances statistical credibility, even if it demands more cautious policy planning.

Descriptive question:

23. Discuss the significance of the revision of India’s GDP base year to 2022–23. How do the methodological and data improvements in the new national accounts series impact economic measurement and fiscal policy? (250 words, 15 marks)

 

Article 2: The waning sheen

Why in news: Import IGST rose due to higher global commodity prices, rupee depreciation increasing dollar import costs, and continued dependence on crude oil and semiconductors, which raised assessable import values and boosted tax collections.

Key Details

GST collections rose 8.1% in February to ₹1.83 lakh crore, aided by the two-tier rate rationalisation (5% and 18%) that boosted consumption.

Import IGST surged over 17% YoY to ₹47,800 crore and now forms 27% of total GST revenue, indicating rising dependence on import-based taxes.

Rupee depreciation (4–6.2%) increased the assessable value of dollar-denominated imports, mechanically inflating IGST collections.

Heavy reliance on crude oil, semiconductors (90% imported), copper and aluminium has raised input costs due to higher global prices and import shifts.

Uneven State GST growth (e.g., Tamil Nadu –6%) suggests national buoyancy is partly import-driven rather than broad-based domestic demand-led.

Strong GST Collections in February

February GST collections rose 8.1% year-on-year, reaching about ₹1.83 lakh crore.

Growth is largely attributed to higher consumption expenditure following the GST rate rationalisation (September 2025).

Impact of Rate Rationalisation

Shift to a two-tier rate structure (5% and 18%).

Lower taxes on consumer non-durables.

Boost in sales of automobiles, appliances, mobile phones, and tourism-related services.

Rising Import IGST – A Key Concern

Import IGST collections increased by over 17% compared to last February.

February import IGST rose to ₹47,800 crore, up from ₹40,800 crore last year.

Compared to February 2022 (₹33,800 crore), collections have risen nearly 41% in five years.

Import IGST now forms about 27% of total GST collections (Apr 2025–Feb 2026), up from 24% last year.

This indicates growing dependence on import-based tax revenues.

Impact of Rupee Depreciation

The rupee depreciated:

Around 4% (Feb 2025–Feb 2026)

About 6.2% (Apr 2025–Feb 2026)

Since imports are largely dollar-denominated, a weaker rupee:

Raises the import bill

Increases the assessable value for IGST

Mechanically inflates GST collections

Heavy Dependence on Key Imports

India imports:

Over 90% of semiconductor requirements

Large quantities of crude oil, copper, and aluminium

These items together accounted for about 35% of February 2026 merchandise imports:

Crude oil: Over 25%

Semiconductors: Around 5%

Copper and aluminium: 3–4% combined

Rising global prices and import reconfiguration (shift from discounted Russian oil to U.S. and West Asia sources) have further raised import costs.

Transmission to Domestic Prices

Higher import costs increase input expenses in sectors like:

Automobiles

Appliances

This may offset the price relief from GST rationalisation, leading to higher consumer prices.

Inter-State Disparities in GST Growth

National GST growth stood at 8%, but major States underperformed:

Tamil Nadu: –6%

Maharashtra: 6%

West Bengal: 1%

This suggests GST buoyancy may be import-driven rather than reflecting broad-based domestic demand growth.

Overall Concern

While GST collections appear strong, the rising share of import IGST signals:

Increased vulnerability to global price movements

Currency depreciation risks

Potential pressure on consumer prices

Uneven revenue distribution across States

Sustained growth requires strong domestic demand, not excessive reliance on import-linked tax gains.

Conclusion

While February’s strong GST growth appears encouraging, the rising share of import IGST signals structural vulnerability. Rupee depreciation and higher global prices are inflating collections rather than purely robust domestic demand. Sustained revenue stability requires strengthening domestic production and consumption, reducing import dependence, and ensuring balanced growth across States to avoid fiscal and price pressures.

 

 

Article 3: Durand Line 

Why in news: For the second time in six months, Pakistan and Afghanistan engaged in intense clashes, marked by deep airstrikes into Kabul and Kandahar and retaliatory attacks across the Durand Line, signalling dangerous escalation beyond routine skirmishes.

Key Details

The Durand Line is a 2,640 km border between Afghanistan and Pakistan, drawn in 1893.

It was negotiated by Sir Mortimer Durand with Abdur Rahman Khan to define spheres of influence between British India and Afghanistan.

The line divided Pashtun tribal regions, creating long-standing ethnic and political tensions.

After 1947, Pakistan recognized it as the official international border, while Afghanistan has historically disputed its legitimacy.

It remains strategically significant due to border security, militancy, fencing disputes, and regional geopolitics, especially after the return of the Taliban.

About

The Durand Line forms the border between Afghanistan and Pakistan.

Drawn in 1893 under British colonial administration.

Length: Approximately 2,640 km.

Cuts across ethnic, tribal and mountainous regions.

Origin and Agreement (1893)

Negotiated by Sir Mortimer Durand.

Signed with Abdur Rahman Khan.

Objective: Define the boundary between British India and Afghanistan.

Intended as a strategic buffer against expanding Russian influence in Central Asia (Great Game context).

Initially meant to demarcate spheres of influence, not necessarily a permanent international border.

Ethnic and Social Impact

Divided the Pashtun population into two parts.

Separated tribes such as Afridis, Wazirs, and Mohmands.

Created long-term identity and nationalist issues (Pashtunistan demand).

Traditional tribal movement continued despite political division.

Post-1947 Developments

After the creation of Pakistan in 1947, the line became the Pakistan–Afghanistan border.

Afghanistan was the only country to oppose Pakistan’s admission to the United Nations (1947).

Afghanistan questioned the validity of the agreement after British withdrawal.

Issue linked with the idea of an independent “Pashtunistan.”

Legal and Diplomatic Dimensions

Pakistan argues the agreement was legally binding and inherited under the principle of state succession.

Afghanistan claims the agreement lapsed with the end of British rule.

Most international actors recognize the Durand Line as the de facto border.

Periodic border clashes occur due to disputes over demarcation and fencing.

Security Concerns

Historically porous border enabled cross-border militancy.

Region became significant during the Soviet–Afghan War (1979–89).

Played a crucial role during the U.S. intervention post-9/11.

Relevance increased after the return of the Taliban in 2021.

Geostrategic Importance

Acts as a gateway between South Asia and Central Asia.

Includes strategic passes like the Khyber Pass.

Influences regional connectivity projects such as CPEC (China–Pakistan Economic Corridor).

Important for trade, transit, and military logistics.

Recent Developments

Pakistan has undertaken large-scale border fencing to regulate movement.

Taliban authorities have objected to fencing in certain sectors.

Periodic tensions affect diplomatic and trade relations.

Conclusion

The Durand Line remains a colonial legacy dispute.

It combines issues of ethnicity, sovereignty, security, and geopolitics.

Its resolution (or management) is crucial for long-term stability in the Afghanistan–Pakistan region.

EXPECTED QUESTION FOR PRELIMS:

The Durand Line agreement was signed between Amir Abdur Rahman Khan and:

Lord Curzon

Lord Ripon

Sir Mortimer Durand

Lord Mountbatten

Answer: c