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

Editorial 1: ​Greying with grace

Context

Policy reorientation is essential to address shifting population dynamics.

Introduction

India is undergoing a significant demographic shift, reflected in a declining Crude Birth Rate (CBR), falling Total Fertility Rate (TFR), and a steadily ageing population. While the nation still enjoys a demographic dividend with a young workforce, the emerging reality demands policy reorientation to ensure sustainable growth, equitable development, and readiness for the challenges of an increasingly grey population.

Key Findings from SRS 2023

• Decline in Birth Rate:
  • India’s Crude Birth Rate (CBR)dropped to 4 in 2023, from 19.1 in 2022.
  • CBR = Number of annual live births per 1,000 people.
• Decline in Fertility Rate:
  • Total Fertility Rate (TFR)fell to 9 in 2023, after being stable at 2.0 in 2021 and 2022.
  • Replacement-level fertility= 1 children per woman → ensures stable population.
  • Below 1→ indicates future population decline and aging.

Regional Variations

• Highest Rates:
  • Bihar→ Highest CBR (25.8) and TFR (2.8).
• Lowest Rates:
  • Tamil Nadu→ Lowest CBR (12).
  • Delhi→ Lowest TFR (1.2).
• Below Replacement Level (TFR < 2.1):
  • 18 States/UTsfall in this category.
  • Examples: Delhi, West Bengal, Tamil Nadu, Maharashtra.
• Above Replacement Level (TFR > 2.1):
  • Concentrated in northern India: Bihar, Uttar Pradesh, Madhya Pradesh, Rajasthan, Chhattisgarh.

Aging Population

• National Trend:
  • Proportion of people aged 60+rose by 7 percentage points in a year → now 9.7%.
• State-Level Trends:
  • Kerala→ Highest elderly population (15%).
  • Lowest proportionsin Assam, Delhi, Jharkhand.

Implications for India

• Demographic Transition:
  • India, with 46 billion people, is entering a phase of declining fertility and birth rates.
  • Population growth momentum means changes will reflect graduallyover years.
• Policy Challenges Ahead:
  • Need to balance demographic dividend(young workforce) with emerging aging population.
  • Required focus areas:
    • Financial security for elderly.
    • Infrastructure for reduced mobility.
    • Physical & mental health care facilities.
    • Social support services.
  • Call for Realignment:
    • From a “young nation” mindset to preparing for a “greying nation”.
    • Requires massive restructuring of policies and services.

Conclusion

The evolving population dynamics call for adaptive governance that balances the needs of a young workforce with those of a rapidly ageing society. Investing in healthcare, pension reforms, social security systems, and elderly care infrastructure is critical. Proactive planning today will help India remain resilient, inclusive, and sustainable, turning demographic change into an opportunity rather than a looming challenge.

 

Editorial 2: A complex turn in India’s FDI story

Context

The withdrawal of funds by foreign firms after short-term profits, coupled with Indian firms investing abroad, exposes systemic gaps that need urgent attention.

Introduction

Since the post-1991 economic reforms, foreign direct investment (FDI) has been a key driver of India’s economic growth. It has significantly modernized the country’s industrial base, spurred technological innovation, and strengthened ties with global markets. Sectors like e-commerce and computer hardware and software have particularly benefited from substantial FDI inflows, transforming their landscapes. However, recent trends indicate a more nuanced picture, with investment levels declining. While India continues to attract foreign capital, much of it is focused on short-term profits rather than long-term industrial development. Simultaneously, the rise of Indian firms investing abroad raises concerns about the health of domestic investment conditions.

Divergence between inflows and outflows

• Gross FDI inflowsreached $81 billion in FY 2024-25, up 13.7% from the previous year; between 2011–2021, inflows rose from $46.6 billion to $84.8 billion, highlighting India’s investor appeal.
• After peaking in FY 2021-22, inflows fell to $71 billion in FY 2023-24before a slight recovery; post-pandemic, gross inflows grew at 3% annually, while foreign disinvestments/repatriations surged at 18.9% annually.
• During this period, India saw $308.5 billion in gross FDI inflows, but foreign investors withdrew $153.9 billion, causing net FDI inflowsto decline sharply; after adjusting for outward FDI by Indian firms, net retained capital fell to just $0.4 billion.
• Disinvestmentsrose 51% to $44.4 billion in FY 2023-24 and further to $51.4 billion in FY 2024-25, now over 63% of total FDI activity, indicating a shift from long-term strategic investments to short-term profit-seeking, often via tax arbitrage or treaty-based routing.
• The manufacturing sector, once a primary FDI target, saw its share drop to 12%due to massive outflows.
• The decline in net inflowsand surge in outward FDI by Indian firms (from $13 billion in FY 2011-12 to $29.2 billion in FY 2024-25) reflects regulatory inefficiencies, infrastructure gaps, and unpredictable policies, limiting job creation, innovation, and industrial growth.
• Despite government reforms and improved rankings, regulatory opacity, legal unpredictability, and inconsistent governancecontinue to discourage investors.
• The parallel trendof foreign firms withdrawing funds and Indian firms investing abroad highlights systemic lacunae that must be addressed to sustain India’s long-term economic development.

Trends and Challenges in FDI

• Gross FDI inflowsmay appear promising but hide underlying issues: rising disinvestments, shifting investment patterns, and growing capital outflows signal eroding investor confidence.
• Short-term capital inflowsdominate, lacking the potential to support long-term growth.
• Sectoral trends:FDI increasingly flows into services and rent-seeking sectors (financial services, energy distribution, hospitality) rather than manufacturing, infrastructure, or advanced technology, limiting multiplier effects and economic resilience.
• Sources of FDI:Financial centres like Singapore and Mauritius often channel investment for tax strategies, while traditional industrial investors (e.g., US, Germany, UK) are reducing involvement.
• Outward FDI:Around half of India’s FDI outflows target developed economies, attracted by favorable tax regimes, market stability, and strategic resources.

Policy Implications and Recommendations

• India must prioritize reformsthat reward long-term investment commitments to build a resilient investment ecosystem.
• Key measures include simplifying regulations, ensuring policy consistency, investing in infrastructure, and enhancing education and skill-buildingto meet evolving industry needs.
• Macroeconomic impact:Declining net FDI inflows affect capital availability, balance of payments, and currency stability, reducing monetary policy flexibility.
• India needs to proactively attract and retain investmentaligned with developmental and technological goals to sustain long-term economic growth in a global context.
• The Reserve Bank of Indiaemphasizes that while rising outflows mirror trends in other emerging economies, they pose risks requiring careful management.

What needs to be done

• To become a global investment hub, India must go beyond headline FDI figures.
• Focus should be on the quality, durability, and strategic alignmentof capital inflows.
• Overemphasis on gross FDI figures, without considering their source or impact, can mask deeper economic vulnerabilities.
• India requires committed capital investmentthat builds domestic capability and aligns with national priorities.
• Key enablers include:
  • Streamlined regulations
  • Infrastructure upgrades
  • Policy stability
  • Renewed trust in institutions
• Investing in human capitalis essential to attract high-value sectors such as:
  • Advanced manufacturing
  • Clean energy
  • Technology
• India is at a critical juncturein navigating its FDI strategy.

Conclusion

India’s FDI landscape shows promise in gross inflows but masks structural vulnerabilities, rising disinvestments, and short-term profit-seeking. To secure sustainable growth, the country must focus on quality, long-term investments, strengthen regulations, upgrade infrastructure, and invest in human capital. Only by aligning FDI with national priorities and technological goals can India emerge as a resilient global investment hub.