Content:

1. Budgeting for a gender-inclusive ‘Viksit Bharat’
2. Averting Engels’ pause

 Budgeting for a gender-inclusive ‘Viksit Bharat’

Context:

• The Union Budget 2025-26 underscores inclusive development, prioritizing the poor, youth, farmers, and women.
• The explicit focus on women aligns with the government’s commitment to women-led development.

Relevance : GS 2(Governance)

Practice Question: Gender-responsive budgeting is essential for achieving inclusive economic growth. Discuss the key provisions in the Union Budget 2025-26 aimed at enhancing women’s participation in economic activities. What challenges remain, and how can they be addressed? (250 words)

Gender Budget Allocation – Highest in Two Decades

• Gender budget increased to 8.8% of total Budget (₹4.49 lakh crore), up from 6.8% in the previous year.
• 49 Union Ministries and departments now have gender budget components.
• 12 additional Ministries from non-traditional sectors (e.g., Railways, Ports, Land Resources, Pharmaceuticals) have integrated gender budgeting.
• A whole-of-government approach reflects enhanced gender mainstreaming in policies.

Boosting Female Labour Force Participation Rate (FLFPR)

• FLFPR (usual status) increased to ~42% in 2023-24 (from 33% in 2021-22), nearing the global average of 47%.
• However, a 37-percentage point gap exists compared to men’s FLFPR (79%).
• Achieving the 70% target by 2047 requires:
  • Investment in skilling, employment, and entrepreneurship
  • Access to productive resources and social security

Key Budget Allocations for Women in Economic Activities:

• Skill India Programme, ESDP, National Skill Training Institutes, DAY-NRLM, MGNREGS, PM Employment Generation Programme, PM Vishwakarma, Krishonnati Yojana
• Combined allocation increased from ₹1.19 lakh crore to ₹1.24 lakh crore, with 52% of funds directed towards women and girls.
• New schemes:
  • PM Dhan-Dhaanya Krishi Yojana
  • First-time entrepreneurs’ scheme
  • Sustainable livelihood for urban workers
  • Centres of Excellence for ‘Make in India’

Formalizing Women in the Gig Economy

• 90% of India’s working women are in the informal sector.
• Budget proposes:
  • Identity cards for gig workers
  • Registration on the e-Shram portal

• Potential benefits:
  • Formal identity and recognition
  • Access to social security and financial inclusion

• Challenges in the gig economy:
  • Low wages, job insecurity, lack of employment rights
  • Need for comprehensive social security measures, including maternity benefits
• Labour code enforcement and progressive parental entitlements are crucial for economic security.

AI & Digital Skilling for Women

• Centre of Excellence on Artificial Intelligence (AI) for the education sector introduced.
• ₹600 crore allocated under India AI Mission for gender-focused AI initiatives.
• Importance of AI and digital skilling:
  • Bridging the digital divide
  • Enhancing women’s employability in high-growth sectors

Strengthening Women’s Financial Inclusion & Entrepreneurship

• Women play key roles in agriculture, entrepreneurship, and employment, requiring better financial support mechanisms.

• Key Budget Provisions:
  • Simplifying loan documentation (e.g., delinking Kisan Credit Cards from land ownership).
  • Gender-disaggregated tracking of financial access to enhance efficiency.
  • Supporting women entrepreneurs via collateral-free loans, alternative credit scoring, and financial literacy programs.

• Potential impact:
  • Women-owned MSMEs (20.5% of total MSMEs) employ ~27 million people.
  • 30 million additional women-led businesses could generate 150-170 million jobs by 2030.

Gender-Responsive Budgeting – Key to Inclusive Growth

• Budget 2025-26 lays a strong foundation for women’s economic participation.

• Key measures for realizing Viksit Bharat:
  • Sustained policy implementation
  • Infrastructure development
  • Transforming social norms

• Gender-responsive budgeting ensures:
  • Strengthened social protection
  • An inclusive labour market for both women and men
  • Women as key drivers of national growth

Conclusion: Achieving 70% women’s participation in economic activities by 2047 requires sustained investment, social security, and structural reforms. Gender-sensitive policies and financial inclusion will be crucial for women-led economic transformation in India’s journey towards Viksit Bharat.

Averting Engels’ pause

AI Governance and Global Commitments

• Prime Minister Narendra Modi emphasized the need for AI governance, standards, and trust-building at the AI Action Summit in Paris (Feb 11, 2025).
• India, along with over 50 countries, committed to principles of trust, safety, and universal access in AI development.
• The focus on mitigating AI risks while advancing technology aligns with India’s long-term AI strategy.

Relevance : GS 3(Technology), GS 2(Governance)

Practice Question : Discuss the concept of Engels’ Pause in the context of Artificial Intelligence (AI)-driven economic transformations. How can India mitigate the risks associated with job losses and wage stagnation while ensuring sustainable AI adoption? (250 words)

Labour Market Challenges and Engels’ Pause

• Engels’ Pause: A phase where technological advances benefit firms, but real wages stagnate before eventual trickle-down effects.
• Historical perspective: PM Modi highlighted how past technological revolutions created new employment opportunities.
• The Economic Survey acknowledges concerns that AI-driven productivity gains could initially disrupt labour markets.
• India’s IT and services sector contributes significantly to GDP but employs a smaller workforce—AI efficiency gains could reduce job creation and stagnate wages.
• Proactive policy responses are essential to ensure AI adoption does not exacerbate job losses.

Energy Sustainability and AI’s Rising Power Demand

• AI’s energy footprint is increasing due to high computational power required for model training and deployment.
• The U.S. produces over twice India’s electricity with a quarter of its population—data centres are becoming major consumers.
• India must focus on renewable energy-driven AI expansion to ensure sustainability.

India’s AI Strategy and Future Path

• Unlike Western AI firms pursuing a high-investment, low-return model, India must focus on cost-effective AI tailored to national needs.
• The IndiaAI Mission promotes AI research through:
  • Subsidised GPU clusters for AI model training.
  • Funding for promising AI projects to foster innovation.
• Skilling and education:
  • Scaling up AI training programs to ensure a strong domestic talent pool.
  • Addressing the brain drain by ensuring India retains top AI expertise.

Way Forward

• AI’s impact on labour markets and wages must be monitored and managed through policy interventions.
• Energy-efficient AI adoption is critical for India’s sustainability goals.
• Developing indigenous AI capabilities will ensure economic competitiveness and reduced dependence on foreign technologies.
• A balanced AI strategy can help India avert Engels’ Pause and harness AI for inclusive economic growth.