UPSC Mains Current Affairs for 9 March 2026

Farm Loan Waivers and Their Impact on India’s Credit Culture

March 9, 2026

Farm Loan Waivers Latest News

The Maharashtra government has announced a ₹35,000 crore farm loan waiver scheme, raising concerns about its impact on credit culture and state finances.
The move comes despite earlier warnings from the Reserve Bank of India (RBI) and expert groups against such waivers.
The waiver for loan defaulters is estimated to cost around ₹20,000 crore, while the ₹50,000 incentive for farmers who regularly repaid their loans will require another ₹15,000 crore, taking the total expenditure to about ₹35,000 crore.
Although the state government claims its financial position is strong enough to bear the cost, experts warn that the growing trend of farm loan waivers across states could have broader negative consequences for fiscal discipline and credit culture.

Farm Loan Waivers in India: Trends and Implications

Farm loan waivers have increased significantly since 2014–15, mainly through state government announcements, although the Central government initiated two nationwide waivers since 1990.
The main objective of farm loan waivers is to reduce farmers’ debt burden, enabling them to restart productive investments and improve economic activity.
According to the Reserve Bank of India (RBI), loan waivers are not a permanent solution to farmers’ financial distress caused by climatic risks and market fluctuations.
Over the last 35 years, both the Centre and states have spent around ₹3 lakh crore on various farm loan waiver schemes.

Political Timing of Waivers

Farm loan waivers are often linked with electoral politics.
An RBI Internal Working Group (2019) noted that many waivers were announced close to elections, including the nationwide schemes of 1990 and 2008 and several state waivers since 2014.

Central Government Farm Loan Waiver Programmes

The first major nationwide farm loan waiver was the Agriculture and Rural Debt Relief Scheme (ARDRS), 1990.
It covered short-term loans and overdue instalments of term loans owed to public sector banks and Regional Rural Banks as of October 2, 1989.
The scheme provided relief of up to ₹10,000 per farmer, without differentiating based on the size of landholdings.

Second Nationwide Waiver: ADWDRS, 2008

The Agricultural Debt Waiver and Debt Relief Scheme (ADWDRS), 2008 expanded the coverage to include scheduled commercial banks, RRBs, cooperative credit institutions, and local area banks.
The scheme provided greater benefits to small and marginal farmers (with landholdings up to five acres) compared to larger farmers.

Fiscal Cost of the Schemes

The 1990 waiver programme cost about ₹10,000 crore (around ₹50,600 crore at 2016–17 prices).
The 2008 waiver cost about ₹52,500 crore (about ₹81,200 crore at 2016–17 prices), according to the RBI Internal Working Group report.

Expansion of Farm Loan Waivers by States

Since 2014–15, around ten states have announced farm loan waiver schemes worth about ₹2.4 lakh crore, equivalent to 1.4% of India’s GDP (2016–17 prices), according to the RBI.

Major State Announcements

Several states introduced large loan waiver programmes:
- Madhya Pradesh: ₹36,500 crore (4.5% of GSDP)
- Rajasthan: ₹18,000 crore (1.9% of GSDP)
- Chhattisgarh: ₹6,100 crore (1.7% of GSDP)
Similarly, Karnataka expanded its waiver scheme from ₹18,000 crore in 2017–18 to ₹44,000 crore (3.4% of GSDP) in 2018–19.

Impact on State Finances

The fiscal impact of loan waivers is usually spread over three to five years, either through phased implementation or staggered payments to banks.
The burden varies across states, ranging from 0.1% to 1.8% of GSDP.

Effect on Agricultural Credit

Loan waivers have been associated with a temporary slowdown in agricultural credit growth and loan disbursements, although lending tends to recover in the following years, according to the RBI.

RBI’s Position on Farm Loan Waivers

The RBI has repeatedly discouraged farm loan waivers. It argues that waivers weaken credit discipline, as borrowers may delay repayments expecting future waivers.
This harms their credit history and ability to obtain new loans.
The deterioration in credit culture is reflected in high agricultural NPAs, which stood at 8.44% as of March 31, 2019.
- States that announced waivers in 2017–18 and 2018–19 experienced rising NPA levels, indicating repayment stress.
RBI reports suggest the possibility of moral hazard, where borrowers strategically default on loans anticipating government waivers.

Criticism from Former RBI Governors

Raghuram Rajan argued that waivers benefit only a subset of farmers who have access to formal credit, often excluding the most vulnerable.
Urjit Patel stated that waivers undermine credit discipline and discourage future borrowers from repaying loans.

Fiscal Impact on Governments

Loan waivers also place significant pressure on government finances.
The RBI estimated that about 5 basis points of the fiscal slippage in revenue expenditure in 2017–18 were due to loan waivers.

Opportunity Cost for Agricultural Investment

According to the RBI working group, funds spent on waivers reduce resources available for productive investments, such as agricultural infrastructure and long-term sector development.

Limited Impact of Loan Waivers

According to an SBI research report, out of about 3.7 crore eligible farmers since 2014, only around 50% received the loan waiver benefits by March 2022, limiting the scheme’s effectiveness.
The report notes that loan waivers have not significantly relieved farmers’ distress.
Instead, they have weakened credit discipline in some regions and made banks cautious about extending fresh agricultural loans.

Alternative Solutions for Farmers

The SBI report recommends income support programmes as a better alternative.
With around ₹50,000 crore expenditure, such schemes could benefit more farmers and provide more stable financial support.
The report emphasises that farm loan waivers are not a long-term solution.
Instead, policies should aim to increase farmers’ income through nationwide income support mechanisms.

Source: IE

Farm Loan Waivers FAQs

Q1: What are farm loan waivers and why are they implemented?

Ans: Farm loan waivers are government schemes that cancel farmers’ outstanding loans. They aim to reduce debt burdens and support farmers facing crop failures, price shocks, or financial distress.

Q2: How have farm loan waivers evolved in India since 1990?

Ans: India has implemented two major nationwide farm loan waivers in 1990 and 2008. Since 2014, several states have announced large waivers worth nearly ₹2.4 lakh crore.

Q3: Why does the RBI oppose frequent farm loan waivers?

Ans: The RBI argues that farm loan waivers weaken credit discipline, encourage borrowers to delay repayments, increase agricultural NPAs, and discourage banks from providing fresh agricultural loans.

Q4: What fiscal impact do farm loan waivers have on governments?

Ans: Farm loan waivers place heavy pressure on government finances, increasing fiscal deficits and reducing funds available for productive investments such as agricultural infrastructure and irrigation.

Q5: What alternatives do experts suggest instead of farm loan waivers?

Ans: Experts recommend income support schemes and policies that increase farmers’ income. These measures can provide broader benefits while maintaining credit discipline and strengthening the agricultural economy.

Andhra Pradesh Population Policy and the Shift from Population Control

March 9, 2026

Andhra Pradesh Population Policy Latest News

The Andhra Pradesh government has introduced a draft Population Management Policy aimed at encouraging families to have two or three children.
The policy proposes better healthcare facilities, particularly for women. It also seeks to strengthen elderly care systems, as the proportion of older people in the population is expected to rise in the coming years.
The initiative responds to the sharp decline in fertility rates in Andhra Pradesh. The state’s Total Fertility Rate (TFR) has fallen to 1.5, which is significantly below the replacement level of 2.1.
The AP govt has expressed concern that declining birth rates could reduce the working-age population while increasing the elderly population.
This may slow economic growth and increase pressure on government welfare systems, turning a demographic dividend into a demographic burden.

Demographic Trends in Andhra Pradesh and India

The Total Fertility Rate (TFR) in Andhra Pradesh has declined steadily from 2.2 in 2003 (when Andhra Pradesh and Telangana were a combined state) to 1.5 in 2023.
Telangana has also recorded the same fertility rate of 1.5.
The decline in fertility is a national trend. India’s overall TFR has fallen from 3 in 2003 to about 1.9 today.
Falling fertility rates are often linked with development indicators such as better education, healthcare, urbanisation, higher incomes, and the rise of nuclear families.

Regional Differences in Fertility

Southern states generally have lower fertility rates than the national average due to stronger social development indicators.
- Tamil Nadu: 1.3
- Andhra Pradesh, Telangana, Karnataka, Kerala: around 1.5
In contrast, several northern and eastern states still have higher fertility rates:
- Bihar: 2.8
- Uttar Pradesh: 2.6
- Madhya Pradesh, Chhattisgarh, Rajasthan, Jharkhand, Assam: above the national average.

Political Implications of Population Changes

Falling fertility in southern states could affect their representation in Parliament.
Since parliamentary constituencies are allocated based on population, states with slower population growth may see their relative representation decline compared to populous states like Uttar Pradesh and Bihar.

Delimitation Debate

This concern is linked to the delimitation exercise, which redraws parliamentary constituencies after each Census.
The process has been suspended for about 50 years, but with the suspension set to end soon, the issue of representation based on population is expected to re-emerge in national politics.

Objectives of Andhra Pradesh’s Population Management Policy

Andhra Pradesh has introduced a targeted population management policy to address declining fertility rates and demographic challenges.
The government believes this initiative could significantly shape the state’s future demographic and economic structure.

Five Key Pillars of the Policy

The policy is built around five major components:
- Matrutva: Focus on maternal health and well-being.
- Shakti: Increase women’s participation in the workforce.
- Kshema: Strengthen care and welfare for senior citizens.
- Naipunyam: Improve workforce skills, especially for healthcare services for children and the elderly.
- Sanjeevani: Expand and strengthen the digital public health system.

Incentives to Encourage Childbirth

The government proposes several incentives to encourage families to have more children:
- ₹25,000 cash incentive for the birth of a second or third child.
- ₹1,000 monthly support for five years for the third child to ensure nutrition.
- Free education in government institutions for the second and third child until age 18.
- Subsidised IVF treatments through public-private partnerships to support infertile couples.

Health and Workforce Measures

The policy also includes measures to improve health outcomes and workforce preparedness:
- ₹50,000 and 15 days leave for retiring government employees for preventive health check-ups.
- Training of 10,000 healthcare assistants annually to support adolescent and elderly healthcare needs.

Public Health and Social Targets

The state government aims to achieve several health-related goals:
- Reduce C-section birth rates from 67.5% to below 40%.
- Lower teenage pregnancies.
- Reduce male sterilisation procedures.

Addressing Ageing Population and Workforce Participation

Andhra Pradesh is experiencing faster population ageing than the national average.
Median age: 32.5 years (India: 28.4 years).
Population above 60 years: about 10%, expected to reach 23% by 2047.
Female workforce participation: about 31%, lower than the national average of 37%.

Urgency of Policy Intervention

The government believes there is a limited window to address declining fertility and ageing population trends.
Without timely intervention, these demographic shifts could weaken the state’s economic structure and future growth prospects.

Source: IE | HT

Andhra Pradesh Population Policy FAQs

Q1: Why did Andhra Pradesh introduce a new population policy?

Ans: The Andhra Pradesh population policy was introduced to address declining fertility rates. The state’s total fertility rate has fallen to 1.5, below the replacement level of 2.1.

Q2: What demographic trends prompted Andhra Pradesh’s population policy?

Ans: Andhra Pradesh faces declining birth rates and a rapidly ageing population. This could shrink the working-age population and increase welfare burdens in the future.

Q3: What are the key pillars of the Andhra Pradesh population policy?

Ans: The policy includes five pillars: Matrutva (maternal health), Shakti (women’s workforce participation), Kshema (elderly welfare), Naipunyam (skill development), and Sanjeevani (digital health systems).

Q4: What incentives does the policy provide to encourage childbirth?

Ans: The Andhra Pradesh population policy proposes ₹25,000 cash incentives for second or third children, monthly support for the third child, and free education in government institutions.

Q5: How could population decline affect political representation in India?

Ans: Population decline in southern states could reduce their parliamentary representation after delimitation, as seats are allocated based on population size.

Challenges to India’s Renewable Energy Transition – Explained

March 9, 2026

Renewable Energy Latest News

Concerns have emerged over grid congestion and stranded renewable energy capacity in India, highlighting operational challenges in the country’s renewable energy transition.

India’s Renewable Energy Transition

India has emerged as one of the world’s leading countries in the transition toward clean and renewable energy.
India’s renewable energy sector has witnessed rapid growth due to several factors:
- Large-scale government policy support
- Competitive renewable energy auctions
- Increasing private investment in solar and wind projects
- Falling costs of renewable energy technologies
India has also set ambitious energy transition targets, including:
- Achieving 500 GW of non-fossil fuel energy capacity by 2030
- Meeting 50% of energy requirements from renewable sources
- Achieving net-zero emissions by 2070
As a result, renewable energy capacity in India has expanded rapidly across states such as Rajasthan, Gujarat, Tamil Nadu, and Karnataka, which possess favourable conditions for solar and wind power generation.
However, despite impressive growth in installed capacity, several structural and operational challenges have begun to emerge.

Stranded Renewable Power in India

One of the most pressing issues facing India’s renewable energy transition is the phenomenon of stranded renewable power.
Stranded power refers to situations where electricity generated from renewable sources cannot be transmitted to consumers due to limitations in the power grid.
For example, in Rajasthan, more than 4,000 MW of fully commissioned renewable energy capacity remains unable to evacuate power during peak hours because of grid congestion.
Although Rajasthan has approximately 23 GW of renewable capacity installed, the available evacuation capacity is only about 18.9 GW, leading to curtailment of power generation.
This means that renewable energy plants that are fully operational cannot deliver electricity to the grid, resulting in financial losses for developers and inefficiencies in the energy system.

Transmission Infrastructure Bottlenecks

Transmission infrastructure plays a crucial role in the renewable energy ecosystem because renewable energy generation is often concentrated in specific geographic locations, while electricity demand is spread across the country.
Large transmission corridors have been constructed to transport electricity from renewable-rich regions to demand centres.
However, many high-capacity transmission lines are currently operating far below their designed capacity.
For instance, 765 kV double-circuit transmission corridors designed to evacuate around 6,000 MW are often operating at only 600–1,000 MW, resulting in utilisation levels below 20%.
These transmission corridors involve massive public investment, with each corridor costing approximately Rs. 4,000 to Rs. 5,000 crore.
Underutilisation of such infrastructure results in inefficient use of public resources and increases the cost burden on electricity consumers.

Institutional and Operational Challenges

A major issue underlying grid congestion is the gap between infrastructure planning and operational management.
Transmission corridors are often planned by the Central Transmission Utility (CTU) based on projected renewable energy capacity.
Developers receive General Network Access (GNA) approvals, which allow them to connect their power plants to the national grid.
However, operational decisions made by grid operators sometimes limit the amount of electricity that can actually flow through these corridors.
As a result, a situation arises where infrastructure exists on paper but cannot be fully utilised in practice.
This mismatch between planning and operational realities undermines investor confidence and disrupts the renewable energy ecosystem.

Curtailment and Financial Risks

Curtailment refers to the forced reduction in electricity generation due to grid constraints.
In some regions, curtailment is disproportionately imposed on projects that have Temporary General Network Access (T-GNA), while projects with permanent network access continue operating normally.
This creates an uneven distribution of financial risks among renewable energy developers.
Projects that face curtailment may experience complete shutdowns during peak solar hours, leading to revenue losses and financial distress for investors.
Since renewable energy projects involve large upfront investments, prolonged curtailment can discourage future investments in the sector.

Technical Solutions and Global Best Practices

Many of the technical challenges affecting renewable energy integration are solvable through advanced grid management technologies.
Some key solutions include:
- Advanced reactive power technologies: Devices such as STATCOMs (Static Synchronous Compensators) and other reactive power equipment can help stabilize voltage and manage power flows.
- Dynamic grid management systems: Modern power systems use real-time monitoring tools such as dynamic security assessment and contingency management to maximise transmission capacity.
- Adaptive line rating technologies: These technologies allow transmission lines to carry more electricity under favourable environmental conditions.
Many countries with high renewable energy penetration have adopted such solutions to balance grid stability with efficient power transmission.

Institutional Reforms Needed

Experts suggest that addressing India’s renewable energy challenges requires stronger institutional coordination.
Improved grid utilisation targets: Grid operators should be evaluated not only on maintaining stability but also on maximising utilisation of transmission assets.
Transparent curtailment mechanisms: Curtailment should be distributed proportionately among generators to ensure fairness.
Dynamic reallocation of network capacity: Unused transmission capacity should be made available to other generators through transparent and real-time mechanisms.
Better coordination between planning and operations: Transmission planning agencies and grid operators must align their decisions to ensure that planned infrastructure delivers its intended capacity.

Source: TH

Renewable Energy FAQs

Q1: What is stranded renewable power?

Ans: Stranded renewable power refers to electricity generated by renewable plants that cannot be transmitted to consumers due to grid constraints.

Q2: Which Indian state currently faces major renewable power congestion?

Ans: Rajasthan has significant grid congestion, leaving thousands of megawatts of renewable capacity unable to evacuate power.

Q3: What is General Network Access (GNA)?

Ans: GNA is a system that allows power generators to access the national transmission grid to evacuate electricity.

Q4: What technologies can improve renewable grid integration?

Ans: Technologies such as STATCOMs, dynamic grid management, and adaptive line rating can improve power transmission efficiency.

Q5: Why is transmission infrastructure important for renewable energy?

Ans: Transmission infrastructure enables electricity generated in renewable-rich regions to reach demand centres across the country.

Fiscal Devolution to Cities – Gaps in Financing India’s Urban Future

March 9, 2026

Fiscal Devolution to Cities Latest News

Urban centres in India are the primary engines of economic growth, generating nearly 67% of GDP and around 90% of government revenues.
Despite their economic importance and rapid population growth, the 16th Finance Commission (FC) continues the pattern of limited fiscal transfers to Urban Local Bodies (ULBs).
The Commission instead emphasises enhancing Own Source Revenue (OSR) through local taxation, raising questions about the adequacy of fiscal support and the implications for urban governance and federalism.

Urban Economy vs Fiscal Support

Cities as engines of growth:
- Urban centres contribute around two-thirds of India’s GDP and a significant share of government revenues.
- India’s urban population is projected to reach 41% by 2031, increasing pressure on infrastructure, housing, sanitation, and mobility.
Urban grants under Finance Commissions:
- 15th Finance Commission (2021–26): Urban local bodies received ₹1.2–1.3 lakh crore over five years. This amounted to roughly 0.12–0.13% of GDP.
- 16th Finance Commission (2026–31): Proposed allocation of ₹3.56 lakh crore over five years (₹75,000 crore annually). With India’s projected GDP around ₹400 lakh crore, the ratio remains around 0.13% of GDP.
Key insight: Despite higher nominal allocations, the share of GDP transferred to cities remains stagnant, indicating limited improvement in fiscal support.

Per Capita Transfers - The Hidden Reality

India’s urban population exceeded 470 million around 2020. It is expected to reach 600 million or more during the 2026–30 FC cycle.
When grants are distributed across this growing population, per capita transfers remain stagnant or decline in real terms.
The fiscal capacity of cities does not grow proportionately with the rising urban population and infrastructure demands.

Utilisation Challenges

Even the limited funds allocated have not always been effectively utilised.
For example,
- Under the 15th FC, total local body grants were about ₹4.36 lakh crore.
- Around ₹90,000–95,000 crore remained unspent or pending utilisation.
- Approximately ₹30,000–35,000 crore of these unspent funds were meant for urban local bodies.
Reasons include: Administrative bottlenecks, weak institutional capacity in ULBs, delays in project approvals and fund releases.

Tied Grants and Fiscal Autonomy

What are tied grants? Tied grants are earmarked funds that must be used for specific sectors such as water supply, sanitation, wastewater management, etc.
Implications: They limit the fiscal autonomy of cities. ULBs cannot allocate funds according to local priorities.
16th FC: It introduces even stricter conditions through performance-based grants.

Performance-Based Conditions

A portion of urban grants is linked to certain governance reforms, such as regular elections for local bodies, improved fiscal discipline, publication of provisional and audited accounts, and constitution of State Finance Commissions.
Additionally, 20% of funds are conditional on meeting specific benchmarks. Cities must increase OSR (~₹1,200 per household annually), especially through property taxes and user charges.
Concern: Many cities may struggle to meet these benchmarks, risking the loss of funds.

Federalism Concerns

Incentives for peri-urban mergers: The Commission has proposed ₹10,000 crore as a one-time incentive for merging peri-urban villages (population >1 lakh) with urban areas.
Issues involved:
- Constitutional concerns: Urban development is a State subject under the Constitution. Central incentives may interfere with State autonomy.
- Administrative complications: In States with strong rural governance structures (e.g., Kerala), such mergers could create institutional and service delivery challenges.

Neglect of Climate Finance

The 16th FC recommendations pay limited attention to climate change, despite cities being highly vulnerable to floods, heatwaves, urban pollution, and infrastructure stress.
At the same time, the Centre collects cess revenues worth around 2.2% of GDP (≈ ₹8.8 lakh crore).
These funds remain outside the divisible pool, even though much of the revenue originates from urban economic activity.
Implication: Cities receive limited fiscal returns despite generating substantial revenue.

Way Forward

Increase: Fiscal transfers to cities, raise urban grants as a larger share of GDP.
Enhance: Fiscal autonomy, reduce reliance on tied grants and allow flexible funding.
Strengthen: Own source revenues, reform property tax systems, improve municipal financial management.
Empower: Urban Local Bodies, implement 74th Constitutional Amendment provisions fully, strengthen State Finance Commissions.
Allocate: Dedicated funds for climate-resilient infrastructure.
Revisit: Cess revenue sharing, consider including a portion of cess collections in the divisible pool.

Conclusion

India’s cities are the primary drivers of economic growth, yet their fiscal empowerment remains limited.
While the 16th FC emphasises fiscal discipline and revenue generation, it does not substantially increase the share of funds flowing to urban local bodies.
A sustainable urban future requires greater fiscal devolution, enhanced autonomy, and stronger institutional capacity, enabling cities to plan and finance their own development while the Centre plays the role of an enabler rather than a controller.

Source: TH

Fiscal Devolution to Cities FAQs

Q1: Why are Indian cities considered the primary engines of economic growth?

Ans: Cities generate nearly 67% of India’s GDP and about 90% of government revenues, yet fiscal transfers to ULBs remain only around 0.13% of GDP.

Q2: What are ‘tied grants’ in the context of Finance Commission transfers to ULBs?

Ans: Funds earmarked for specific sectors such as water supply, sanitation, and wastewater management, restricting the fiscal autonomy of cities.

Q3: How does the 16th FC promote fiscal discipline among ULBs?

Ans: It links 20% of urban grants to performance conditions, including improved fiscal discipline.

Q4: Why does the proposal to merge peri-urban villages with cities raise federal concerns?

Ans: Urban development is a State subject, and central incentives for peri-urban mergers may undermine State autonomy.

Q5: What is the major concern regarding cess revenues in the context of urban fiscal governance?

Ans: Cess revenues collected by the Centre—around 2.2% of GDP (₹8.8 lakh crore)—remain outside the divisible pool.