Why in news?

More than 100 people died in powerful thunderstorms that struck Uttar Pradesh, with Prayagraj, Mirzapur, and Bhadohi among the worst-hit districts.

These storms, known as Andhi, are a common pre-monsoon weather phenomenon in northern India, typically occurring between April and May, sometimes extending into July. They are usually accompanied by dust storms, thunder, lightning, rain, and occasionally hail.

While many such storms are mild, stronger ones with wind speeds exceeding 90 kmph can cause severe destruction by uprooting trees, collapsing structures, toppling poles, and causing lightning-related deaths.

What’s in Today’s Article?

• Thunderstorms: Formation, Characteristics and Life Cycle
• Why This Thunderstorm Event Was More Destructive?
• Thunderstorm Forecasting: Successes and Limitations

Thunderstorms: Formation, Characteristics and Life Cycle

• A thunderstorm is a rain-bearing weather event accompanied by thunder. Since thunder is produced by lightning, all thunderstorms involve lightning.
• Thunderstorms are primarily the result of convection, which is the upward movement of warm, moist air in the atmosphere.
• Thunderstorms are most common during spring and summer, especially in the afternoon and evening, though they can occur throughout the year depending on atmospheric conditions.
• Key Conditions for Thunderstorm Formation
  • Three essential ingredients are required for the formation of a thunderstorm:
    • Moisture - Adequate moisture in the atmosphere provides the water vapour needed for cloud formation and precipitation.
    • Unstable Rising Air - The air must be unstable, meaning that once it starts rising, it continues to rise because it remains warmer and lighter than the surrounding air.
    • Lifting Mechanism - A trigger or “nudge” is needed to push warm air upward. This can be caused by: Surface heating by the sun; Hills or mountains; Collision of warm and cold air masses; Interaction between wet and dry air masses.
• How Does a Thunderstorm Form?
• The sun heats the Earth’s surface, warming the air above it.
• This warm air rises and carries moisture upward through convection. As the air rises, it cools, and the water vapour condenses to form clouds.
• As the cloud grows vertically into colder regions of the atmosphere, ice particles form.
• Collisions among these ice particles generate electrical charges, eventually leading to lightning.
• The rapid heating caused by lightning produces shock waves heard as thunder.
• Thunderstorm Life Cycle
  • Developing Stage
    • Marked by the formation of a cumulus cloud
    • Strong upward air movement (updraft) dominates
    • Cloud grows vertically into a towering cumulus
    • Little or no rainfall, though occasional lightning may occur
  • Mature Stage
    • Most intense and dangerous stage
    • Rain begins to fall, creating a downdraft
    • Updraft and downdraft coexist
    • Formation of a gust front due to spreading cool air
    • Associated with: Heavy rainfall; Hail; Frequent lightning; Strong winds; Tornadoes
  • Dissipating Stage
    • Downdraft becomes dominant
    • Warm moist air supply gets cut off
    • Rainfall gradually weakens
    • Lightning may still remain a threat

Why This Thunderstorm Event Was More Destructive?

• Unusually Powerful and Widespread Storms - The recent thunderstorms in Uttar Pradesh were far stronger than typical pre-monsoon events, with at least eight districts recording wind speeds above 100 kmph, reaching 130 kmph in some areas.
• Meteorological Conditions Behind the Event - Pre-monsoon thunderstorms in northern India are usually triggered by intense surface heating and moisture-laden winds.
  • This time, temperatures crossed 45°C, while strong southeasterly winds carried abundant moisture from the Bay of Bengal deep into northwestern Uttar Pradesh.
• Atmospheric Instability Triggered Severe Storms - At the same time, western disturbances brought cool, dry air in the upper atmosphere, while warm, moist air remained near the surface. This sharp contrast created intense atmospheric instability—a classic condition for severe thunderstorms.

Thunderstorm Forecasting: Successes and Limitations

• The IMD had forecast thunderstorm activity in advance, but underestimated the maximum wind speeds.
• Initial forecasts predicted winds up to 60 kmph, later revised to 70 kmph, while nowcasts projected 80–90 kmph. However, some districts recorded winds exceeding 100 kmph.
• According to the IMD, the overall forecast was timely and reasonably accurate.
• A strong observation network of around 2,400 weather stations in Uttar Pradesh has improved forecasting accuracy, though efforts are ongoing to better predict extreme intensity.
• Unlike cyclones, thunderstorms do not follow a clear directional path and occur as scattered, multiple events across wide areas.
• This makes large-scale evacuation impractical, limiting disaster response options mainly to early warnings and preparedness.

Why in news?

India is considering reducing the withholding tax on foreign investors’ earnings from Indian bonds from 20% to 5% to attract overseas capital inflows.

The move comes as India’s foreign exchange reserves have declined sharply amid the West Asia conflict and rising crude oil prices, increasing external economic pressure.

Lowering this tax is aimed at making Indian bonds more attractive to foreign investors and strengthening capital inflows as part of broader efforts to manage the external sector and conserve foreign exchange.

Reducing the withholding tax could increase foreign investors’ net returns, make Indian debt instruments more attractive, encourage greater capital inflows, and help support India’s foreign exchange reserves during global uncertainty.

What’s in Today’s Article?

• About Withholding Tax
• Evolution of India’s Withholding Tax Regime
• Withholding Tax Practices Across Countries
• FPI Investment in India’s Government Debt
• Why There Are Demands to Cut Withholding Tax?

About Withholding Tax

• Withholding tax (WHT) is a tax collected at the source of income.
• Instead of waiting for the taxpayer to pay at the end of the financial year, the payer deducts a portion of the income before transferring it to the recipient and deposits that amount directly with the government.
• It applies to income earned through employment, investments, royalties, and other sources, ensuring advance tax collection.

Evolution of India’s Withholding Tax Regime

• Expiry of the Concessional Rate - India had introduced a concessional 5% withholding tax on interest earned by foreign investors from investments in government securities and certain rupee-denominated bonds under Section 194LD of the Income Tax Act.
• Tax Rate Hike After July 2023 - The concessional regime expired in July 2023, after which the effective withholding tax for many foreign investors reverted to around 20%, making Indian debt relatively less attractive for global bond investors.
• Impact on Foreign Capital Inflows - The higher tax burden reduced the appeal of Indian debt instruments at a time when India was seeking stronger foreign capital inflows and inclusion in global bond indices.
• Historical Evolution in Other Areas
  • India’s withholding tax regime has changed significantly over time. In 1976, withholding tax on royalties paid to non-residents was 40%, while fees for technical services attracted 20%.
  • Between 1986 and 2005, the government reduced withholding tax on royalties and technical services to 10% to lower technology acquisition costs and encourage foreign collaboration.

Impact of Withholding Tax Cut on Foreign Portfolio Investors (FPIs)

• Higher Post-Tax Returns - Withholding tax reduces FPIs’ effective yields because tax is deducted before investment income is paid. Lowering the tax would improve post-tax returns and overall investment gains.
• Better Compounding and Reinvestment - A high withholding tax reduces the amount available for immediate reinvestment, weakening the benefits of long-term compounding. A lower tax rate would free up more capital for reinvestment.
• Improved Liquidity for Global Investors - For large international investors, withholding tax can temporarily lock up funds until tax credits or refunds are processed, creating short-term liquidity pressures. Lower taxes would ease this constraint.
• Reduced Compliance Burden - FPIs often face administrative difficulties in claiming tax relief under Double Taxation Avoidance Agreements (DTAAs). A lower withholding tax would reduce compliance costs and regulatory friction.
• Greater Market Attractiveness - By lowering transaction costs and improving risk-adjusted returns, a reduced withholding tax would make Indian financial markets more attractive to overseas investors.

Withholding Tax Practices Across Countries

• Most countries impose withholding tax on foreign investors, particularly on passive income such as interest, dividends, and royalties.
• The tax rate, coverage, and exemptions vary depending on the country, investor category, and the presence of DTAA.
  • United States: 30%
  • Germany: 26.4%
  • France: 25%
  • China: 10%
  • Hong Kong: No withholding tax
  • Singapore: No withholding tax

FPI Investment in India’s Government Debt

• FPI hold a relatively small share of India’s government debt market, though their participation has increased significantly following India’s inclusion in global bond indices such as the JPMorgan Government Bond Index-Emerging Market.
• The RBI has capped FPI investment in government securities at 6% of the outstanding stock.
• By March 2025, FPI investment in dated government securities had risen sharply by 43.2%, increasing from $30.6 billion to $43.9 billion year-on-year.

Why There Are Demands to Cut Withholding Tax?

• High Tax Reduces India’s Attractiveness - Analysts argue that India’s 20% withholding tax on interest income makes Indian debt less attractive compared to many peer countries, reducing foreign investor interest.
• Barrier to Global Bond Index Inclusion - High taxation and procedural hurdles delayed India’s inclusion in major global bond indices. Lower taxes and simpler processes could significantly boost foreign capital inflows.
• Potential for Large Capital Inflows - Experts estimate that greater tax clarity or exemptions could bring $45–50 billion in inflows over two years, while also attracting pension funds and endowment investors.
• Global Competition - Several countries do not tax bond investments, while countries like China offered special tax exemptions after bond index inclusion to attract foreign investors, making India comparatively less competitive.
• Recent FPI Debt Outflows - After the concessional withholding tax regime ended in 2023, foreign investors faced higher tax costs. As a result, India’s debt market has recently seen FPI outflows, indicating weaker investor sentiment.

Context:

• India’s recent economic performance has been strong, especially in the post-COVID-19 period, combining relatively high growth with macroeconomic stability in a manner achieved by few large economies.
• Real GDP growth reached 6.5% in FY 2024-25, making India one of the fastest-growing major economies globally.
• This performance has been supported by strong domestic demand, subdued inflation, gradual fiscal consolidation, and a broadly stable financial sector.
• However, while India has recorded meaningful productivity growth over recent decades, achieving the goal of Viksit Bharat by 2047 will require a faster pace of growth.
• This will depend not only on maintaining macroeconomic stability, but also on activating all engines of growth—labour, capital, and productivity—through deeper structural reforms.
• This article highlights why India’s journey to Viksit Bharat by 2047 requires a shift from growth-led expansion to productivity-led transformation.

Manufacturing: The Missing Link in India’s Structural Transformation

• The Economic Survey 2025-26 highlights that manufacturing must anchor India’s next phase of growth.
• However, the challenge is not merely expanding manufacturing, but making it more productive.
• Skewed Structural Transformation
  • India’s growth has been largely driven by the services sector, while manufacturing has not expanded enough to absorb labour or deliver broad-based productivity gains.
  • This creates an imbalanced pattern of structural transformation.
  • In successful development models, manufacturing acts as a bridge between low-productivity agriculture and high-productivity modern sectors.
  • It plays a critical role in sustaining growth and generating large-scale employment.
• Productivity and Firm Structure Challenges
  • Manufacturing productivity in India remains below its potential and lags behind international peers.
  • A major reason is the sector’s structure, marked by numerous small, low-productivity firms and too few mid-sized firms capable of scaling up.
  • Unlike India, successful East Asian economies developed strong medium and large manufacturing firms that boosted exports, productivity, and industrial growth.
  • The current structure leads to inefficient allocation of resources, with a large share of labour remaining stuck in low-productivity agriculture instead of moving to more productive sectors.
  • Despite significant investments, especially in infrastructure, efficiency gaps continue to persist in the manufacturing sector.

Zombie Firms and India’s Productivity Challenge

• India’s productivity growth is constrained by weak business dynamism. The process of “creative destruction,” where efficient firms replace inefficient ones, remains slow, limiting productivity gains.
• Small, low-productivity “zombie” firms continue operating despite being economically unviable. These firms lock up capital and labour that could otherwise be used more productively.
• Although zombie firms form a small share of total firms, they account for a disproportionately large share of total debt and assets, creating significant inefficiencies in resource allocation.
• A Persistent Structural Problem
  • Zombification is a gradual and persistent process rather than a temporary cyclical issue.
  • Firms begin deteriorating financially well before being classified as zombies and often remain trapped in distress.
  • The source of financing affects firm survival. Bank-financed firms are more likely to become zombie firms, stay distressed longer, and relapse after partial recovery, while equity-financed firms show better recovery prospects.
  • Financial and regulatory systems often keep inefficient firms alive instead of enabling their exit.
  • This crowds out credit for productive firms and weakens overall productivity growth.

Strategy for Viksit Bharat

• Manufacturing-Led Growth as the Core Strategy - India’s journey to Viksit Bharat requires a manufacturing-led growth strategy that focuses not only on expanding scale but also on improving efficiency and productivity.
• Strengthening Manufacturing Competitiveness - Expanding manufacturing will require deeper integration into global value chains, addressing trade barriers, and sustaining infrastructure investment to improve competitiveness.
• Boosting Productivity and Business Dynamism - Higher productivity will depend on stronger business dynamism, greater research and development, and an environment that enables efficient firms to grow.
• Enabling Exit of Inefficient Firms - Productivity gains also require allowing unproductive firms to exit so that capital and labour can be reallocated to more efficient uses.
• Reform Priorities - Key reforms should focus on simplifying regulations, easing labour constraints, strengthening insolvency mechanisms, improving credit allocation, and expanding access to finance.

Conclusion

• Achieving Viksit Bharat will depend not just on sustaining growth, but on raising productivity through stronger manufacturing, efficient resource allocation, structural reforms, and greater business dynamism.

About Euphrates River:

• It is Western Asia’s longest river.
• Course:
  • The river originates in the Armenian Highlands of southeastern Turkey.
  • It then flows through the countries of Syria and Iraq, where it meets with the Tigris River and finally drains into the Persian Gulf.
• The Euphrates River flows parallel to the Tigris River and along with all their tributaries, form the large Tigris-Euphrates River System.
• Ancient Mesopotamia, a part of what is often called the “Fertile Crescent,” occupied the land between the Tigris and Euphrates
• Some of the world’s oldest civilizations were established there thousands of years ago.
• One of the ancient world’s most important cities, Babylon, was built along the Euphrates.
• Often used as a boundary between various kingdoms, the Euphrates was the scene of battles during ancient times.
• The Euphrates receives most of its water from winter rains and snowfall in the mountains. The rest of the land that the Euphrates flows through is dry.

About Project Garud:

• It is a satellite platform programme launched by Hyderabad-based space startup Dhruva Space.
• It is focused on developing a flat-pack 500 kg-class satellite platform designed for scalable and high-volume manufacturing.
• It is positioned to bridge the gap between smaller experimental satellites and larger traditional systems.
• The platform is being developed as a standardised, production-oriented spacecraft capable of supporting multiple mission c
• The satellite architecture is aimed at applications across Telecommunications, National Security, Earth Observation, and emerging data-driven use cases.
• The platform introduces a flat-pack architecture that enables efficient launch stacking, faster system integration, and improved deployment timelines, making it suitable for large-scale satellite deployments.
• Dhruva Space will also establish the infrastructure, tooling, and industrial processes required for high-volume satellite manufacturing at scale.
• The manufacturing roadmap is designed to support production of up to two satellites per day, translating into an annual manufacturing capacity of nearly 500-600 satellites. 

About Rakchham Chitkul Wildlife Sanctuary:

• It is located in the Kinnaur district of Himachal Pradesh.
• The sanctuary is also referred to as `Sangla Wildlife Sanctuary`.
• The perilous Lamkhanga Pass is one of the many trekking routes that pass through this sanctuary.
  • This pass connects the Himachal Pradesh province of Kinnaur to the Uttarakhand region of Gangotri.
• Unlike the climate of other sanctuaries in Himachal Pradesh, the sanctuary is located in a dry zone; hence it does not experience monsoons.
• Vegetation: Sub-Alpine Forests, Dry Broadleaf and Coniferous Forests, Dry Temperate Forests and Dry Alpine Scrubs and Pastures.
• Flora: Rhododendrons, oak trees, pine trees, and medicinal herbs.
• Fauna: It is also home to various species of wildlife, such as snow leopards, Himalayan black bears, musk deer, and numerous bird species.

Key Facts about Himalayan Brown Bear:

• It is the largest mammal found in the high-altitude regions of the Himalayas.
• It is one of the most ancient brown bear lineages.
• Scientific Name: Ursus arctos isabellinus
• It is also known as the “Himalayan Red Bear” and the “Isabelline Bear”. It is known as Denmo in the Ladakhi
• It is believed by some that the bear’s ability to walk upright probably gave rise to the legend of the Yeti or “Abominable Snowman.”
• Distribution:
  • They are found in the northwestern and central Himalayas, including Pakistan, India, Nepal, the Tibetan Autonomous Region of China, and Bhutan.
  • They are found above the timberline, between 3,000 and 5,500 meters above sea level.
  • In India, this species exists in small isolated populations in the fragmented alpine and subalpine habitats of Jammu and Kashmir, Himachal Pradesh, and Uttarakhand.
• Features:
  • Males are larger than females, with an average length of 1.9 m and weight of 135 kg, in comparison to the female averages of 1.6 m and 70 kg.
  • It has thick fur, which is most often sandy or reddish-brown in colour.
  • Food: Omnivorous, eating grasses, roots, bulbs, and other plants, insects, and small mammals such as marmots, pikas, and voles.
  • They hibernate in dens during the winter.
• Conservation Status:
  • IUCN Red List: Critically Endangered

About Tughlaqabad Fort:

• It is located in South Delhi.
• It was built by the founder of the Tughlaq Dynasty, Ghiyas-ud-din-Tughlaq in 1321.
  • Ghias-ud-din Tughlaq, also called Ghazi Malik, was the slave who served Sultan Mubarak Khilji of the Khilji Dynasty.
  • Ghazi Malik drove away the Khilji ruler and built his city of Tughlaqabad and the fort.
• Established as the 3rd historic city, the fort was later abandoned in 1327 after a curse given by Nizamuddin Auliya.
• Features:
  • The fort is divided into three parts: the main city area with houses built along a rectangular grid between its gates, the citadel with a tower at its highest point known as Bijai-Mandal, and the adjacent palace area containing the royal residences.
  • On the southern side of the fort is the tomb of Ghiyas-ud-din Tughlaq, which was built in 1325 AD by the ruler himself.
  • Ghiyas-ud-din's successor, Muhammad Tughluq (1325-51), added the small fortress of ‘Adilabad on the hill south of Tughluqabad, with which it shares the main characteristics of construction.

About Meningitis:

• Meningitis is an inflammation (swelling) of the protective membranes covering the brain and spinal cord. These membranes are called meninges.
• It can be deadly and often results in serious long-term health issues.
• Causes:
  • It can be caused by several species of bacteria, viruses, fungi, and parasites.
  • Injuries, cancers, and drugs cause a small number of cases.
• Bacterial meningitis is the most serious type of meningitis. It is a severe, life-threatening condition that can often lead to long-term adverse health consequences.
• Transmission: Infections that cause meningitis can be spread through sneezing and coughing.
• Treatment and Prevention:
  • Meningitis is a medical emergency. It is potentially fatal within 24 hours and requires urgent medical attention.
  • Meningitis can vary in severity, appropriate treatment and care depending on the cause.
  • Meningitis caused by bacteria requires immediate antibiotic treatment.
  • Vaccines offer the best protection against common types of bacterial meningitis.
  • Antibiotics for close contacts of those with meningococcal disease, when given promptly, decreases the risk of transmission.
  • Viral meningitis usually goes away on its own without treatment.

About Advance Authorisation (AA) Scheme:

• It allows duty free import of inputs, which are physically incorporated in an export product.
• In addition to any inputs, packaging material, fuel, oil and catalysts which are consumed/utilized in the process of production of export products, are also allowed.
• The inputs imported are exempt from duties like,
  • Basic Customs Duty, Additional Customs Duty, Education Cess, Anti-dumping duty, Safeguard Duty and Transition Product-Specific Safeguard duty, Integrated tax, and Compensation Cess, wherever applicable, subject to certain conditions. 
• An export obligation is usually set as a condition for issuing Advance Authorization.
• Advanced Authorization Issued to
  • Manufacturer Exporters: Entities engaged in manufacturing goods for export.
  • Merchant Exporters tied to Supporting Manufacturer(s): Traders who do not manufacture themselves but procure goods from a supporting manufacturer for export.
• The Advanced Authorization shall be issued for
  • Physical exports
  • Intermediate supply
  • Supplies made to specified categories of deemed exports
  • Supply of ‘stores’ on board of a foreign-going vessel/aircraft, provided that there are specific Standard Input Output Norms (SION) in respect of items supplied.
• Advance Authorization is valid for 12 months from the date of issue of such Authorization.
• It is overseen by the Directorate General of Foreign Trade (DGFT).

About Ginger:

• It is an herbaceous perennial plant of the family Zingiberaceae.
• Required Climatic Conditions:
  • Climate: It requires a warm and humid climate (up to an altitude of 1500m).
  • Temperature: The crop performs well in a temperature range of 19°C- 28°C.
  • Rainfall: It requires moderate to high rainfall of about 1,500–2,500 mm per year or reliable irrigation.
  • Ginger does not tolerate frost or prolonged drought.
  • Soil: It requires loose, fertile, well-drained loam or sandy-loam soils rich in organic matter.
• Largest Producer: India is the largest producer of ginger and mainly in Kerala, Orissa, Meghalaya, West Bengal, and Arunachal Pradesh.
• Uses: It is most widely used spice both for flavouring and for medicinal purpose. It is used in food preparations, confectionary, beverages, making ginger candy/ preserves. 
• Significance: It contains a vast amount of antioxidant compounds which can be used to treat various inflammatory conditions.
• Ginger supplementation significantly reduces the levels of fasting blood sugar, hemoglobin A1c, apolipoprotein B etc.