Why in news?

In November 2025, India received a 'C' grade — the second-lowest grade — from the IMF for the quality of its national accounts statistics.

In response, the government undertook a wide-ranging overhaul of its key statistical databases over the following months, improving their timeliness, representativeness, accuracy, and coverage across GDP measurement, industrial output, and inflation indices.

What’s in Today’s Article?

• What Got Updated?
• Why Was the Overhaul Necessary?
• Changes to National Accounts (GDP/GVA)
• Changes to Industrial Output (IIP)
• Changes to Inflation Indicators
• Producer Price Index (PPI) — A New Addition

What Got Updated

• Three broad categories of statistical databases were revised:
• 

Why Was the Overhaul Necessary?

• The core problem: India's statistical databases were built on outdated base years and were becoming progressively less representative of economic reality.
  • GDP, GVA, and IIP had a base year of 2011-12.
  • WPI had a base year of 2011-12; CPI had a base year of 2012
  • These reflected household consumption patterns nearly 15 years old.
• Old indices still measured items no longer in common use — DVDs, cassettes, VCRs, tape recorders — while missing modern items like online streaming services, CNG/PNG, and rural house rent that have since become significant in household spending.
• Why Accurate Data Matters?
  • The RBI's Monetary Policy Committee uses CPI to gauge inflation and set interest rates.
  • Dearness Allowance (DA) and Dearness Relief (DR) for government employees are pegged to inflation data.
  • Real GDP growth — the global standard metric for measuring economic growth — is calculated only after adjusting for inflation.
  • Inaccurate base data distorts policymaking across the board.

Changes to National Accounts (GDP/GVA)

• The base year was revised from 2011-12 to 2022-23, making the data far more representative of the current economy.
• Key Methodological Improvements
  • Double Deflator Method - This method adjusts input and output prices separately when estimating real GDP growth — giving a much more accurate picture of how price changes affect different stages of production. Currently applied to agriculture and manufacturing, with plans to extend it to other sectors over time.
• Segregation of Multi-Activity Enterprises - Earlier, if a company operated across multiple sectors, its entire output was attributed to its main sector — distorting sectoral data. Now, output is allocated proportionately across each sector the company actually operates in, giving a more accurate sectoral picture.
• New Data Sources - The revised series now incorporates:
  • GST data
  • Periodic Labour Force Survey (PLFS) data
    • These additions, along with improved statistical methodology, are expected to reduce data discrepancies.

Changes to Industrial Output (IIP)

• The Index of Industrial Production (IIP) — which tracks monthly industrial activity and feeds directly into GDP/GVA calculations — was updated as follows:
  • Base year updated to 2022-23
  • Expanded sectoral coverage: now includes gas supply, water supply, sewerage, and waste management activities (in addition to existing sectors)
  • Greater granularity introduced — separately tracking renewable vs. non-renewable electricity sources and different types of minerals produced
• Products – 839 (Old Series); 1,042 (New Series)
• Item groups – 407(Old Series); 463 (New Series)

Changes to Inflation Indicators

Consumer Price Index (CPI) — Retail Inflation

• Base year updated to 2024.
• Item basket and weightages now pegged to the Household Consumption Expenditure Survey (HCES) 2023-24.
• Categories expanded from 6 groups to 12 categories.
• Total items measured (goods + services) increased from 299 to 358.
• New inclusions: Rural house rent, online media/streaming services, CNG and PNG fuel costs, and improved measurement of telephone charges, rail fare, air fare, and postal charges.
• Removed items: VCRs, DVD players, radios, tape recorders, cassettes — products no longer in common use.

Wholesale Price Index (WPI) — Producer-Level Inflation

• Base year updated to 2022-23.
• Items expanded from 697 to 957.
• Reorganised categorisation — for example, crude petroleum and natural gas moved from "Primary Articles" to the "Fuel and Power" group, aligning them with coal, electricity, and petroleum products.

Producer Price Index (PPI) — A New Addition

• The Commerce Ministry introduced an entirely new index — the PPI — in June 2026, with key distinguishing features:
  • Separately tracks input prices paid by producers and output prices they receive.
  • Excludes transport costs and indirect taxes (which WPI includes) — making it a purer measure of producer-level pricing.
  • Incorporates both goods and services, making it more holistic than WPI.
• The Big Shift: WPI to Be Phased Out
  • The government has indicated that the WPI will be phased out over the next five years, after which CPI and PPI will become India's two principal price indices — aligning India more closely with international statistical practice.

Conclusion

• Numbers shape policy — and outdated numbers shape it badly. By updating base years, refining methodology, and introducing the PPI, India has moved its statistical architecture closer to economic reality and global best practice.
• The real test now lies in sustained data quality, regular updates, and whether this overhaul finally earns India a better IMF grade.

Why in news?

The US Federal Reserve's Federal Open Market Committee (FOMC) held its benchmark interest rate steady at 3.50–3.75% for a fourth consecutive meeting — but signalled a more hawkish stance, indicating possible rate hikes later this year.

The shift has direct implications for foreign capital flows into Indian markets.

What’s in Today’s Article?

• The Hawkish Signal: Summary of Economic Projections (SEP)
• Why Is the Fed Turning Hawkish?
• Impact on Indian Markets
• The Counterbalancing Factor: US-Iran Peace Deal
• Conclusion

The Hawkish Signal: Summary of Economic Projections (SEP)

• A hawkish Fed means the central bank is leaning toward tighter monetary policy — raising interest rates or signalling it will do so soon, to control inflation, even if it means slowing down economic growth.
• Median Fed funds rate estimate (end-2026) - 3.4% (March 2026); 3.8% (June 2026)
• Officials expecting rate hike – Minority (March 2026); 9 of 18 (6 expect multiple hikes) (June 2026)
• Officials expecting rate cut – Majority (March 2026); Only 1 (June 2026)
• This represents a clear shift from an easing bias to a tightening bias within the Fed's own committee.

Why Is the Fed Turning Hawkish?

• Inflation Concerns
  • US retail inflation accelerated to 4.2% in May — crossing the 4.2% mark for the first time in 3 years. This is well above the Fed's 2% inflation target.
  • Inflation drivers: reciprocal tariffs imposed by President Trump last year, and more recently, the West Asia war (US-Iran conflict), which drove up fuel prices and disrupted global supply chains.
• Strong Labour Market
  • Non-farm payrolls rose for the third straight month in May.
  • Unemployment rate remained steady.
  • A robust labour market gives the Fed more room to raise rates without fearing a recession.
• Market Reaction in the US
  • Yields on short-term US treasuries rose to a 16-month high.
  • US rate markets now price in 72% odds of a rate hike by October 2026.
  • (Bond yields move inversely to bond prices — rising yields reflect expectations of higher borrowing costs).

Impact on Indian Markets

• Higher US interest rates make US treasuries more attractive to foreign investors, which can lead to:
  • Foreign outflows from Indian capital markets
  • Reduced attractiveness of Indian bonds compared to US debt instruments
  • Pressure on the rupee as foreign investors seek better returns elsewhere
• India's Pre-Existing Vulnerabilities
  • This hawkish signal arrives at a particularly sensitive time for Indian markets, which are already under pressure from:
    • High crude oil prices (linked to the West Asia conflict)
    • Geopolitical uncertainty
    • A weaker rupee squeezing foreign investor returns
    • Underperformance of Indian equities due to lack of AI-related investment opportunities
• Scale of Foreign Outflows in 2026
  • Foreign Institutional Investors (FIIs) have already pulled out $26.7 billion from Indian capital markets in 2026 so far — already exceeding the $11.84 billion withdrawn in the entire year of 2025.

The Counterbalancing Factor: US-Iran Peace Deal

• Despite the hawkish Fed signal, Indian markets showed resilience — largely due to positive developments on the US-Iran peace deal (signed June 17–18, 2026):
  • The peace deal prospects led to a sharp drop in crude oil prices (which had peaked at $125/barrel during the conflict).
  • Lower fuel prices ease inflationary pressure and import costs for India.
• Market Performance Post-Fed Decision
  • The rupee initially slipped against the dollar but recovered to end higher for the 5th straight session.
  • Nifty 50 and Sensex recovered from intraday lows to close 0.3% higher.
• RBI's Supportive Measures
  • The Reserve Bank of India has taken steps to attract foreign capital, including easing of FPI (Foreign Portfolio Investment) norms — providing a cushion against the Fed's tightening stance.
• Analysts Opinion
  • Experts noted that while a hawkish Fed could temper risk-on sentiment, the US-Iran deal prospects, falling crude prices, and RBI's FPI-friendly measures together remain supportive for the INR, FPI flows, and domestic bond market — keeping overall sentiment constructive.
  • They observed that the Fed policy was largely a "non-event" for Emerging Markets (EMs) for now, but warned that a sustained Fed tightening cycle would likely force EM central banks (including RBI) to follow suit with their own rate adjustments.

Conclusion

The Fed's hawkish pivot is a reminder that India's markets remain tethered to global monetary cycles, however strong domestic fundamentals may be. For now, falling crude prices and RBI's proactive measures are cushioning the blow — but a sustained US tightening cycle could test India's resilience in the months ahead.

Why in the News?

• The National Testing Agency (NTA) is set to reconduct NEET-UG 2026 after the cancellation of the original examination due to allegations of a paper leak, once again bringing examination security and institutional accountability into focus.

What’s in Today’s Article?

• About NTA (Objectives, Major Examinations, Importance of Examination Integrity, Performance of NTA, Major Examinations, Key Challenges, Way Forward)

National Testing Agency (NTA)

• The NTA was established in 2018 by the Ministry of Education as an autonomous and specialised testing organisation to conduct entrance examinations for higher educational institutions.
• Objectives: The agency was created with the aim of:

• Conducting transparent, efficient, and standardised examinations
• Reducing the burden on educational institutions
• Utilising technology to improve testing processes
• Ensuring merit-based admissions through fair assessments

• Major Examinations Conducted by NTA

• National Eligibility-cum-Entrance Test (NEET-UG)
• Joint Entrance Examination (JEE Main)
• Common University Entrance Test (CUET)
• University Grants Commission-National Eligibility Test (UGC-NET)
• CSIR-UGC NET and other specialized examinations

• Over the years, NTA has emerged as one of the largest examination-conducting agencies in the world, handling millions of candidates annually.

Importance of Examination Integrity

• Competitive examinations serve as gateways to higher education and public employment. Their credibility depends upon:

• Confidentiality of question papers
• Fairness and transparency in evaluation
• Secure digital infrastructure
• Efficient logistics and coordination
• Public trust in the examination process

• Even isolated instances of paper leaks or procedural lapses can undermine confidence in the merit-based selection system and affect the future of millions of students.

Performance of NTA Since Its Establishment

• The initial years of NTA witnessed the relatively smooth conduct of major examinations. According to the available record:

• NEET, JEE Main, and UGC-NET in 2019 and 2020 were conducted without major controversies.
• The agency successfully expanded computer-based testing and centralized examination administration.

• However, concerns began to emerge regarding examination security, technical glitches, and operational management.

Parliamentary Committee Observations

• The Parliamentary Standing Committee on Education, Women, Children, Youth and Sports, in its 371st Report (2025), highlighted serious concerns regarding the functioning of the NTA.
• The committee observed that out of 14 competitive examinations conducted by NTA in 2024, at least five faced major issues:

• UGC-NET, CSIR-NET, and NEET-PG had to be postponed
• NEET-UG witnessed instances of paper leaks
• CUET (UG/PG) experienced delays in result declaration

• The committee further noted that in JEE Main 2025, at least 12 questions were withdrawn from the final answer key because of identified errors, raising concerns about quality control and examination management.

Major Examination Controversies

• NEET
  • NEET has faced the most significant scrutiny among examinations conducted by the NTA.
  • In 2021, allegations of a paper leak surfaced in Jaipur, leading to FIRs and arrests. However, the NTA denied any confirmed leak and no nationwide retest was conducted.
  • In 2024, a major controversy emerged after the NEET question paper was allegedly photographed from a strong room in Hazaribagh and sold before the examination. The issue gained national attention after 67 candidates secured a perfect score of 720 marks. The CBI subsequently filed multiple charge sheets against 45 accused persons.
  • In 2026, NEET-UG was cancelled following fresh allegations of a paper leak, necessitating a complete retest.

• UGC-NET and CSIR-NET
  • UGC-NET has also faced recurring allegations.
  • In 2022, student organisations alleged that the History paper had been leaked, although the NTA denied the claims.
  • In 2024, UGC-NET was cancelled after allegations that examination questions had appeared on the dark web.
  • In 2025, CSIR-UGC NET faced paper leak allegations in Haryana.

• CUET
  • The Common University Entrance Test (CUET) witnessed significant logistical and technical challenges during its initial years.
  • The debut edition in 2022 was marked by operational disruptions and technical glitches.
  • Similar logistical difficulties persisted in 2023 and 2024, although no major confirmed paper leaks were reported.

Comparison with Other Examination Agencies

• A comparison with other major examination-conducting bodies reveals a contrasting picture.
• UPSC
  • The Union Public Service Commission (UPSC), which conducts the Civil Services Examination and NDA examination, has largely maintained a clean record.
  • According to a government reply in the Rajya Sabha, no confirmed paper leaks were reported between 2021 and 2026 in UPSC examinations.
• JEE (Advanced)
  • Conducted annually by one of the IITs on a rotational basis, JEE (Advanced) has not witnessed any major paper leak controversy during the period under review.
• CAT
  • The Common Admission Test (CAT) conducted by the Indian Institutes of Management (IIMs) has also maintained a strong record in recent years.
  • The last major controversy dates back to 2003, when the CAT paper was leaked, forcing the examination to be conducted again.

Key Challenges in Conducting Large-Scale Examinations

• The increasing scale of competitive examinations presents several challenges:

• Securing question papers across thousands of centres
• Preventing digital and cyber-enabled leaks
• Managing technology-driven examinations
• Ensuring coordination among multiple agencies and state administrations
• Maintaining candidate confidence in the examination system

• The growing use of encrypted messaging platforms, social media, and dark web networks has further complicated examination security.

Way Forward

• To strengthen examination integrity, India needs:

• End-to-end digital security protocols
• Real-time monitoring of examination logistics
• Independent security audits
• Stronger accountability mechanisms
• Better coordination between testing agencies and law-enforcement agencies
• Adoption of international best practices in high-stakes testing

• Institutional reforms should focus not only on responding to leaks but also on preventing them through robust systems and proactive oversight.

Why in News?

• During the Indian PM’s recent visits to France and Slovakia, as well as interactions at the G7 Summit, India employed cultural diplomacy.
• It presented a curated selection of traditional handicrafts, textiles, agricultural products, and classical knowledge texts to foreign dignitaries.
• These gifts highlighted India's diverse cultural heritage, regional craftsmanship, and traditional knowledge systems.

What’s in Today’s Article?

• Cultural Diplomacy as a Soft Power Tool
• Gifts Presented in France
• Gifts Presented in Slovakia
• Promotion of India’s Knowledge and Culinary Heritage
• GI-Tagged and Traditional Products at the G7 Summit
• Significance for India
• Conclusion

Cultural Diplomacy as a Soft Power Tool:

• The selection of gifts reflected India's strategy of using soft power to strengthen diplomatic ties.
• By showcasing products with deep historical, cultural, and geographical significance, India projected its civilizational identity while promoting local artisans, traditional industries, and indigenous products globally.

Gifts Presented in France:

• Kalamkari Mahabharata painting to Emmanuel Macron:
  • The Indian PM gifted French President Emmanuel Macron a handcrafted Kalamkari Mahabharata painting from Andhra Pradesh.
  • Key features:
    • Traditional pen-drawing and natural dyeing technique.
    • Depicts scenes from the Mahabharata.
    • Required nearly six months of craftsmanship.
    • Represents India's rich narrative art tradition and cultural continuity.
• Pochampally silk stole:
  • To Macron’s spouse, the Indian PM presented a Pochampally silk stole from Telangana.
  • Significance:
    • Produced using the traditional Ikat resist-dyeing technique.
    • Known for geometric and floral motifs.
    • Reflects India's renowned textile heritage and handloom excellence.

Gifts Presented in Slovakia:

• Kashmiri silk carpet to PM Robert Fico:
  • The Kashmiri silk carpet symbolizes one of India's most prestigious handicrafts.
  • Features:
    • Hand-knotted using high-quality natural silk.
    • Intricate floral, paisley, vine, and medallion patterns.
    • Reflects the artistic traditions and natural beauty of Kashmir.
• Brass Dokra Antelope set to President Peter Pellegrini:
  • The Dokra Antelope set showcased India's ancient Dokra metal-casting tradition, practiced by tribal artisans in Chhattisgarh, Odisha, Jharkhand, West Bengal.
  • Symbolic importance:
    • Antelope figures represent gentleness, agility, and harmony with nature.
    • Established a cultural connection with Slovakia’s Tatra Chamois, symbolizing resilience and environmental harmony.
• Thewa motif cufflinks:
  • The PM gifted handcrafted Thewa motif cufflinks, originating from Pratapgarh, Rajasthan, and representing Rajasthan’s traditional jewellery craft.
  • Characteristics: Finely engraved gold sheets fused onto coloured glass. Designs inspired by nature and symbolism.

Promotion of India’s Knowledge and Culinary Heritage:

• Charaka Samhita and Sushruta Samhita:
  • A copy of each was gifted to Slovak Parliament Speaker Richard Raš.
  • Importance: Foundational texts of Ayurveda. Reflect India's scientific, medical, and intellectual heritage. Demonstrate the historical depth of indigenous healthcare knowledge.
• Thekua:
  • The Prime Minister also gifted Thekua, a traditional sweet snack from Bihar.
  • Significance: Closely associated with regional festivals and cultural traditions. Represents India's diverse culinary heritage and local food culture.

GI-Tagged and Traditional Products at the G7 Summit:

• During the G7 Summit, the Prime Minister presented products that highlight India's agricultural diversity and traditional knowledge systems.
• Nagauri Ashwagandha (Rajasthan):
  • Valued in Ayurveda as a Rasayana herb.
  • Supports vitality, immunity, mental well-being, and overall health.
  • Demonstrates the integration of traditional medicine with modern wellness research.
  • Provides livelihood opportunities to rural communities.
• Lakadong Turmeric (Meghalaya): Renowned for its exceptionally high curcumin content, it represents India's rich agro-biodiversity and premium agricultural products.
• Ramban Honey (Jammu & Kashmir): Produced in the Chenab Valley region, it reflects sustainable rural livelihoods and natural-resource-based economies.
• Banarasi Silk Stoles: Symbolize India's globally recognized handloom and weaving traditions. Showcase centuries-old craftsmanship from Varanasi.

Significance for India:

• Cultural and diplomatic dimensions: Strengthens bilateral relations through cultural diplomacy. Enhances India's soft power projection. Promotes regional crafts and indigenous traditions on international platforms.
• Economic and developmental impact:
  • Supports artisans, weavers, tribal communities, and farmers.
  • Creates global visibility for Geographical Indication (GI) products and traditional industries.
  • Encourages export promotion and preservation of cultural heritage.
• Civilizational messaging:
  • Reflects the idea of “Vasudhaiva Kutumbakam” and India's civilizational continuity.
  • Demonstrates the integration of traditional knowledge, culture, craftsmanship, and sustainable livelihoods.

Conclusion:

• India’s diplomatic gifting strategy goes beyond ceremonial exchange, serving as a powerful instrument of cultural outreach and economic promotion.
• By showcasing indigenous crafts, traditional knowledge systems, and GI-tagged products, India strengthens its global cultural footprint while advancing local development and heritage conservation.

About Lebanon:

• Location: It is situated on the eastern coast of the Mediterranean Sea in Western Asia.
• Borders: It is bounded in the northern and eastern parts by Syria; in the southern part by Israel; in the western part by the Mediterranean Sea.
• Capital City: Beirut
• Geographical Features of Lebanon:
  • Climate: Its Mediterranean climate brings mild, wet winters and hot, dry summers.
  • Mountains: Its major mountains are Lebanon Mountains (Jabal Lubnan), Hermon Ranges.
  • Highest Peak: The highest point of Lebanon is Qurnat as Sawda’
  • Major Valley: Bekaa (Al-Biqa)
  • River: The Litani the most significant river which irrigates the heart of the fertile Bekaa Valley.
  • Natural Resources: It mainly consists of mineral products which include limestone, gypsum, oil, natural gas, and salt.

About Dongria Kondh Tribe:

• It is a Particularly Vulnerable Tribal Group (PVTG) Community.
• Dongria Kondhs are ancient occupants of Niyamgiri hills spread across Kalahandi and Rayagada districts of Odisha.
• They derive their name from dongar, meaning ‘hill’ and the name for themselves is Jharnia: protector of streams.
• Belief: They trace their ancestry to Niyam Raja, a mythical god-king, who they believe is a creator of the Niyamgiri hills and whose stewardship has been left to them. 
• Culture and Society:
  • The Dongria have distinctive jewellery, tattoos and hairstyles. Women wear many rings through their ears and three through their noses, while boys wear two nose rings. 
  • They have no overarching political or religious leader
  • Clans and villages have their own leaders and individuals with specific ceremonial functions, including the beju and bejuni, male and female priests.
  • Language: They speak two languages namely “kuyi” and “kuvi”,vocabulary which is completely unrelated to odiya, the state’s official language.
  • Members of the Dongria Kondh tribe perform a traditional dance at Phakeri.
• Economy: The economy and livelihood of Dongria kondh is dependent on collection of Non-timber forest products (NTFPs) and podu cultivation. They are traditionally horticulturists.

About Pradhan Mantri Viksit Bharat Rozgar Yojana:

• It is a flagship employment generation scheme launched by the Government of India to encourage job creation in the formal sector.
• The scheme provides financial incentives to employers and first-time employees, promoting increased enrollment in the Employees’ Provident Fund Organisation (EPFO).
• It aims to boost employment opportunities, strengthen social security coverage, and support the vision of a developed India by 2047.
• Key Features of Pradhan Mantri Viksit Bharat Rozgar Yojana:
  • Part A – Support to First-Time Employees:
    • Targeting first-time employees registered with EPFO, this Part will offer one-month EPF wage up to Rs 15,000 in two installments.
    • Employees with salaries up to Rs 1 lakh will be eligible for the incentives.
    • All payments to the First Time Employees under Part A of the Scheme will be made through DBT (Direct Benefit Transfer) mode using Aadhar Bridge Payment System (ABPS).
  • Part B – Incentives for Employers:
    • This part will encourage generation of additional employment in all sectors, with a special focus on the manufacturing sector.
    • The employers will get incentives in respect of  new employees with salaries up to Rs 1 lakh.
    • The Government will incentivize employers, up to Rs 3000 per month, for two years, for each additional employment, sustained  for at least six months.
    • For the manufacturing sector, incentives will be extended to the 3rd and 4th  years as well.
    • Payments to the Employers under Part B will be made directly into their PAN-linked Accounts.

About Financial Action Task Force:

• It is an independent intergovernmental body that develops and promotes policies to protect the global financial system against money laundering and terrorist financing.
• Origin:
  • It was established in 1989 during the G7 Summit in Paris in response to a growing concern about money laundering.
  • In 2001, its mandate expanded to include terrorism financing.
• Headquarters: Paris, France.
• Members: FATF members include 40 countries, including the United States, India, China, Saudi Arabia, Britain, Germany, France, and the EU as such.
  • India became a member of FATF in 2010.
  • In addition, over 200 jurisdictions around the world have committed to the FATF Recommendations through the global network of FSRBs and FATF memberships.
• FATF regularly publishes reports that raise awareness about the latest money laundering, terrorist financing, and proliferation financing techniques.
• Once a member, a country or organization must endorse and support the most recent FATF recommendations and commit to being evaluated by (and evaluating) other members.
• The FATF holds countries to account that do not comply with the FATF Standards.
• If a country repeatedly fails to implement FATF Standards, then it can be placed under the grey and black lists.
• The FATF recommendations are recognised as the global anti-money laundering (AML) and counter-terrorist financing (CFT) standard.