1) Gross Domestic Knowledge Product: Reviving the Measure of India’s Knowledge Economy

GS 3: Economy: Measuring the Knowledge Economy

Why is it in the news?

• The government is reviving the concept of Gross Domestic Knowledge Product (GDKP), an idea previously shelved in 2021, to supplement the Gross Domestic Product (GDP) by measuring the knowledge economy.
• This initiative aims to develop a comprehensive framework to assess the impact of knowledge on economic and social life.
• The Ministry of Statistics and Programme Implementation (MoSPI) recently held a session on the “Conceptual Framework of GDKP Measurement,” chaired by Principal Scientific Advisor where he emphasized the need to shift from traditional economic indicators to a knowledge-based approach, arguing that a refined methodology for GDKP would better capture the contributions of knowledge-driven sectors, innovation, and intellectual assets to India’s economic growth.

Role of Satellite Accounts

• Currently, all expenditures on Intellectual Property Products (IPP) are recorded under Gross Fixed Capital Formation (GFCF), which tracks capital investments in GDP calculations.
• Further, the session aimed to explore the feasibility of creating a satellite account to measure the knowledge economy. MoSPI has already been working on satellite accounts for various sectors, including tourism, culture, and the blue economy. However, there is no existing formulation to measure the knowledge economy comprehensively.
• To address this, MoSPI will establish a technical committee to evaluate and provide guidance on developing a structured methodology for assessing the knowledge economy.

Challenges in Implementation

• The concept of GDKP was first introduced in 2021 when NITI Aayog presented a concept note on the idea.
• However, the National Statistical Commission highlighted the lack of a clear methodology for data collection and computation. It stressed the need to identify key knowledge parameters and refine them to accurately reflect economic outcomes.
• MoSPI also noted that while GDKP could supplement GDP as a welfare indicator, there was no clear approach to integrating the two. Additionally, data for GDKP is not readily available, which may require perception-based surveys.
• A portion of knowledge-driven contributions is already included in GDP, but a proper methodology is needed to integrate GDKP effectively.

Project Revival and Future Steps

• Following a review by NITI Aayog in August 2021, the project was shelved due to these challenges. However, with the renewed focus on measuring the knowledge economy, the government is reconsidering its implementation.
• The formation of a technical committee and further discussions aim to resolve previous concerns and develop a structured framework for incorporating GDKP into economic assessments.

2) USAID Funding Freeze: A Major Shift in U.S. Foreign Policy

GS 2: International Relations: U.S. freeze on foreign assistance

Why is it in the news?

• On January 20, U.S. President Donald Trump, upon assuming office for a second term, imposed a 90-day freeze on foreign assistance. The executive order called for a “pause in United States foreign development assistance for assessment of programmatic efficiencies and consistency with United States foreign policy.”
• This led to an immediate halt in the disbursement of funds by the United States Agency for International Development (USAID). By late January, USAID’s website removed all content except for a notice stating that most of its 10,000 personnel worldwide would be placed on administrative leave, with only mission-critical staff retained.
• While a federal judge issued a temporary restraining order delaying the reduction in personnel until February 14, the freeze on funds remains in effect.

What is USAID?

• USAID was established in 1961 as an independent agency to manage U.S. civilian foreign aid and development assistance. Its mission is to promote democratic values and advance global peace, security, and prosperity while aligning with U.S. national interests.
• USAID provides financial aid to over 100 countries, focusing on economic development, health, education, food security, humanitarian assistance, climate change, and governance.
• USAID operates through partnerships with governments, NGOs, businesses, and international organizations, offering grants and technical assistance. Some of its flagship programs include the President’s Emergency Plan for AIDS Relief (PEPFAR), Feed the Future (food security), Power Africa (electricity expansion), and the Water for the World Act (sanitation and hygiene services).
• In 2024, USAID was allocated $44.2 billion, constituting 0.4% of the U.S. federal budget, and accounted for nearly 42% of global humanitarian aid tracked by the United Nations.
• Elon Musk, head of the Department of Government Efficiency (DOGE), has called for shutting down USAID, branding it a “criminal organization” and a “viper’s nest of radical-left Marxists.”
• Meanwhile, Secretary of State, now the acting USAID administrator, has indicated plans for restructuring rather than outright termination of the agency.

Impact on Global Aid Recipients

• The freeze affects many countries reliant on U.S. aid. USAID’s top recipients include Ukraine, Ethiopia, Jordan, Somalia, the Democratic Republic of Congo, Afghanistan, Nigeria, Syria, Yemen, and South Sudan. The withdrawal of funds could halt development projects, severely impacting healthcare, education, food security, and infrastructure.
• The United Nations AIDS agency warned that over six million people could die from HIV and AIDS in the next four years if U.S. funding is withdrawn. In Haiti, while a $13.3 million aid freeze was imposed, the U.S. State Department issued a waiver allowing $40.7 million for the country’s police force.
• USAID has stated that exceptions will be made for “mission-critical functions and specially designated programs,” but details remain unclear. Reports suggest that only 294 out of 10,000 USAID employees will remain, with just 12 assigned to Africa and eight to Asia—regions crucial for combating poverty, disease, and conflict.
• Although Secretary of State insists the move is about restructuring aid to better serve U.S. national interests, critics argue that Trump’s long-standing “America First” stance risks isolating the U.S. from global development efforts.

Effect on USAID Projects in India

• India’s dependence on USAID funding has declined over the years due to concerns over conditions attached to grants. Over the last decade, India received about $1.5 billion from USAID, accounting for just 0.2% to 0.4% of the agency’s global funding.
• USAID’s engagement in India dates back to 1951 when the U.S. provided emergency food aid. Since then, its focus has shifted from food relief to infrastructure, economic reforms, and public health programs.
• Currently, USAID’s primary involvement in India is in healthcare, including HIV/AIDS, tuberculosis, maternal and child health, and immunization programs, with $79.3 million allocated in 2024. Other areas of interest include economic development, energy, water supply, and sanitation.
• While experts believe the USAID freeze may not have a major impact on India, ongoing healthcare projects could face setbacks. The ability of central and state governments to compensate for funding gaps will determine the fate of affected initiatives. Meanwhile, USAID has instructed all implementing organizations in India to suspend operations for now.

3) Exploring President’s Rule in Manipur

GS 2: Polity and Governance: President’s Rule

Why is it in the news?

• Following the resignation of the Chief Minister of Manipur on February 9, efforts are underway to form a new government.
• If a consensus on a new Chief Minister is not reached, the state may be placed under President’s Rule, a scenario that leaders seek to avoid due to opposition to such impositions in principle.

Article 356 and President’s Rule

• Article 356 of the Constitution allows for the imposition of President’s Rule when the President, based on the Governor’s report, is satisfied that the state government cannot function as per constitutional provisions.
• Upon issuing a ‘Proclamation,’ all state government functions transfer to the Centre, and the powers of the state legislature are taken over by Parliament, except for the functioning of High Courts.
• The proclamation initially lasts for two months but requires approval from both Houses of Parliament to remain in effect. If approved, it can be extended for six months at a time, up to a maximum of three years.
• However, beyond one year, extensions require either a national emergency declaration or the Election Commission’s certification that elections in the state are not feasible.

History of President’s Rule in India

• Since 1950, President’s Rule has been imposed 134 times across 29 states and Union Territories. Manipur and Uttar Pradesh have seen it the most, with ten instances each.
• However, Jammu & Kashmir holds the record for the longest duration under central rule, spending over 12 years (4,668 days) under President’s Rule, followed by Punjab (10 years, 3,878 days) and Puducherry (7 years, 2,739 days). These impositions were primarily due to militancy, law and order issues, or political instability.
• The most recent case of President’s Rule was in Puducherry in 2021, after the Congress government collapsed due to a failed vote of confidence. Repeated cases of infighting and defections have historically led to its frequent imposition in Puducherry.

Supreme Court’s Verdict on President’s Rule

• The Supreme Court examined the imposition of President’s Rule in the landmark case of S R Bommai v. Union of India (1994), addressing concerns over its misuse.
• A nine-judge Bench ruled that the President’s decision under Article 356 is subject to judicial review. Courts can assess whether the imposition is based on valid grounds or influenced by malafide intentions, extraneous considerations, abuse of power, or fraud.
• The judgment established safeguards to protect state governments, ruling that unless Parliament approves President’s Rule within two months, the dismissed government must be reinstated.
• Justice B.P. Jeevan Reddy, in his opinion, emphasized that while the Constitution grants the Centre greater power, states are not mere appendages of the Union. He cautioned against interpretations that could undermine the autonomy of states.

Conclusion

• Following the Bommai judgment, instances of President’s Rule have significantly declined, as the ruling imposed judicial oversight and established checks to prevent its arbitrary use.
• The case remains a landmark in strengthening federalism in India by restricting the Centre’s ability to dismiss state governments without valid justification.

4) PM Modi’s Vision for AI: Open Source, Sustainability, and Job Growth

GS 3: Science and Technology: AI Action Summit

Why is it in the news?

• During his speech at the AI Action Summit, PM Narendra Modi highlighted the importance of global collaboration to harness Artificial Intelligence (AI) for economic growth, social transformation, and sustainable development.
• One of the key aspects of his address was the call for embracing open-source AI models, a stance that comes at a time when China’s low-cost open-source DeepSeek model has gained attention and prompted comparisons with Western counterparts like OpenAI and Google.
• Unlike these Western models, which are not open-sourced, DeepSeek offers transparency through its open-source approach, though it has faced criticism for its distillation process.
• PM Modi also stressed the need for AI models that are free from biases, particularly in the context of India’s diverse social and cultural landscape. The Indian government is focusing on funding foundational AI models that understand local contexts, which may be underrepresented in existing AI systems.
• Models built in India are expected to emphasize the nuances of the country’s languages and cultural heritage, which are often overlooked in global AI models due to the dominance of Western languages online.

Sustainability and AI’s Energy Demands

• Sustainability in AI is another crucial topic Modi addressed during the summit. He pointed out that AI’s energy demands would be substantial, requiring clean energy sources to support the increasing energy consumption from AI-powered data centres.
• Drawing attention to the “high energy intensity” of AI, Modi emphasized the need for “green power” to fuel AI’s future growth. In this context, nuclear energy was presented as a potential solution, especially with France’s focus on nuclear energy for powering its AI initiatives.
• Modi’s remarks on AI sustainability align with global concerns about the environmental impact of AI technology, especially as countries like the U.S. and the UK have been hesitant to fully endorse AI sustainability and inclusivity in international agreements, such as the Paris AI Summit.

Optimism on AI’s Impact on Jobs and the Need for Skilling

• In contrast to some cautionary views on AI’s impact on the job market, PM Modi offered an optimistic perspective, stating that technology does not cause jobs to disappear but instead changes their nature. He called for enhanced focus on skilling and re-skilling the workforce to adapt to the evolving job landscape.
• This optimistic outlook departs from some earlier government assessments, such as the 2023-24 Economic Survey, which warned of significant uncertainty for workers in low-skill and low-value-added sectors in India due to the rise of AI. The Survey highlighted concerns that sectors like business process outsourcing (BPO) could face job losses.
• However, Modi’s emphasis on the potential for AI to augment workers’ efforts, rather than replace them, reflects a belief in AI’s capacity to create new opportunities for skilled labour.
• A recent QS study confirmed that Indian businesses are in high demand for AI-related jobs but face a significant gap in the skills required to meet the evolving demands of the economy.
• As AI becomes more integrated into industries, the need for robust institutions to transition workers into medium- and high-skilled jobs is becoming increasingly vital.

Conclusion

• PM Modi’s address at the AI Action Summit reflects a forward-looking approach to AI development, focusing on inclusivity, sustainability, and job creation.
• By advocating for open-source models and emphasizing the need for skilling initiatives, India aims to leverage AI for positive social and economic impact while addressing the challenges that come with this transformative technology.

5) Panama Withdraws from Belt and Road Initiative (BRI)

GS 2: International Relations: Geopolitical dynamics in Panama Region

Why is it in the news?

• On February 7, 2025, China’s Assistant Foreign Minister summoned Panama’s Ambassador to China to lodge a formal protest after Panama announced its decision not to renew the Memorandum of Understanding on the Belt and Road Initiative (BRI).
• The Chinese government also expressed its firm opposition to the United States using “pressure and coercion” to undermine Belt and Road cooperation. A Foreign Ministry spokesperson emphasized that such actions reveal the “hegemonic nature” of the US.

The Context Behind Panama’s Move

• Panama’s decision comes amidst growing tensions surrounding the Panama Canal, one of the world’s most crucial commercial waterways. US President Donald Trump has made numerous allegations about Chinese influence in the region, particularly regarding the Panama Canal.
• The decision also follows a visit by US Secretary of State to Panama earlier in February, although President of Panama has denied that the United States directly pressured the country to withdraw from the BRI.

Trump’s Claims on Panama and China

• In December 2024, Trump had threatened to take over the Panama Canal, accusing Panama of unfairly charging US ships and claiming that Chinese soldiers were operating the canal illegally.
• He expressed concern about the Chinese involvement in the canal, emphasizing that when the US ceded control of the canal in the late 1990s, it was meant for Panama to manage, not China. However, over time, mismanagement and rising costs led to the US decision to relinquish control.
• However, Panama President publicly rejected Trump’s claims, stating that Panama welcomes all foreign investors without discrimination. He specifically refuted the idea of Chinese military personnel operating the canal, calling it “nonsense.”

China’s Presence in the Panama Canal

• The Panama Canal is primarily operated by the Panama Canal Authority, an autonomous entity of the Panamanian government, with various ports and terminals operated by private companies.
• One notable Chinese presence in the region is the Panama Ports Company (PPC), which has operated key terminals at the northern and southern ends of the canal since 1997.
• PPC is part of Hong Kong-based Hutchison Port Holdings, which has operations in multiple continents. In 2021, PPC was granted a 25-year extension, although an audit and potential rebidding process are currently underway.

Growing Chinese Influence in Panama

• China’s influence in Panama has been expanding over the years, not only in the canal but also within the country’s broader infrastructure. The People’s Liberation Army (PLA) has established relationships with Panama’s national security agencies, including its Border Protection Service and the National Police.
• Chinese companies such as COSCO, a major player in the global shipping industry, are significant users of the Panama Canal. This growing presence has raised strategic concerns in the US, especially since Chinese companies could be perceived as susceptible to the influence of the Chinese Communist Party, which might dictate their actions during times of conflict.

US Concerns Over Strategic Risks

• US concerns regarding Chinese influence in the Panama Canal are rooted in the belief that Chinese companies could use their control over critical infrastructure as leverage in times of conflict.
• Further, the Chinese companies might turn the canal into a strategic choke point, posing a direct threat to US national security and interests.

Conclusion

• Panama’s withdrawal from the BRI, combined with growing Chinese involvement in the region, has sparked diplomatic tensions between Panama, China, and the United States.
• While Panama maintains its sovereignty over the canal, US concerns about Chinese influence continue to shape the geopolitical dynamics in the region.

6) The Two-Term Limit: How the US Enacted the 22nd Amendment

GS 2: International Relations: Debate over U.S. Presidential term

Why is it in the news?

• President Donald Trump questioned the two-term limit for American Presidents, suggesting it could be reconsidered. Speaking at a Republican retreat in Florida, he expressed uncertainty about the restriction and whether he could run again.
• Over the years, Trump has frequently hinted at serving beyond two terms, stating in November 2024 that he might not run unless Republicans pushed for an exception.

The 22nd Amendment: Constitutional Limit on Presidential Terms

• The 22nd Amendment to the US Constitution, ratified in 1951, states that no person can be elected President more than twice. This amendment was introduced after Franklin D. Roosevelt won four consecutive terms from 1932 to 1944.
• It also allows a Vice President who assumes the presidency to serve two full terms if their predecessor’s remaining term was less than two years. For example, Lyndon B. Johnson served 14 months after John F. Kennedy’s assassination before winning the 1964 election. Although he did not run in 1968, he could have served a total of nine years.
• The amendment aimed to prevent excessive power concentration, resembling monarchy-like rule, as noted by constitutional expert Kimberly Wehle.

The Two-Term Tradition Before the Amendment

• The question of limiting presidential terms was debated among the framers of the US Constitution. Most opposed a restriction, preferring flexibility during emergencies. However, the debate persisted.
• In 1803, Congress introduced a resolution to impose a term limit, but it was rejected. Similar proposals in 1824 and 1826 passed the Senate but failed in the House. Meanwhile, an informal tradition emerged when George Washington declined a third term in 1796, setting a precedent. Thomas Jefferson followed suit, reinforcing the norm.
• The tradition faced its first major challenge in 1872 after Ulysses S. Grant won a second term. His supporters floated the idea of a third term, but political and economic challenges led to Republican losses in the 1874 midterms.
• In response, Grant ruled out another run. In 1875, the House of Representatives passed a resolution warning that breaking the two-term custom would be dangerous, though it did not legally ban third-term bids. Despite this, Grant attempted to run again in 1880 but was unsuccessful.

Roosevelt Breaks the Tradition, Leading to a Legal Change

• Franklin D. Roosevelt became the first and only President to serve more than two terms, holding office from 1933 until his death in 1945. His supporters justified his unprecedented tenure, citing the need for stable leadership during World War II.
• However, his extended rule sparked concerns about the risks of prolonged executive power. Republicans had previously sought a constitutional limit in 1940 and 1944 but lacked the political strength to enact it.
• After Roosevelt’s death, momentum grew for a constitutional amendment. When Republicans gained control of Congress in 1946, they prioritized limiting presidential terms to prevent another extended presidency.
• While some Democrats saw this move as an attack on Roosevelt’s legacy, others supported it as a safeguard against authoritarian leadership. The debate also included discussions on whether the limit should be two four-year terms or one six-year term.
• In 1947, after extensive negotiations, Congress passed the 22nd Amendment, formally capping the presidency at two terms. This amendment was ratified in 1951, ensuring that no future President could serve more than eight years, reinforcing a principle long observed in American democracy.

7) NITI Aayog Releases Policy Report on State Public Universities

GS 2: Polity and Governance: Role and Performance of SPUs in India 

 Why is it in the news?

• NITI Aayog has released a policy report titled “Expanding Quality Higher Education through States and State Public Universities (SPUs)”, focusing on the role and performance of SPUs in India.

Overview

• This report is the first comprehensive policy document dedicated to higher education at the state level, specifically analyzing the functioning and challenges of State Public Universities (SPUs).
• A State Public University (SPU) refers to an institution established through a State Act or a Provincial Act. The report provides an in-depth quantitative analysis of key aspects such as quality, funding and financing, governance, and employability over the past decade.

Key Insights from the Report

Higher Education Funding

• States with Highest Funding: Maharashtra ranks first in higher education funding, followed by Bihar and Tamil Nadu.
• States with Lowest Funding: Sikkim, Arunachal Pradesh, and Nagaland allocate the least budget to higher education.

University Density Across States

• The national average university density stands at 0.8 universities per lakh population.
• Sikkim leads with the highest university density at 10.3, followed by Arunachal Pradesh, Ladakh, Himachal Pradesh, Meghalaya, and Uttarakhand.
• Large states such as Bihar, Uttar Pradesh, West Bengal, and Maharashtra have university density below the national average.

Female Enrolment in Higher Education

• In states like Kerala, Chhattisgarh, and Himachal Pradesh, female enrolment rates surpass those of males.

Challenges Faced by SPUs

• Infrastructure Deficiencies: Many SPUs lack modern facilities, affecting academic and research quality.
• Faculty Shortages: There is an inadequate number of qualified faculty members and administrative staff.
• Low R&D Investment: Insufficient spending on research and development hampers innovation.
• Limited Higher Education Enrolment: Enrolment at M.Tech and Ph.D. levels remains low, affecting advanced research and academic growth.
• Outdated Curriculum: Courses and syllabi are often misaligned with industry requirements.
• Financial Constraints: Heavy reliance on traditional funding sources like admission fees and state grants. Moreover, delayed fund disbursements and lack of structured loan mechanisms create hurdles in financial sustainability.

Recommendations for Strengthening SPUs

The report outlines 80 policy recommendations focusing on four key areas: education quality, funding and financing, governance, and employability.

Enhanced Investment in Education:

• Increase combined spending of Centre and States on education to 6% of GDP, as suggested in the National Education Policy (NEP) 2020.
• Boost public and private R&D investment to 2% of GDP, as recommended in the Economic Survey 2017-18.

Regional Research Initiatives:

• SPU clusters should focus on 2-3 critical local issues and establish Centres of Excellence to tackle them.

Dedicated Financial Institutions for SPUs:

• States should consider forming a specialized financing agency similar to the Higher Education Financing Agency (HEFA), which was launched as a joint venture between the Centre and Canara Bank in 2017.
• This agency would focus on improving infrastructure and research facilities in SPUs.