UPSC Key: India’s informal sector, Agni missile with MIRV system, and Labour Codes rules

Key Points to Ponder:

— What is the informal sector? 

— What is the difference between the formal and informal sectors? 

— What are the structural constraints of India’s unincorporated sector and their implications for employment quality and productivity?

— How declining indebtedness in the informal sector does not necessarily indicate economic strength. 

— What are the vulnerabilities of small, informal enterprises to input cost shocks, and what measures should be taken to enhance their resilience?

— What is the significance of unincorporated enterprises in India’s economy?

— What are the government initiatives for the informal sector?

Key Takeaways:

— An analysis of the MoSPI report data released earlier this week showed annual interest payable per unincorporated establishment — or an informal business unit — reduced by 16% on average compared to the previous annual survey, conducted between October 2023 and September 2024.

— The reduction in outstanding loans coincided with a fall in investments, with each establishment’s net addition to fixed assets declining 14% in the 2025 survey from 2023-24.

— India’s unincorporated, non-agricultural enterprises —covered by the ASUSE survey — make up a sizable portion of the economy and include the likes of small manufacturers, service providers, and trading units. In fact, the 2025 survey estimates the total gross value added (GVA) of the unincorporated sector at Rs 20 lakh crore — or 6.4% of the entire country’s GVA in 2025-26.

— However, the 2025 ASUSE survey revealed signs of some weakness in the unorganised sector. As reported by The Indian Express on March 24, when the ‘factsheet’ of the survey was released, pay in the informal sector rose by just 3.9% – a third of the 13% increase reported in the 2023-24 survey. Further, the number of establishments increased by 58.5 lakh as against 83.5 lakh in 2023-24, resulting in the creation of fewer jobs: 74.5 lakh in 2025 compared to 1.1 crore in the 12 months ended September 2024.

— All but 12 of the estimated 7.92 crore unincorporated enterprises in the 2025 survey were Micro, Small, and Medium Enterprises, with micro enterprises making up 99.94% of the estimated number.

— The total number of establishments actually surveyed in 2025 was 6.7 lakh — 2.94 lakh in rural areas and 3.76 lakh in urban areas. Interestingly, outstanding loans of informal enterprises reduced sharply even though bank credit to micro and small enterprises has been rising rapidly.

— As per latest Reserve Bank of India (RBI) data, loans to ‘micro and small’ industry were up 33% year-on-year as on March 31. This suggests that most bank loans are going to ‘small’ enterprises.

— The smaller net addition to fixed assets, as per the latest ASUSE report, is part of a broader trend that has policymakers worried. Earlier this month, Chief Economic Advisor V Anantha Nageswaran criticised the Indian private sector for being reluctant to invest, saying that even though profits of India’s top 500 companies had grown 31% every year since Covid, their capital formation rate had been “disappointing”.

— While the informal sector saw a decline in net addition to fixed assets at an all-India level, there were large differences between states. For instance, among large states, establishments in Punjab more than doubled their investments, with their outstanding loans rising nearly four-fold.

— On the other hand, per establishment investment fell in Telangana (down 63%), Gujarat (down 48%), and Maharashtra (down 35%), although they also reported large reductions in outstanding loans.

— The state whose unincorporated establishments were most indebted was Kerala, with outstanding loans per establishment at Rs 1.51 lakh. If Union Territories are included, Puducherry was comfortably at the top, with a 14-fold rise in loans to Rs 3.75 lakh. But as a percentage of the annual GVA per worker, the annual interest payable of establishments in Andhra Pradesh was the highest, at 5.9%.

— In terms of the broad activity category of the informal sector, the biggest decline in investments – 20% – was for ‘other services’, with activities such as ‘support activities for transportation, postal and courier activities’ seeing a fall of 86% per establishment.

— Establishments engaged in manufacturing spent 3% less on fixed assets, with the largest decline in investment seen in the manufacture of coke and refined petroleum products (down 95%) and tobacco products (down 89%).

Do You Know:

— The number of informal establishments has increased from 7.34 crore in 2023-24 to 7.92 crore in 2025, reflecting a growth of nearly 8 per cent. This rise reflects the steady entry and survival of small economic units. A closer look at these numbers also reveals that the distribution of this growth across sectors largely remains unchanged: 27 per cent in manufacturing, 31 per cent in trade, and 42 per cent in ‘services’. 

Other Important Articles Covering the same topic:

📍Why India’s informal workforce is trapped between survival and stagnation

Previous year UPSC Prelims Question Covering similar theme:

(1) With reference to casual workers employed in India, consider the following statements: (UPSC CSE 2021)

1. All casual workers are entitled for Employees Provident Fund coverage.

2. All casual workers are entitled for regular working hours and overtime payment.

3. The government can by a notification specify that an establishment or industry shall pay wages only through its bank account.

Which of the above statements are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Previous year UPSC Mains Question Covering similar theme:

📍How globalization has led to the reduction of employment in the formal sector of the Indian economy? Is increased informalization detrimental to the development of the country? ( UPSC CSE 2016)

Rules for all four Labour Codes notified, minimum wage criteria dropped

Syllabus:

Preliminary Examination: Current events of national and international importance.

Mains Examination: General Studies-II, III: Government policies and interventions for development in various sectors and issues arising out of their design and implementation, Indian Economy and issues relating to planning, mobilisation of resources, growth, development and employment.

What’s the ongoing story: Giving effect to the new labour codes in full after having brought them in November 2025, the government has now notified final rules for all four codes after a four-month gap from draft rules. 

Key Points to Ponder:

— Why were the new four labour codes introduced?

— Labour laws fall under which list of the Seventh schedule of the Indian Constitution? 

— What are the key highlights of the four labour Codes?

— How do the new labour codes impact different worker groups?

— How will the new labour Codes affect formalisation and job creation?

— What further regulatory reforms are needed?

— What benefits do the new codes bring for women employees?

— How does the reform in labour laws promote the ease of doing business? 

— What are the concerns related to these codes?

Key Takeaways:

— A national floor wage by Centre in consultation with an advisory board along with states; a normal working day of eight hours with weekly cap of 48 working hours; mandatory wage slips; social security fund for unorganised sector and gig workers — these are some of the key provisions that will come into effect, with states to follow suit. 

— However, in a critical omission from the draft rules published in January, the Centre has dropped the criteria for calculating minimum wage in the final Code on Wages (Central) Rules, 2025, stating that the criteria will be “separately specified by the central government by special or general order”. This is likely to result in lower minimum wages and higher wage disparities for the same worker category across states, experts said.

— The removal of the formula for fixing the minimum wage from the final version of the rules for Code on Wages is likely to result in lower-than-potential wages for workers as wages play a key role in collective bargaining, said K R Shyam Sundar, labour economist and former professor at XLRI. 

— Separately, the new wage rules state that a floor wage will be fixed by the central government taking into account “the minimum living standard clothing, housing and any other factor considered appropriate by the central government from time to time”. 

— The floor wage will act as a baseline wage below which states cannot fix their minimum wages, which is going to be closely eyed given the recent backdrop of a spate of workers’ protests across several industrial hubs in the country. 

— The government specified that the number of working hours in a normal working day for an employee whose wage period is on a daily basis will be eight hours. For those employed on other than the daily wage mode, the number of working hours will be fixed in a manner to not exceed the weekly cap of 48 hours. Interval for rest will be fixed separately under the Occupational Safety, Health and Working Conditions Code, 2020.

— Setting the weekly limit at 48 hours for those not on daily wage, will help many workplaces provide flexible working hours for employees, especially in sectors which follow a hybrid work model, allowing work-from-home.

— A National Social Security Board will also be formed for gig and platform workers, which will include members from Lok Sabha, Rajya Sabha, unorganised sector workers’ and employers’ associations, states, and representatives from scheduled castes, scheduled tribes, women and minorities, the rules stated.

— Under the Occupational Safety, Health and Working Conditions (Central) Rules, 2026, the government has allowed for electronic application for single licence for contractors working in more than one state or for the whole country. The approval or disapproval has to be granted within 45 days.

— For women workers, who have been allowed to work in the night shift under the OSH Code beyond 7 PM and before 6 AM, the consent of the female employee has to be taken by the employers in writing, the rules said. Also, adequate transportation facilities have to be provided for pick-up and drop for such women employees at her residence in addition to safe and well-lit workspace.

Do You Know:

— The newly implemented four labour codes – Code of Wages (2019), Industrial Relations Code (2020), Code on Social Security (2020) and Occupational Safety, Health and Working Conditions Code (2020) – replaced 29 fragmented laws with a unified, modern framework.

— Notably, India’s old labour laws were too many, too complex, and outdated. They increased the compliance burden and discouraged businesses from hiring. Many workers, especially gig, platform, MSME, and migrant workers, had no uniform social security. 

— Also, as labour is a Concurrent List subject, and while most states have finalised rules aligned with the four codes, central-level implementation was pending. This delay resulted in uneven social security coverage for workers and compliance complexity for employers operating across multiple states. Thus, the new labour codes are introduced to try to fix all this. 

Other Important Articles Covering the same topic:

📍UPSC Issue at a Glance | Understanding India’s New 4 Labour Codes: The what, why and how

📍How India’s 4 labour codes aim to improve wages and worker safety 

Previous year UPSC Prelims Question Covering similar theme:

(2) In India, which one of the following compiles information on industrial disputes, closures, retrenchments and lay-offs in factories employing workers? (UPSC CSE 2022)

(a) Central Statistics Office

(b) Department for Promotion of Industry and Internal Trade

(c) Labour Bureau

(d) National Technical Manpower Information System

Previous year UPSC Mains Question Covering similar theme:

📍Discuss the merits and demerits of the four ‘Labour Codes’ in the context of labour market reforms in India. What has been the progress so far in this regard? (UPSC CSE 2024) 

Claims of Rs 25,160 cr settled under social security schemes: FM

Syllabus:

Preliminary Examination: Economic and Social development.

Mains Examination: General Studies-II: Government policies and interventions for development in various sectors.

What’s the ongoing story: Jansuraksha schemes like Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana have settled claims of about Rs 25,160 crore since their launch in 2015, Finance Minister Nirmala Sitharaman said on Saturday.

Key Points to Ponder:

— Know the objectives and key features of Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), and Atal Pension Yojana (APY). 

— What is Jan Suraksha Portal?

— How do low-cost insurance and pension schemes contribute to inclusive development?

— What are the achievements and limitations of Jan Suraksha schemes?

— What are the challenges in achieving universal social security coverage in India?

— What measures should be taken to improve the effectiveness of social security schemes?

Key Takeaways:

— Jan Suraksha schemes Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), and Atal Pension Yojana (APY) envisioned to extend affordable financial protection to all, particularly the under-served and vulnerable sections of society, were launched by Prime Minister Narendra Modi on May 9, 2015.

— These flagship schemes, which completed 11 years, aim to broaden the insurance and pension landscape by shielding citizens against life’s uncertainties and fostering long-term financial resilience.

— Citing data on the 11th anniversaries of the Jan Suraksha Schemes, Sitharaman said that over 27 crore, 58 crore and 9 crore enrolments have been done under PMJJBY, PMSBY and and APY ,respectively. 

— On PMJJBY, she said the scheme has settled claims worth more than Rs 21,500 crore for over 10.7 lakh families. Under the PMSBY scheme, Sitharaman said it has settled claims worth nearly Rs 3,660 crore for over 1.84 lakh families. “As we mark the 11th anniversary of the Jan Suraksha schemes, heartfelt appreciation for all the stakeholders, including field functionaries of banks and insurance companies, whose dedicated efforts have made these schemes a huge success,” she said. 

— Speaking on the occasion, Minister of State for Finance Pankaj Chaudhary said the launch of the online Jan Suraksha Portal has made it possible for citizens to enrol conveniently without visiting bank branches or post offices, and digitising the claims process has ensured faster settlements.

Do You Know:

— Launched in 2015 by the Government of India, the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) is an initiative in life insurance accessibility. This scheme targets a vast segment of the Indian population, particularly those working in the unorganised sector. 

— PMJJBY addresses the critical need for affordable life insurance amongst these individuals and families, who often lack access to traditional insurance products due to high premiums or complex eligibility requirements. 

— Pradhan Mantri Suraksha Bima Yojana is an accident insurance scheme offering accidental death and disability cover for death or disability on account of an accident.

— Atal Pension Yojana (APY), is a voluntary pension scheme launched by the Government of India for all Citizens of India, especially the poor, the under-privileged and the workers in the unorganised sector. 

— APY is applicable to all citizens of India aged between 18-40 years. Under the APY, a minimum guaranteed pension of Rs. 1,000/- or 2,000/- or 3,000/- or 4,000 or 5,000/- per month will start after attaining the age of 60 years, depending on the contributions made by the subscribers for their chosen pension amount. 

Other Important Articles Covering the same topic:

📍Pradhan Mantri Jeevan Jyoti Bima Yojana: Benefits, eligibility criteria and application process; all you need to know

UPSC Prelims Practice Question Covering similar theme:

(3) With reference to the Atal Pension Yojna, consider the following statements:

1. The scheme was introduced in the year 2016 to provide social security to workers mainly in the unorganised sector.

2. Income taxpayers can enroll in the government’s social security scheme Atal Pension Yojana.

3. It is applicable to all citizens of India aged between 18-40 years.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

 

FRONT PAGE

From ground to the skies: How drones are reshaping operations along borders

Syllabus:

Preliminary Examination: Current events of national and international importance.

Mains Examination: General Studies-III: Security challenges and their management in border areas; linkages of organized crime with terrorism.

What’s the ongoing story: In the early hours of June 26, 2021, two consecutive blasts rocked the highly fortified Indian Air Force station in Jammu. This was the first terror attack in which drones were used to airdrop bombs on a major security installation. Though the explosions caused no serious damage, the attack reflected a paradigm shift in the tactics of Pakistan-based terror groups: the threat had moved from the ground to the air, rendering traditional security measures permanently inadequate. 

Key Points to Ponder:

— What are unmanned aerial vehicles (UAVs)? How has it become significant in modern warfare? 

— Know about Operation Sindoor.

— What are the challenges posed by drone technology to India’s national security?

— How have drones transformed surveillance, intelligence gathering, and military operations in modern warfare? 

— What is India’s anti-drone system?

— What is a swarm drone?

— Read about the SkyStriker Kamikaze drones, HAROP and Nagastra-1.

— Where does India stand in drone warfare?

Key Takeaways:

— The introduction of drones has rendered established security measures obsolete and fundamentally changed how border security is conceived. According to a Ministry of Home Affairs report last year, two to three drones were sighted, and one drone incursion occurred daily, over the past five years. While the focus of incursions in Punjab and Rajasthan is primarily smuggling, the situation in J&K is especially challenging.

— In J&K, drones are being used to airdrop weapons, ammunition and narcotics, conduct tactical surveillance, guide infiltrating militants and carry out attacks. Soon after the beginning of Operation Sindoor last year, drones became the weapon of choice — the first such use of drone swarms in an Indo-Pak conflict, changing the nature of border warfare permanently.

— Between May 7 and 8 last year, Pakistan launched drone attacks using nearly 300-400 drones targeting around three dozen locations from Kashmir to Sir Creek in Gujarat. A large number targeted Jammu and Kashmir, and almost all were neutralised by Indian defence forces, an Army officer said.

— Indian armed forces deployed SkyStriker Kamikaze drones, HAROP and Nagastra-1 during their campaign. Counter-drone systems were activated, including Man-Portable Air Defence Systems (MANPADS), Direct Energy Weapons (DEWs) and the indigenous anti-drone D-4 system. 

The introduction of drones has rendered established security measures obsolete and fundamentally changed how border security is conceived.

— A laser system called KAVACH has also been put into action in J&K to detect drone infiltration attempts and send early warnings. Forces have additionally deployed jammers to disrupt hostile drone flights and High-Altitude Long-Endurance (HALE) drones to monitor difficult terrain.

— The BSF, primarily responsible for border security, raised its first drone squadron last year to bolster its capabilities.

— While drones have transformed military operations over India’s borders since Operation Sindoor, the shift is equally visible on the ground. A senior Army officer in the Northern Command told The Indian Express that the “advent of drone and anti-drone technologies changed the dynamics along the Indo-Pak border to a great extent.”

— He described an array of advanced sensors — thermal imagers, underground sensors (UGS), fibre-optic sensors, radar and sonar — that form an invisible electronic barrier even where physical patrolling is impossible, providing round-the-clock real-time monitoring.

— A retired senior Army officer noted that drone introduction has brought a new type of soldier — one who is well-versed in technology and capable of responding to modern warfare. He cautioned that not every drone can be picked up by radar due to factors like coverage area and low-altitude flight, making 24×7 vigilance imperative.

— Within the Army, significant investment has gone into drone training. Drone competitions are now held between units, brigades and divisions, with battalions purchasing equipment from regimental funds to train on obstacles. As drones and high-tech equipment become integral to infantry units, expertise in operating them is a priority — though, the officer stressed, without compromising on basic physical fitness.

Do You Know:

— Swarm drones are autonomous or semi-autonomous UAVs that operate in coordinated groups, much like swarms of birds or fish. They communicate via wireless networks and adjust in real time to achieve shared objectives.

— Swarms are more resilient than traditional drones due to in-built redundancy — even if one drone is intercepted, others can continue on the mission. Drone swarms are thus used to saturate air defences (a few payloads may sneak through even robust defences), gathering intelligence, and attacking high-value targets.

Other Important Articles Covering the same topic:

📍Drone warfare came home during Op Sindoor. Where does India stand? 

Previous year UPSC Prelims Question Covering similar theme:

(4) Consider the following activities: (UPSC CSE, 2020)

1. Spraying pesticides on a crop field

2. Inspecting the craters of active volcanoes

3. Collecting breath samples from spouting whales for DNA analysis

At the present level of technology, which of the above activities can be successfully carried out by using drones?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Previous year UPSC Main Question Covering similar theme:

📍The use of unmanned aerial vehicles (UAVs) by our adversaries across the borders to ferry arms/ammunitions, drugs, etc., is a serious threat to the internal security. Comment on the measures being taken to tackle this threat. (UPSC CSE 2023)

 

POLITICS 

India tests nuclear-capable Agni missile with MIRV system

Syllabus:

Preliminary Examination: Current events of national importance.

Mains Examination: General Studies-III: Awareness in the fields of Space, Achievements of Indians in science & technology; indigenization of technology and developing new technology. 

What’s the ongoing story: The Ministry of Defence (MoD) announced on Friday that India has conducted the successful flight-trial of an advanced version of the nuclear-capable Agni missile with Multiple Independently Targeted Reentry Vehicle (MIRV) system from Dr APJ Abdul Kalam Island, Odisha, Thursday. 

Key Points to Ponder:

— What are Agni-5 missiles?

— What is MIRV technology?

— What are the key features of MIRV technology?

— What is the significance of MIRV technology?

— How does MIRV technology boost India’s defence capabilities?

— Agni-5 missile-Know the key features and specifications.

— Prithvi, Trishul, Aakash, Nag and Agni-Compare and Contrast 

— What is the difference between a missile and a ballistic missile?

— What is the history of missile technology in India?

— What kind of missiles does India have?

Key Takeaways:

— Without specifying which variant of the Agni missile was used, the MoD said the missile was flight-tested with multiple payloads, targeted to different targets spatially distributed over a large geographical area in the Indian Ocean Region.

— “The telemetry and tracking was carried out by multiple ground and ship-based stations. These systems tracked the entire missile trajectory from lift-off till the impact of all payloads. Flight data confirmed that all mission objectives were met during the trial. With this successful trial, India once again demonstrated the capability to target multiple strategic targets using a single missile system. This missile is developed by DRDO laboratories with the support of industries across the country. The trial was witnessed by senior scientists of DRDO and Indian Army personnel,” the MoD said.

— More than two years ago, on March 11, 2024 the MoD had said it had carried out the first successful flight test of the indigenously developed Agni-5 missile with MIRV technology.

— While there was no official confirmation of the range of the missile tested on Thursday, a NOTMAR (Note to Mariners) issued for the window of May 6 to 9 for the Bay of Bengal was to the range of around 3,600 km, suggesting the missile hit targets within this range. 

Do You Know:

— Agni is a long-range missile system indigenously developed by the DRDO. It is the main land-based delivery system for India’s nuclear arsenal. The first-generation Agni missiles were developed in the 1990s, and entered service with the armed forces in the mid-2000s. 

— The Agni-1 to Agni-IV missiles have ranges of 700 to 3,500 kilometres and can carry single payloads weighing 12 to 40 kilotonnes. 

— But the latest variant of the Agni missile family – Agni-5 equipped with MIRV technology –  is capable of striking targets at ranges up to 5,000 kilometres with a very high degree of accuracy. It uses a three-stage solid fuelled engine. 

— In addition to going over 5,000 kilometres, the Surface-to-Surface Ballistic Missile may enter the intercontinental range, which is estimated to be 5,500 kilometres or more.

— The next-generation Agni-6 missile, which is presently in development, is also expected to be equipped with MIRV.

— Therefore, it is believed that the DRDO’s in-house Agni family of short-, medium-, and intercontinental-range ballistic missiles will gain from the integration of MIRV technology.

Other Important Articles Covering the same topic:

📍PM hails first test of Agni-5 with multiple warhead technology 

UPSC Prelims Practice Question Covering similar theme:

(5) Which of the following missiles have been successfully tested with Multiple Independently Targetable Re-Entry Vehicle ( MIRV) technology?

(a) Agni-IV

(b) Agni-V

(c) Prithvi-II

(d) K-15 (Sagarika)

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PRELIMS ANSWER KEY

1. (b)  2. (c)  3. (a)   4. (d)  5. (b)

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