Government Initiative for AI Dataset Platform

The government is set to commence the collection and aggregation of datasets from various ministries, departments, and public and private records to develop a comprehensive database of non-personal information for the India AI datasets platform. This initiative aims to facilitate the application of artificial intelligence (AI) and machine learning (ML) in developing localized large language models (LLMs).

Data Collection and Processing

• The raw data collected will be refined to enhance access, quality, and utilization.
• Once collated, the database will become available for training LLMs and other language models.
• The entire process of data collection and sifting is expected to take approximately six months.

Access and Application

The aggregated data will provide seamless access to startups, companies, academics, and researchers, enabling the creation of specialized services:

• Trained data will be available for domestic startups and companies to develop application programming interfaces (APIs).
• APIs will interact with the language models to deliver specialized services.

India AI Mission Funding

• The India AI Mission, launched in March, has allocated ₹10,372 crore for various initiatives.
• ₹199.55 crore is dedicated to the India AI datasets platform.
• An outlay of ₹689.05 crore is planned for the application development initiative.
• ₹4,563.36 crore is aimed at establishing computing capacity of up to 10,000 graphic processing units (GPUs).
• The mission also includes ₹1,971.37 crore for the India AI innovation centre and ₹882.94 crore for the future skills programme.
• ₹1,942.5 crore is allocated for financing startups under the AI Mission.

Mission's Pillars

• The mission is based on seven pillars, including:
• Streamlined funding support for deep-tech AI startups.
• The establishment of an AI innovation centre and an AI datasets platform.

Revised GDP Series Scheduled for 2026

The Ministry of Statistics and Programme Implementation (MoSPI) is set to release a revised gross domestic product (GDP) series in 2026. This revision aims to incorporate new and real-time data sources for enhanced accuracy.

Incorporation of New Data Sources

• eGram Swaraj:
  A portal by the Ministry of Panchayati Raj that includes panchayat profiles, budget monitoring, and progress tracking on the utilisation of central and state schemes.
• E-Vahan:
  A dashboard from the road transport and highways ministry providing comprehensive data on vehicle registrations, categorized by fuel type and states. This data will replace the current reliance on data from the Society of Indian Automobile Manufacturers (SIAM).
• GST and PFMS:
  Data from Goods and Service Tax (GST) and Public Finance Management System (PFMS) will also be incorporated.

Implementation Timeline

• Release Date:
  The revised GDP series is scheduled for release in February 2026, coinciding with the publication of the first revised estimate of 2024-25.

New Base Year

• 2022-23:
  The Advisory Committee on National Account Statistics (ACNAS) has decided on 2022-23 as the new base year for the GDP series.

Objective and Outreach

• The statistics ministry aims to enhance the use of administrative statistics and is reaching out to various ministries for sourcing new data that could be utilized either directly or indirectly in the revised series.

China's Economic Revision and Future Prospects

Economic Revision and GDP Growth

• China revised its GDP for 2023 upwards by 2.7%, reaching a new total of 129.4 trillion yuan ($17.73 trillion).
• This revision is part of the fifth national economic census and follows previous adjustments of 2.1% for 2018 and 3.4% for 2013.
• The revision reflects China's resilience to various internal and external challenges over the past five years, including the impact of the COVID-19 pandemic.
• The revision is not expected to significantly impact the GDP growth rate for 2024.

Future Economic Plans and Challenges

• China aims for a growth target of "around 5%" for 2025, amidst challenges like potential U.S. tariff hikes.
• Policy measures include increasing the budget deficit and issuing more debt to support economic growth.
• President Xi Jinping's vision of "Chinese-style modernization" aims to double the economy's size by 2035, requiring an average annual growth rate of 4.7%.

Economic Census and Industry Changes

• The economic census indicated a 52.7% rise in business entities in the secondary and tertiary sectors since 2018, while employment growth lagged at 11.9%.
• Tertiary industry employment increased by 25.6% by the end of 2023, whereas secondary industry employment decreased by 4.8%.
• The property sector faces a significant decline, with employment dropping by 27% to 2.71 million by the end of 2023.

Outlook and International Factors

• The World Bank adjusted China's growth forecast for 2024 and 2025 upwards but noted challenges like subdued household and business confidence and issues in the property sector.
• The upcoming U.S. administration may bring further trade tensions, affecting China's economic strategies.

Overview of Workforce Changes in China's Finance and Property Sectors

China's finance and property sectors have seen significant reductions in their workforces over recent years, marking a shift from previous trends of workforce growth in the services sector.

Financial Sector Workforce Reduction

• The financial industry had 12.4 million employees at the end of 2023.
• This figure represents a 32% decrease from five years earlier.
• Factors contributing to this decline include: 
  • A government crackdown on graft.
  • Deep pay cuts.
  • Reduced deal-making activities.

Impact of the Housing Market Collapse

• The number of people working for property developers fell by 27%, down to 2.7 million.
• China's housing market is experiencing its worst downturn in modern history.
• Developers face a liquidity shortage and deteriorating balance sheets.
• Country Garden Holdings Co., once the largest property firm, exemplifies firms hit hardest.

Government Response and Economic Adjustments

• Housing Minister Ni Hong suggested insolvent property firms should go bankrupt or restructure.
• The government shifted focus from supporting financially sound developers to injecting liquidity into residential projects.
• Real estate management and sales agency jobs have helped the overall property workforce rise by 14%.
• Conversely, the number of workers in construction firms decreased by 12% to 51 million.

Revised Economic Indicators

China revised its gross domestic product (GDP) for 2023, increasing it by 2.7%, equating to 3.4 trillion yuan, as reported by Kang Yi, head of the National Bureau of Statistics.

India's MoU with the US on Critical Minerals

India's Memorandum of Understanding (MoU) with the United States on critical minerals represents a significant advancement in their bilateral engagements. This is expected to pave the way for further commitments under the US Inflation Reduction Act (IRA).

Critical Minerals Partnership Agreement (CMPA)

• India has proposed a Critical Minerals Partnership Agreement (CMPA) with the US, especially in sectors like electric vehicles.
• The MoU on critical minerals supply chains was signed in October, aiming to leverage the complementary strengths of both countries to enhance resilience in the critical minerals sector.
• New Delhi anticipates that converting the MoU into a partnership would equate to a Free Trade Agreement (FTA), allowing India to benefit from the EV tax credit under the US IRA.

Benefits of US Inflation Reduction Act (IRA)

• The IRA provides a tax credit of up to $7,500 per electric vehicle, dependent on the origin of critical minerals used in EV batteries.
• The tax credit requires a percentage of materials to originate from the US or countries with an FTA with the US.
• This access is expected to attract substantial foreign investment and facilitate large-scale component manufacturing in India.

International Market Access Developments

• China: Granted market access for Indian exports of key fish species, including Pampus chinensis (Chinese pomfret), Pampus argenteus (silver pomfret), and Scylla serrata (mud crab).
• Russia: Allowed the export of dairy products from two listed establishments and egg products from six establishments in India.

FTA Negotiations

• India is engaged in FTA negotiations with several countries, including the UK, EU, Oman, Peru, and Sri Lanka.
• The India-Sri Lanka Economic and Technology Cooperation Agreement has completed its 14th round of negotiations by July 2024.
• Negotiations have concluded on most chapters, excluding specific goods lines related to garments.

Import Restrictions on Low-Ash Metallurgical Coke

The Indian government has enacted a temporary restriction on the import of low-ash metallurgical coke, effective for six months starting January 1.

Key Points:

• The restriction is issued by the Directorate General of Foreign Trade (DGFT).
• Quantitative restrictions have been applied to imports from several countries, including: 
  • Australia
  • China
  • Colombia
  • Indonesia
  • Japan
  • Poland
  • Qatar
  • Russia
  • Singapore
  • Switzerland
  • United Kingdom
• Imports are permitted only with an import authorisation from the DGFT.
• Metallurgical coke with an ash content above 18% is exempt from these restrictions.

Reserve Bank of India's Initiative on Artificial Intelligence

The Reserve Bank of India (RBI) has taken a significant step towards ensuring the ethical and responsible use of artificial intelligence (AI) by establishing a dedicated panel.

FREE-AI Committee

• The committee is named FREE-AI.
• It is an eight-member panel led by Pushpak Bhattacharyya from the Department of Computer Science and Engineering at IIT Bombay.
• This initiative is supported by the RBI’s fintech department.

Mandate and Objectives

• The committee is tasked with submitting its report within six months from its first meeting.
• Key responsibilities include: 
  • Assessing the current AI adoption levels in financial services.
  • Reviewing regulatory and supervisory approaches concerning AI in the financial sector on a global scale.
  • Recommending a framework for the responsible and ethical adoption of AI models in the financial sector, focusing on governance aspects.
  • Identifying potential risks associated with AI and suggesting evaluation, mitigation, and monitoring strategies for regulated entities.

Committee Members

• The panel includes: 
  • Suvendu Pati, Chief General Manager at the RBI
  • Abhishek Singh, Additional Secretary, Ministry of Electronics and IT
  • Debjani Ghosh, Independent Director for Reserve Bank Innovation Hub
  • Dr. Balaraman Ravindran of IIT Madras
  • Rahul Matthan, Partner at Trilegal
  • Anjani Rathor, Chief Digital Officer at HDFC Bank
  • And others contributing to this initiative

Credit Growth Potential in India's Economy

A recent central bank report highlights India's potential for credit growth to stimulate economic expansion by analyzing the country's total debt to GDP ratio.

Key Findings

•  India's total credit-to-GDP ratio was 90.1% in 2022, which is below both advanced economies (AEs) and emerging market economies (EMEs), and under the estimated threshold of 113.1%. 
•  The central bank's economists suggest that a credit threshold of 113.1% of GDP could support economic growth without diverting credit towards less productive purposes. 
•  The study examined 16 emerging and advanced economies over the past 21 years to reach these conclusions. 

Economic Implications

•  Credit deepening can enhance consumption, investment, and economic activity. 
•  An inverted U-pattern is observed, suggesting that beyond a certain threshold, additional credit may be used for riskier or less productive activities, potentially dampening growth. 
•  Current credit growth has been below 15% for over three years, mainly driven by the retail sector. 
•  Lending to the private corporate sector, which constitutes about a quarter of total bank credit, has slowed in the current fiscal quarter compared to the previous quarter's high growth. 

Reserve Bank of India's Insights on Banking Digitization and Associated Risks

The Reserve Bank of India (RBI) has expressed concerns regarding the increased risk of cyber attacks, digital frauds, data breaches, and operational failures due to the rise in digitization. The findings were detailed in the report on the Trends and Progress of Banking in India.

Key Recommendations

• Enhancing Risk Management: Banks, non-bank financial companies (NBFCs), and co-operative banks are urged to bolster their risk management standards.
• Tightening IT Governance: There is a call for improved IT governance arrangements, stricter customer onboarding, and transaction monitoring systems to prevent suspicious activities.

Fraud Statistics

• Decline in Fraud Amount: As of March 2024, the total fraud amount was the lowest in a decade, with the average value being the lowest in 16 years.
• Digital Fraud Cases: For April-September 2024, digital frauds (card and internet) amounted to ₹514 crore across 13,133 cases, a decrease from ₹630 crore and 12,069 cases in the same period of the previous year.
• Internet and Card Frauds: These accounted for 44.7% of total frauds in terms of amount and 85.3% in terms of number of cases.

Specific Concerns

• Mule Bank Accounts: The RBI highlighted the rapid rise in the use of mule accounts for frauds, which pose financial, operational, and reputational risks to banks.
• Coordination with LEAs: Effective coordination with law enforcement agencies is necessary to detect and curb system-level fraud concerns.

Advisories for NBFCs

• Diversification of Funding Sources: NBFCs are advised to diversify their funding sources to mitigate risks and avoid over-reliance on bank-led funding.
• Risk Management Framework: The importance of developing a robust risk management framework and addressing customer grievances is emphasized.
• Discouraging 'Growth at Any Cost': NBFCs should avoid imprudent growth strategies and adhere to fair practices to prevent potential negative outcomes.

Russia's Response to US Ceasefire Proposal in Ukraine

Russia has rejected the incoming US President Donald Trump's proposal for an immediate ceasefire in Ukraine while expressing willingness to engage in negotiations for a long-term peace agreement to resolve the conflict that has lasted almost three years.

Key Points

• Russian Position:
  • Russian Foreign Minister Sergei Lavrov stated that a ceasefire is seen as ineffective, as it would allow Ukraine to strengthen its military capabilities.
  • Lavrov emphasized the need for conclusive, legally-binding agreements to secure Russian Federation's safety and legitimate security interests of neighboring countries.
• Expectations from the Trump Administration:
  • Lavrov expressed hope that the Trump administration would address the root causes of the conflict.
  • President Putin is open to reviewing any serious, concrete proposals for peace.