The Hindu Editorial Analysis- 13th June 2025 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Urbanisation and the Challenge of Ideal Transit Solutions

Why is it News?

Urban planners in India should evaluate whether they are selecting the most cost-effective and environmentally friendly transportation options. 

Introduction

• A key goal of Viksit Bharat by 2047 is a more urbanized India, as urban areas are expected to drive economic growth. By the 2060s, over 60% of India’s population is projected to move from less productive rural areas to highly productive urban centers.
• Large-scale urban mobility, which involves the movement of people within cities from homes to workplaces, presents a significant challenge for urban planners.
• Although smart cities are being developed to reduce the need for daily commuting, progress has been slower in India compared to countries like China.
• New smart cities in India are not evolving as quickly or effectively as planned, while existing metropolitan and tier 1 cities continue to expand rapidly.
• This rapid expansion increases pressure on infrastructure and transportation systems, leading to higher transport demands and new policy challenges for accommodating urban workers.

Focus on Public Transport and Government Initiatives

• India currently operates only 35,000 urban buses, while a need for 2,00,000 buses is identified, indicating a substantial shortfall.
• Metro development is gaining traction but remains a long-term and expensive undertaking, often reliant on central government funding.

Urban Transit Accessibility: Gaps & Challenges

• India falls significantly behind in providing public transit access to its urban population, with only 37% having easy access.
• In contrast, countries like Brazil and China have over 50% of their urban populations with easy access to public transport.
• Many metro projects in India have not achieved full cost recovery, as actual ridership often falls short of projections.
• Fare sensitivity is a critical issue, where even small increases in fares can lead to significant drops in ridership.

Structural and Financial Hurdles

• Cost recovery for metro systems is viable only if they operate along high-density routes.
• Issues with last-mile connectivity diminish the convenience and adoption rates of metro services.
• Unlike some developed nations, India lacks the capacity for large subsidies, making it challenging to keep fares low and services accessible.

Road-Based Public Transport: The Need and the Gaps

• Affordable road-based public transport is essential for improving last-mile connectivity in urban and metro areas.
• The 2025 Budget has increased funding for urban bus systems, supporting efforts to expand capacity.
• However, private sector investment in this area remains limited due to uncertain returns on infrastructure projects.

Shift in Government Priorities

• While the government is now prioritizing electric buses, there are concerns about high costs and limited scalability.
• Future transport models are expected to explore a diverse mix of cleaner technologies.

Missed Opportunity: Trams and Trolleybuses

• Trams and trolleybuses are frequently overlooked in current urban transport policies.
• However, analysis of life cycle costs and revenue indicates that these modes can often be more financially efficient than e-buses.
• Trams and trolleybuses are mature, reliable, and environmentally sustainable systems that deserve greater attention in India’s urban transport planning.

Assessing Financial Viability of Urban Road-Based Transport

• Key metrics for evaluating the profitability or deficit of urban road-based transport systems include revenue generation and economic sustainability over time.
• Analyzing profit and loss percentages over a system's life cycle is crucial for informed policy decisions regarding future transit investments.

Comparative Life Cycle Profitability (Over 70 Years)

• Trams are identified as the most economically viable and sustainable option over the long term, aligning with climate goals and urban scalability.
• While e-buses are currently prioritized, they face significant financial challenges in the long run.
• Trolleybuses, although better than e-buses, do not match the comprehensive advantages offered by trams.

Conclusion

• It is important to reflect on whether current investments in urban mobility are truly sustainable and cost-effective, or if they are creating a system that relies on ongoing public subsidies.
• Evaluating the long-term economic and environmental viability of transit choices is crucial.
• The planned reintroduction of trams in Kochi could mark a significant shift in India’s urban transport strategy.
• This move, rather than being a nostalgic reference to the past as seen in Kolkata, represents a strategic and forward-thinking approach.
• Adopting proven, low-emission, and durable transit systems like trams may provide a more feasible alternative to expensive and high-maintenance options, contributing to a financially stable and climate-resilient future in urban mobility.

Trump’s Tariffs and a U.S.-India Trade Agreement

Why in News? 

India should avoid getting into any less-than-ideal deal with the United States. 

 Ultimately, it wasn’t a major clash between nations, but a lawsuit filed by five small U.S. businesses that posed the most significant challenge yet to President Donald Trump’s broad tariff policies. 

 Key Concepts and Events 

•  Tariffs are the result of careful trade negotiations and are established by laws and regulations. 
•  They are legally obligated through trade agreement schedules, providing certainty and predictability for cross-border businesses. 
•  President Trump’s extensive tariffs, ranging from 10% to 135% and affecting over 100 countries, were a clear violation of trade norms. 
•  These tariffs even extended to remote areas like the Heard and McDonald Islands, showcasing the absurdity of the order. 
•  This executive action compromised the separation of powers — legislature, executive, and judiciary — which is fundamental to democratic constitutions. 
•  It raised concerns about the lack of checks and balances in the U.S., often regarded as a model democracy. 
•  In reaction, five small and mid-sized U.S. businesses challenged the order in the U.S. Court of International Trade (U.S. CIT), citing economic harm. 

 Details of the Case 

 Trump Administration’s Rationale for Tariffs 

•  Claimed a “national emergency” due to the U.S. trade deficit with multiple countries. 
•  A trade deficit occurs when imports exceed exports. 
•  However, a trade deficit does not inherently harm a country’s economy: 
•  It may reflect strong consumer purchasing power. 
•  The administration excluded service exports in its trade calculations. 
•  Example: With India, the U.S. cited a $44.4 billion goods trade deficit. 
•  However, services and arms trade paint a different picture. 

 Corrected Trade Balance with India 

 Legal Judgment by U.S. Court of International Trade (CIT) 

• Court Ruling – May 28, 2025:
  •  Tariffs exceeded legal authority granted to the President. 
  •  Warned against misuse of “national emergency” provisions. 
• Key Observations:
  •  Mere invocation of emergency cannot override constitutional checks. 
  •  President cannot unilaterally revise international tariff agreements. 

 Impact of the Judgment 

•  Stayed the very next day by the U.S. Appeals Court. 
•  As a result: 
•  Tariffs remain in force. 
•  Negotiating pressure on trade partners continues. 

 Arguments & Future Concerns 

• Trump Administration’s Argument:
  •  Claimed tariffs offer leverage in trade negotiations. 
  •  The court rejected this, stating it does not justify illegality. 
• Future Legislative Push – OBBB:
  • Name: One Big Beautiful Bill (OBBB) 
  • Nature: Proposed omnibus law 
  • Key Concern: May grant executive immunity from judicial enforcement 
  • Implication: Undermines judicial review and rule of law 

 Status of India-U.S. Trade Talks 

•  Both governments are pushing for an early trade agreement, with pressure mounting due to the U.S. deadline of July 8. 
•  Despite negotiations, the U.S. has doubled existing tariffs on: 
• Steel: from 25% to 50% 
• Aluminium: from 10% to 50% 

 WTO Dispute & India's Withdrawal 

• WTO Rulings (2022): Found U.S. steel/aluminium tariffs under “national security” invalid 
• Complainants: Switzerland, Norway, China, Türkiye 
• India’s Action: Initially filed a WTO dispute against U.S. tariffs 
• Withdrawal: 2023, based on a “mutually agreed solution” 
• Outcome: Did not prevent new 50% tariffs on Indian exports 

 India’s Options at WTO 

•  Contemplated retaliation at WTO. 
•  Blocked by the U.S., resisting India's efforts to reinitiate or escalate action. 

 Geopolitical Angle: China & Strategic Uncertainty 

• U.S. Targeting of China: Trump administration cites China’s economic rise as a core concern. 
• Strategic Opportunity for India? Initially perceived as a chance for India to benefit from U.S.-China tensions, but this is now diminished due to: 
• Development: U.S.-China Truce: Both paused retaliatory tariffs, are negotiating a deal 
• U.S. Threats to Apple: Tariffs threatened if Apple manufactures in India, undermining India as an alternative hub 

 Implications for India 

• Harsh Transactional Approach: U.S. under Trump adopts a transactional approach, impacting India negatively 
• Erosion of Trade Leverage: India’s trade leverage diminished 
• Geopolitical Backing Uncertainty: No assurance of U.S. backing during potential standoffs with China 
• Increased Investment Risks: Particularly in electronics sectors, exemplified by the Apple case 

 India’s Priorities in a Trade Agreement with the United States 

• Strategic Considerations: Ensure that any trade deal balances India’s core economic and strategic interests. 
• Key Demands:
  • Tariffs: Complete removal of additional U.S. tariffs on Indian exports, especially on steel and aluminium. 
  • Retaliatory Tariffs: Clear commitments against retaliatory tariffs on U.S. companies investing or manufacturing in India, including firms like Apple. 
  • Tax Exclusions: Exclusion of Indian remittances from the proposed 3.5% tax under the OBBB Act. 
  • Digital Services Tax: Protection against U.S. retaliatory actions regarding India’s digital services tax regime. 
• Mobility and Services Trade:
  •  Secure commitments on H-1B and other work visas vital for Indian professionals, particularly in the tech sector. 
  •  Ensure the trade deal addresses visa requirements critical to the services sector, a significant part of India’s trade with the U.S. 
• Cross-border Data and Service Regulation: Resolve issues related to the delivery of cross-border services, including data flow governance, digital trade regulations, and regulatory cooperation on digital infrastructure. 
• Alignment with Multilateral Obligations: Ensure consistency of any bilateral trade agreement with India’s WTO commitments. 
•  Despite the U.S.'s reduced reliance on multilateral frameworks, WTO rules remain a crucial global safeguard. 
•  Reinforce the multilateral trading system, as emphasized during India’s G20 presidency. 

 Conclusion 

 India should maintain the option to withdraw from any trade agreement that does not adequately serve its national interests. While the tariffs imposed by the Trump administration are certainly challenging, they are anticipated to be temporary, with the most significant resistance coming from within the United States itself.