Book Economy SIP+ CA (English)

Indian Economy
(Current Affairs)
Comprehensive coverage of all current topics of the last one year
for UPSC Prelims and other competitive exams
Study IQ Education Pvt. Ltd.
Indian Economy: Current Affairs 2nd Edition by Study IQ Publications
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Preface
Dear Aspirants,
CSE Prelims is just around the corner. It is considered to be the iron gate toward your goal to become a civil servant. Prelims
is the most competitive part of UPSC CSE, and therefore, reading-revising and testing one’s knowledge is imperative for
clearing Prelims. According to the present competition, around 1 in 100 people who attempt UPSC Prelims clear it. Given
the growing competition, there is an urgent requirement for content specially curated to crack Prelims. The need of the
hour is simplified content that helps in a quick and complete revision of the UPSC syllabus.
Taking inspiration from the overwhelmingly positive response to our UPSC CSE books, we are taking another leap towards
simplifying Prelims preparation. To fulfill our aspirants’ demand, Study IQ Publications is delighted to present you with the
first edition of ‘SIP+ Static Revision Simplified booklets’.
The SIP+ booklet series has been strategically divided into 2 parts; SIP+ Static Revision Simplified and SIP+ Current
Revision Simplified. The UPSC syllabus is huge, it is further complicated by information overload and increasingly difficult
questions. These booklets have been created especially keeping in mind, the concerns and challenges that students face
during their Prelims preparation. This is an honest attempt to tackle all of the student’s issues and save their precious
time before Prelims.
Special Features of this Book:
This booklet aims to make your preparation focused and relevant based on UPSC’s current trends and patterns, revision-
friendly, and up-to-date.
• The requirements of the UPSC Prelims are the exclusive focus of this book.
• We have taken great care to ensure that the material is written in a clear; ready revision format so that students can
learn and recall key concepts and facts to their advantage.
• Wherever necessary, we’ve incorporated relevant tables, charts and mind-maps to help students grasp and revise key
concepts and facts.
• The special feature of SIP+ booklet series is the availability of ready revision charts which students can take out and
paste on their wall or study table to revise key concepts and facts anytime on their own discretion.
With all sincerity and humility, the StudyIQ team wishes you the best in your preparation, and we are hopeful that this
book will help you in your journey.
Table of Contents
Chapter 1 : MONEY, BANKING AND MONETARY POLICY ��1
Chapter 2 : FISCAL POLICY AND TAXATION��22
Chapter 3 : FINANCIAL MARKET��29
Chapter 4 : EXTERNAL SECTOR: TRADE, BALANCE OF PAYMENT��39
Chapter 5 : HUMAN DEVELOPMENT INDICATORS��52
Chapter 6 : INFRASTRUCTURE: INDUSTRIES, SERVICE, MINING��69
Chapter 7 : AGRICULTURE��106
Chapter 8 : MISCELLANEOUS��125
Money, Banking and Monetary Policy 1
CHAPTER 1
Money, Banking and Monetary Policy

URBAN CO-OPERATIVE BANKS
Context: In July 2022, RBI has adopted 4-tiered regulatory framework for urban co-operative banks for their strengthening.
The decision of RBI is based on the report submitted by NS Viswanathan Committee on UCBs.
Key Points about the revised norms

• The Reserve Bank of India (RBI) has decided to adopt a simple four-tiered regulatory framework with differentiated
regulatory prescriptions aimed at strengthening the financial soundness of the existing urban cooperative banks (UCBs).
• A minimum net worth of Rs 2 crore for Tier 1 UCBs operating in single district and Rs 5 crore for all other UCBs (of
all tiers). UCBs which don’t meet the minimum net worth requirement, shall achieve it in a phased manner.
• Capital to Risk Weighted Assets Ratio (CRAR): For Tier 1 bank, the minimum CRAR requirement is retained at the
present prescription of 9% under current capital adequacy framework based on Basel-1 rules.
− For Tier 2, Tier 3 and Tier 4 UCBs, UCBs shall maintain a minimum CRAR of 12 percent of RWAs ( Risk Weighted
Assets) on an ongoing basis.
• Further, the banks that do not meet the revised CRAR will be provided with a path of three years for achieving the
same in a phased manner. Accordingly, these banks will have to achieve a CRAR of 10% by the financial year ended
March 31, 2024, 11% by March 31, 2025 and 12% by March 31, 2026.
• Financially Sound and Well Managed (FSWM) criteria: no monetary penalty should have been imposed on UCBs on
account of violation of regulatory directives / guidelines during the last two financial years.
− Net non-performing assets (NPAs) of less than 3 per cent
− Net profit for at least three out of the preceding four years subject to it not having incurred a net loss in the
immediate preceding year;
− no default in the maintenance of cash reserve ratio/ statutory liquidity ratio during the preceding financial year
− sound internal control system with at least two professional directors on the Board.
• Branch expansion: In order to boost growth opportunities in the sector, it has been decided to introduce automatic
route for branch expansion to UCBs which meet the revised Financially Sound and Well Managed (FSWM) criteria and
permit them to open new branches up to 10% of the number of branches as at the end of the previous financial year.
• In respect of housing loans, it has been decided to assign the risk weights on the basis of Loan to Value (LTV) Ratio
alone which would result in capital savings. This will be applicable to all Tiers of UCBs.
NIDHI RULES, 2014

Context: Central Government has amended Nidhi Rules, 2014 to safeguard the interest of general public. Amendment
was done due to a sharp rise in number of ‘Nidhi’ companies and is aimed at improving their governance and safeguarding
public interest.
Background
• Under the Companies Act, 2013, initially there was no need for a company to get declaration from Central Government
to function as a Nidhi Company. Such companies were required to only incorporate as a Nidhi and meet requirements
under sub-rule (1) of rule 5 of Nidhi Rules viz.,
− minimum membership of 200, Net Owned Fund (NoF) of Rs. 10 lakh,
− NOF to deposit ratio of 1:20 and keeping 10% unencumbered deposits in schedule commercial banks or post
offices within one year of commencement of Nidhi Rules, 2014.
© Study IQ Publications
2 Indian Economy: Current Affairs
• A committee was constituted in the Ministry to make recommendations on the issues arising from the implementation
of the Companies Act, 2013 etc. and it was felt that the earlier provisions under the Companies Act, 1956 requiring
the approval of the Central Government for declaration as Nidhi were appropriate since they provided a centralized
and more restrictive frame work for regulation of such entities
• Accordingly Companies Act, 2013 was amended with effect from 15.08.2019 to bring back the requirement of
declaration as a Nidhi by the Central Government.
• After Amedment companies incorporated as Nidhis were required to apply to the Central Government in Form NDH-4
for declaration within 14 months of incorporation, if they were incorporated after the commencement of the Nidhi
(Amendment) Rules w.e.f 15.08.2019.
• Thus during 2014-2019, more than ten thousand companies get incorporated. However, only about 2,300 companies
have applied in form NDH-4 for declaration.
• It has been noticed from examination of form NDH-4 that companies have not been complying with the applicable
provisions of the Act and the Nidhi Rules, 2014 (as amended).
• To safeguard the interest of general public, it has become imperative that before becoming its member, one must
ensure declaration of a company as a Nidhi by the Central Government and towards this, few necessary/important
amendments in the Rules have been carried out which are applicable to the Companies to be incorporated after Nidhi
(amendment) Rule, 2022,
Key Amendments
• A public company set up as a Nidhi with share capital of Rs. 10 lakhs needs to first get itself declared as a Nidhi from
Union government. Earlier, there was no such need for a company to get declaration.
• Promoters and Directors of company have to meet the criteria laid down in rules.
• For timely disposal, it has also been provided in amended Rules that in case no decision is conveyed by the Central
Government within 45 days of the receipt of applications filed by companies in form NDH-4, approval would be deemed
as granted. This would apply for such companies which shall be incorporated after Nidhi (Amendment) Rules, 2022.
About Nidhi Company

• Similar to a Non-Banking Financial Company, a Nidhi is formed to borrow and lend money to its members. It inculcates
saving habits among its members and works on the principle of mutual benefit
• Under the Companies Act, 1956, a Nidhi or Mutual Benefit Society meant a company which the Central Government
declared as Nidhi or Mutual Benefit Society by notification in the official gazette
• Not required to get an RBI licence but need approval under the Companies Act.
• Ministry of Corporate Affairs regulates its operational matters and RBI has the power to issue directions for its
deposit-taking activities.
• Can’t deal with chit funds, hire-purchase finance, leasing finance, insurance or securities business. It is strictly
prohibited from accepting deposits from or lending funds to, any other person except members
• Only individual members are allowed in Nidhi companies
FINANCIAL SERVICES INSTITUTIONS BUREAU

Context: In July 2022, the government has decided to set up the Financial Services Institution Bureau (FSIB) with a
wider mandate to replace the Banks Board Bureau (BBB).
About Financial Services Institutions Bureau

• It’s a government body set up under the Department of Financial Services.
• The board will be entrusted with making recommendations for the appointment of full-time directors and non-
executive chairman of state-run financial services institutions.
• It would also issue guidelines for selecting general managers and directors of public sector general insurance
companies.
• While its main task is to play the role of head-hunter for the state-owned financial services entities, the board will
also be involved in formulating and developing business strategies for state-run banks and help them in their fund-
raising plans.
FSIB’s mandate
• The primary role of FSIB is to identify manpower capabilities and ensure proper selection of talent for senior positions
at financial institutions owned by the government.
• It would also monitor and assess the performance of public sector banks, government-owned financial institutions
and insurance companies.
Why has it replaced Banks Board Bureau (BBB)?

• The BBB was declared an incompetent authority in 2021 by the Delhi High Court, when a general manager at state-
owned National Insurance Company challenged the appointment of a person junior to him for Director’s position by
the BBB.
• Consequent to the order, 10–11 directors appointed by the BBB had to vacate office.
• To end this logjam, the BBB had to be struck down and a new body, namely, FSIB had to be put in place vide approval
from the Appointments Committee of the Cabinet, headed by the prime minister.
Composition of FISB
• FSIB is headed by a chairman, a central government nominee.
• The board shall comprise of the Secretaries of the DFS, the chairman of IRDAI, and a deputy governor of the RBI.
• Additionally, it shall have three part-time members who are experts in banking and three more from the insurance
sector.
MICROFINANCE INSTITUTIONS
Context: According to study conducted by Price Waterhouse Coopers (PwC) and the Association of Microfinance
Institutions of India, MFIs will play a leading role in India’s economic growth.
About the report

• According to the report, the global market size of the MFI industry is expected to grow by $122.46 billion from 2021
to 2026 at a compound annual growth rate of 11.61%.
• From 2017, the Indian MFI industry embraced the digital route by using online delivery channels, mobile banking
and e-wallets, paving the way for the sector to adopt digitisation at a large scale.
• The future course of the industry will be determined by the ability of MFIs to forge partnerships, develop new products
and investment channels and leverage technology.
Challenges for MFIs

• Diverse nature of customer segments such as small farmers, vendors and labourers.
• Diverse nature of customer segments may require varied levels of services with financial products and digital literacy.
• dependence on physical modes of interaction poses a challenge for MFIs to reach last-mile borrowers
India’s Microfinance Sector

• Microfinance is a financial service provided to low-income individuals or groups who otherwise would have no other
access to financial services.
• Microfinance allows people to take small business loans in a manner that is consistent with ethical lending practices.
• There are basically two distinct approaches for extending micro finance services in India.
− The Bank led approach called Self Help Group–Bank Linkage Programme (SHG-BLP)
− The Micro Finance Institution (MFI) led approach
• Microfinance industry in India is diverse with several types of players delivering financial services viz. credit, insurance
and pension to the low income households.
• The various microfinance industry players are broadly categorized into five types: Banks, NBFC-MFIs, Small Finance
Banks, NBFCs and Non-profit MFIs. All of these, except the Non-profit MFIs, are regulated by RBI.
• The Non-profit MFIs are mostly registered as Societies or Trusts, and are regulated by the respective Acts.
• In India microfinance was first introduced by the SEWA Bank, a division of the Self-Employed Women’s Association
(SEWA), in Gujarat in 1974.
Features of Micro Finance in India

• The borrowers are from low-income backgrounds
• Loans availed under microfinance are usually of small amounts, i.e., microloans
• The loan tenure is short
• Microfinance loans do not require any collateral
• These loans are usually repaid at higher frequencies
• The purpose of most microfinance loans is income generation
Structure of Microfinance
The structure of MFI has been created to address the difficulties that the traditional financial services sector encountered
in satisfying the low-income segment’s credit requirement at a reasonable and sustainable cost.
• A Joint Liability Group (JLG) is an informal association of 4-10 people who work as a team to apply for bank loans
either individually or collectively under mutual guarantee.
• A SHG is a group of registered or unregistered microentrepreneurs with similar socioeconomic origins that get
together voluntarily to save modest amounts of money monthly, mutually agreeing to contribute to a common fund,
and meeting their emergency needs through mutual assistance. To ensure proper credit use and prompt repayment,
the group members typically rely on their collective knowledge and peer pressure
Regulatory Framework for Microfinance Loans

• In order to revamp the regulatory policy for microfinance institutions, RBI has come out with Regulatory Framework
for Microfinance Loans in March 2022. This will bring Regulatory parity between different types of Regulated Entities
(RE) dealing with microfinance, harmonization of regulations to protect customers from overindebtedness and a
common definition of microfinance.
• Directions for Microfinance loans are applicable for all Commercial Banks (including SFBs, LABs and RRBs excluding
Payment Banks), PUCBs, SCBs, DCCBs and NBFCs (including MFIs and HFCs).
• Microfinance loan has been redefined as a collateral free loan given to a household having annual household income
up to Rs 3 lakh.
• As per the revised norms, Regulated Entities (REs) should put in place a board-approved policy regarding pricing of
microfinance loans, a ceiling on interest rate and all other charges applicable to microfinance loans.
• Each RE shall disclose pricing-related information to prospective borrowers in a standardised, simplified factsheet.
INSOLVENCY AND BANKRUPTCY CODE (IBC)

Context: In January 2023, Centre has proposes many changes to IBC framework.
Key Changes Proposed in the IBC Framework

• Setting up of an e-platform that may provide for a case management system, automated processes to file applications
with the Adjudicating Authority (AAs), delivery of notices, enabling interaction of IPs with stakeholders, storage of
records of CDs undergoing the process, and incentivising participation of other market players in the IBC ecosystem.
• Redesigning the Fast-Track Corporate Insolvency Resolution Process (FIRP) to allow financial creditors to drive the
insolvency resolution process for a Corporate Debtors (CD) outside of the judicial process while retaining some
involvement of the Adjudicating Authority (AA) to improve the legal certainty of the final outcome.
• Increasing reliance on the record submitted with the Information Utilities during the Admission Process
• When an application is filed to initiate the CIRP in respect of a CD who is the promoter of a real estate project, and
the default pertains to one or more of its real estate projects; the AA, at its discretion, shall admit the case but apply
the CIRP provisions only with respect to such real estate projects, which have defaulted.
• It has also been proposed to enable a resolution professional to transfer the ownership and possession of a plot,
apartment or building to the allottees with the consent of the CoC (Committee of Creditors).
LOAN LOSS PROVISIONING

Context: In January 2023, RBI floated a paper on expected loss-based approach for loan loss provisioning by banks.
About Loan Loss provisions (LLPs)

• The RBI defines a loan loss provision as an expense that banks set aside for defaulted loans.
• Banks set aside a portion of the expected loan repayments from all loans in their portfolio to cover the losses either
completely or partially.
• In the event of a loss, instead of taking a loss in its cash flows, the bank can use its loan loss reserves to cover the loss.
• Since the bank does not expect all loans to become impaired, there is usually enough in the loan loss reserves to
cover the full loss for any one or a small number of loans when needed.
• An increase in the balance of reserves is called loan loss provision. The level of loan loss provision is determined
based on the level expected to protect the safety and soundness of the bank.
Approaches for LLPs

• Presently, in India, banks are required to make loan loss provisions based on an ‘incurred loss’ approach. The incurred
loss approach requires banks to provide for losses that have already occurred or been incurred.
• This model assumes that all loans will be repaid unless evidence suggests otherwise, such as a trigger event indicating
a loss.
• Only when such an event occurs is the impaired loan or portfolio of loans written down to a lower value.
• Its key drawback was that usually banks made provisions with a significant delay after the borrower may have started
facing financial difficulties, thereby increasing their credit risk. This led to systemic issues.
Expected loss-based approach

• Under this practice, a bank is required to estimate expected credit losses based on forward-looking estimations,
rather than wait for credit losses to be actually incurred before making corresponding loss provisions. This means,
banks now have to assess expected loss on their overall financial assets and make provisions after assessment, rather
than making it after the loan turns into a non-performing asset (NPA).
• Banks have to classify financial assets (primarily loans, including irrevocable loan commitments, and investments
classified as held-to-maturity or available-for-sale) into one of three categories - Stage 1, Stage 2, and Stage 3.
• The above classification would depend upon the assessed credit losses on them, at the time of initial recognition as
well as on each subsequent reporting date and make necessary provisions.
− Stage 1 assets are financial assets that have not had a significant increase in credit risk since initial recognition or
that have low credit risk at the reporting date. For these assets, 12-month expected credit losses are recognised
and interest revenue is calculated on the gross carrying amount of the asset.
− Stage 2 assets are financial instruments that have had a significant increase in credit risk since initial recognition,
but there is no objective evidence of impairment. For these assets, lifetime expected credit losses are recognised,
but interest revenue is still calculated on the gross carrying amount of the asset.
− Stage 3 assets include financial assets that have objective evidence of impairment at the reporting date. For these
assets, lifetime expected credit loss is recognised, and interest revenue is calculated on the net carrying amount.
• This expected credit losses approach will further enhance the resilience of the banking system in line with globally
accepted norms. It is likely to result in excess provisions as compared to shortfall in provisions as seen in the incurred
loss approach.
SECURITISATION OF STRESSED ASSETS FRAMEWORK (SSAF)

Context: In January 2023, RBI floated a discussion paper on Securitization of Stressed Assets Framework (SSAF).
About Securitization and SSAF

• Securitisation involves pooling of loans and selling them to a special purpose entity (SPE), which then issues securities
backed by the loan pool.
• A well-developed securitisation market can inter alia provide a market-based mechanism for management of credit
risk by financial institutions and can help in development of a secondary loan market.
• Securitisation of Stressed Assets is a financial structure whereby an originator of NPAs sells these to a SPE that funds
such an acquisition by issuing securitisation notes, per the paper.
• The SPE, in turn, appoints a servicing entity to manage the stressed assets, typically with a fee structure that incentivises
them to maximise recoveries on the underlying loans.
• Investors are paid based on the recovery from underlying assets, as per the waterfall mechanism depending upon
the seniority of the tranches.
• Currently, in India, the Securitization of Standard Assets is allowed through the SPE route in accordance with Basel
guidelines that came into force from January 1, 2018.
• The securitization of Stressed Assets is done by licensed Asset Reconstruction Companies (ARCs) under the SARFAESI
Act.
• In 2019, the Task Force on Development of Secondary Market for Corporate Loans decided to introduce SSAF in
addition to the ARC route, similar to the framework for securitisation of standard assets.
CLIMATE RISK AND SUSTAINABLE FINANCE

Context: In February 2023, RBI announced regulatory guidelines on climate risk and sustainable finance.
Climate-related risks
Climate-related risks refer to the potential risks that may arise from climate change or from efforts to mitigate climate
change, their related impact and the economic and financial consequences. It can impact the financial sector through
two broad channels -- physical risks (economic costs and financial losses from floods, heatwaves etc) and transition risks
(arising from process of adjustment towards a low-carbon economy).
About guidelines
• Broad framework for acceptance of Green Deposits
• Disclosure framework on Climate-related Financial Risks
• Guidance on Climate Scenario Analysis and Stress Testing
• The Reserve Bank shall have a dedicated webpage on its website which will consolidate all instructions, press releases,
publications, speeches and related RBI communication on climate risk and sustainable finance.
RBI’S DIGITAL PAYMENTS INDEX

Context: The Reserve Bank of India (RBI)’s Digital Payments Index rose by 13.2% to 395.57 in March 2023 from 349.30
in March 2022.
About the RBI’s Digital Payments Index

• The RBI introduced the composite Digital Payments Index (RBI-DPI) in January 2021 with March 2018 as the base,
to capture digitization of payments.
• The index has since been steadily rising, crossing the 300-point mark in September 2021.
• Methodology of the index: The RBI-DPI comprises five parameters to measure the deepening and penetration of
digital payments. Of these parameters –
− payment enablers account for 25 per cent of the index,
− payment infrastructure – demand-side factors for 10 per cent,
− payment infrastructure – supply-side factors for 15 per cent,
− payment performance for 45 per cent,
− whereas consumer centricity holds five per cent weightage.
Key highlights of the latest RBI-DPI Index

• The RBI-DPI index has increased across all parameters driven by significant growth in payment infrastructure and
payment performance across the country over the period (March22-March23).
• The increase in Index highlights the remarkable surge in digital payment adoption in India, predominantly propelled
by the success of UPI.
Key Stats IQ on India’s Digital Payment Ecosystem

• As per the Economic Survey 2022-23, India has the highest fintech adoption rate of 87 per cent among the public
compared to the global average of 64 per cent.
• Further, India has gained the third place in digital payments, coming only after US and China.
• UPI (Unified Payments Interface) transactions, have on average, grown 121 per cent in terms of value and 115 per
cent in terms of volume between FY19 and FY22.
• In May 2023, UPI transactions had crossed the benchmark of 900 crore per month, with a record high of 941 crore
transactions worth ₹14.89 lakh crore being processed.
UTKARSH 2.0
Context: The Reserve Bank of India’s Medium-term Strategy Framework for the period 2023-2025 – ‘Utkarsh 2.0’ – was
launched in December 2022.
Background: The first strategy framework (Utkarsh 2022) covering the period 2019-2022 was launched in July 2019. It
became a medium-term strategy document guiding the Bank’s progress towards realisation of the identified milestones.
About Utkarsh 2.0

Utkarsh 2.0 harnesses the strengths of Utkarsh 2022 by retaining the six Vision statements as well as Core Purpose,
Values, and Mission statement. Collectively, they create a strategic guiding path. The Vision in Utkarsh 2.0 that will guide
the Reserve Bank of India over the period 2023-25 are:
• Excellence in performance of its functions;
• Strengthened trust of citizens and Institutions in the RBI;
• Enhanced relevance and significance in national and global roles;
• Transparent, accountable and ethics-driven internal governance;
• Best-in-class and environment-friendly digital and physical infrastructure; and
• Innovative, dynamic and skilled human resources.
MARKETS IN CRYPTO ASSETS (MICA) LEGISLATION

Context: In April 2023, the European Union passed the Markets in Crypto Assets (MiCA) Legislation providing a
framework for regulating cryptocurrency. It is a first-of-its-kind framework for regulating crypto-assets.
About Markets in Crypto Assets (MiCA)

• It is a first-of-its-kind framework for regulating crypto-assets.
• MiCA came into force in May 2023 after receiving formal approval from the European Council.
• MiCA will protect consumers against fraud, provide security and bring about standardization of the crypto-asset
industry in the region.
• MiCA will have a broad scope of application within the crypto ecosystem. It will encompass 10 categories of Crypto
Asset Service Providers (CASP) including exchanges, trading platforms, wallet providers, and advisors dealing with
crypto-assets.
• MiCA will apply not only to traditional cryptocurrencies like Bitcoin and Ethereum but also to newer ones like
stablecoins. Stablecoins are digital tokens that aim to stay pegged in value with a more stable asset — a fiat currency
like the U.S. dollar or other stable cryptocurrencies.
• To become a CASP, a provider will have to obtain a license or “authorization” and must apply to the relevant “competent
authority.”
• The regulation also defines Asset Categories and their issuers. The categories covered under MiCA are – Crypto Assets,
Utility Tokens, Asset-referenced Tokens, and E-money Tokens. This broad inclusion into the regulation makes MiCA
forward-looking and sets the foundation for encompassing future categories.
• MiCA will not regulate digital assets that would qualify as transferable securities and function like shares or their
equivalent and other crypto assets that already qualify as financial instruments under existing regulation.
• MiCA will also not regulate central bank digital currencies issued by the European Central Bank and digital assets
issued by national central banks of EU member countries
Crypto assets
• Crypto assets are a digital representation of value that you can transfer, store, or trade electronically. Crypto assets
are a subset of digital assets that use cryptography to protect digital data and distributed ledger technology to record
transactions. They may run on their own blockchain or use an existing platform.
− A blockchain is a form of secure digital ledger used to store a record of crypto transactions.
• They use cryptography, peer-to-peer networks and distributed ledger technology (DLT) – such as blockchain – to
create, verify and secure transactions.
• Different types of Tokens under Crypto Assets:
− Stablecoins, Non-fungible tokens (NFTs), Central bank digital currencies (CBDCs), Security tokens
How Blockchain-based CBDC and crypto are different?
•
CBDC is more like “dematerialised bank notes”.
•
CBDC, or the Indian e-rupee, is a digital token issued by the RBI and is linked to the value of the fiat currency of the country.
•
The CBDCs operate on authorised (private) blockchains, whereas whereas cryptocurrencies operate on permissionless (public)
blockchains. The former is centralised, whereas the latter is not.
•
Anonymity is a benefit for cryptocurrency users. CBDC customers’ identities will be linked to an existing bank account as well as a
similar quantity of personal information.
•
A central bank determines the regulations for CBDC networks. The authority in crypto networks is given to the user base which
makes choices through consensus.
E-BG (ELECTRONIC BANK GUARANTEE) SERVICES

Context: Indian Bank, in partnership with National E-Governance Service Limited (NeSL) , has rolled out e-BG (electronic
bank guarantee) services under Project WAVE to reduce the number of old paper-based process.
About e-BG
• e-BG roll out will reduce the turn-around time of the bank issuance and delivery to the beneficiary within few minutes
from the 3-4 working days.
• e-BG by Indian Bank would replace physical stamp paper and physical signatures of customers by e-signature and
e-stamps.
Project Wave (World of Advance Virtual Experience)

• It has been introduced in collaboration with National E-Governance Services Ltd.
• It ensures fully end-to -end digitally pre-approved business loans, for easy and smooth loan process. The facility is
available to process a loan of ₹25 lakh.
BASEL-III CAPITAL FRAMEWORK

Context: The RBI has introduced norms on the Basel III capital framework, fund raising, exposure guidelines, and
norms on classification and valuation of investment portfolios for All India Financial Institutions (AIFIs). It will come into
effect from April 2024.
Popular Category of Small Saving Scheme
• Public Provident Fund: This works as a provident fund for the adults as well as minorities.
− The PPF has lower limit of balance holding INR 500 and upper limit of INR 1.5 Lac.
− The maturity time of PPF account is 15 years.
• Post Office Recurring Deposit: Post Office RD is a saving scheme that can be continued with Indian Postal Offices.
− In this scheme minimum balance of Rs. 10/- should be maintained every month.
• Post Office Fixed Deposit: Fixed deposits in Post Offices are same as the banks.
− The difference is the minimum amount here is INR 200/- unlike the other commercial banks.
• Kisan Vikas Patra: This is another small saving scheme that can be purchased from the PO.
− The patra or certificate costs INR 1000/- (minimum).
− The maturity time is 113 months.
• Sukanya Samriddhi Yojana Scheme (SSYS): It is a government-backed deposit programme for girls.
− It was introduced as a part of the "Beti Bachao Beti Padhao" campaign, aids in providing for a girl child's financial needs and
offers income-tax advantages under section 80C.
• Senior Citizen Savings Account: It can be opened by anyone who is over 60 years to age.
− It qualifies for Section 80C tax benefit.
About the news

• AIFIs will be required to maintain a minimum total capital of 9 per cent by April 2024, wherein minimum tier-I capital
will need to be at 7 per cent and common equity tier-I (CET-1) capital at 5.5 per cent.
• All financial subsidiaries, except those engaged in insurance and non-financial activities (both regulated and unregulated),
will need to be fully consolidated for the purpose of capital adequacy.
• The RBI has capped AIFIs’ investments in capital instruments of banking, financial, and insurance entities at 10 per
cent of their capital funds. AIFIs will not be allowed to acquire a fresh stake in a bank’s or AIFI’s equity shares if the
acquisition leads to its holding exceeding 5 per cent of the investee’s equity capital.
About BASEL-III Norms

• Basel-III norms were adopted by financial regulators to improve the banking sector’s ability to absorb shocks arising
from financial and economic stress.
− It was developed by Basel Committee on Banking Supervision in the aftermath of the financial crisis of 2007-08.
• It mandates banks to maintain a CAR or Capital to Risk-weighted Assets (CRAR) at least 8%.
− CRAR is a ratio that compares the value of a bank’s capital (or net worth) against the value of its various assets
weighted according to risk.
− RBI mandates banks to maintain a minimum CAR of 9%.
Note: India has five AIFIs regulated by the central bank, namely the Export-Import Bank of India (EXIM Bank), the
National Bank for Agriculture and Rural Development (Nabard), the National Bank for Financing Infrastructure and
Development (NaBFID), the National Housing Bank (NHB), and the Small Industries Development Bank of India (SIDBI).
SMALL SAVINGS SCHEMES

Context: In Finance Ministry hiked the interest rates for some small savings schemes by 20-110 basis points for the
January-March quarter.
About Small Savings Schemes

• They are designed to provide safe and attractive investment options to the public and at the same time to mobilise
resources for development.
• Beneficiary: Conservative investors and those who have retired or are nearing retirement rely mostly on small savings
schemes, monthly income schemes or fixed deposits.
• Calculation of Interest Rates: Method to calculate interest rates for small savings schemes has been provided by the
Shyamala Gopinath Committee.
− The committee had recommended that the interest rates of various schemes be 25 to 100 basis points higher
than the yields of similar maturity government bonds.
− As per Reserve Bank of India guidelines, the rates on these small savings schemes are calculated on the yields
on government securities (G-secs).
− The interest rates of savings schemes are decided by the government and vary every 3 months to a year. Reference
period for small savings rates for the January-March quarter is September-November.
• National Small Savings Fund (NSSF): All deposits received under various small savings schemes are pooled in this Fund.
− Money in the fund is used by the central government to finance its fiscal deficit.
• Categories of small savings schemes: They can be grouped under 3 categories as below:
1.
Post Office Deposit: It includes savings, recurring, and time deposits with 1, 2, 3, and 5-year maturities and the
monthly income account.
2.
Savings Certificates: These are the two investment options; National Savings Certificate (NSC) and Kisan Vikas
Patra (KVP)
3.
Social Security Schemes: This includes Public Provident Fund (PPF), Senior Citizens Savings Scheme (SCSS), and
the Sukanya Samriddhi Yojana.
Highlight of Hike
• According to the revised rates, beneficiaries will earn 7.00%, 8.00%, and 7.10% interest from National Savings
Certificate (NSC), Senior citizen savings scheme, and monthly income account scheme, respectively.
− The interest rates for the Public Provident Fund (PPF), Kisan Vikas Patra, and Sukanya Samriddhi Account scheme
and some of the term deposits remain the same.
− In September 2022 also, Central government increased the interest rates of these small savings schemes by 10-30
basis points for the October-December quarter after keeping it unchanged for more than two years.
• Advantage of Hike: It will serve as protection against high inflation and interest rates.
• Objective: To balance the interests of senior citizens and persons saving in instruments without tax benefits.
− Checking the interest rate for small savings, as it essentially translates into a higher interest cost for the government
when it borrows against the National Small Saving Fund.
PILOT ON COIN VENDING MACHINE: RBI

Context: RBI Governor has said that the central bank will start a pilot project to launch QR code based coin vending
machines.
About the project

• These vending machines will dispense coins against debit to the customer’s account.
• These vending machines will dispense coins using UPI instead of physical tendering of banknotes.
• This will enhance the ease of accessibility to coins.
• Proposed mechanism for coin dispensation would be a departure from the conventional machines which relied on
banknotes for facilitating coin exchanges.
• Machine would eliminate the need for physical tendering of banknotes and their authentication.
ZOMBIE BANKS
Context: Recent study shows that Zombie banks account for 16% of state-owned banks’ equity, 23% of non-performing
loans and 18% of their lending portfolio within the country.
About Zombie Banks

• Zombie bank is a bank that is practically insolvent but continues to exist through hiding bad loans on their balance
sheet.
• The bank can continue its operations by rolling over bad loans instead of writing them off. This process is called as
forbearance lending or zombie lending.
• Factors that help the zombie banks to continue their business under three groups:
− Fiscal means ( via subsidies or tax concessions and government sponsored capitalisation);
− Indirect support ( by easing competition for the organisation through administrative restrictions on competitors);
and
− Credit provided to the institution.
History Of Zombie Banks

• Appearance of zombie banking traces back to the Japanese banking crisis of 1990s.
• Later, zombie banking returned with the global financial crisis with several banks being allowed to live without health
in the US and Western Europe. Governments supported many such banks with money, and they came back.
Impact of Zombie Banks

• Zombies create ill effects on the rest of the economy.
• The BIS (Bank for International Settlement), observes that zombies are less productive.
− They crowd out (depresses) growth of the more productive firms by locking money (so-called “congestion effects”)
in inefficient firms (loans not returned).
• Non-treatment of zombie banks will produce bigger financial catastrophe as banks are extending risk and continue
to give loans to failed businesses.
ANTARDRISHTI
Context: In June 2023, RBI Governor launches financial inclusion dashboard ‘Antardrishti’.
About the dashboard

• The dashboard would provide the necessary knowledge to evaluate and track the development of financial inclusion
by recording relevant data.
• This tool will also make it possible to assess the degree of financial exclusion at a local level across the nation so that
such places may be addressed.
• The dashboard is presently intended for internal use in the RBI.
MAHILA SAMMAN SAVINGS CERTIFICATE

Context: The Mahila Samman Savings Certificate, a small savings scheme for women and girls, was introduced in
Union Budget 2023–24.
About the saving Certificate

• It is a small savings scheme backed by the government.
• It is a one-time scheme available for two years, from April 2023-March 2025. It will offer a maximum deposit facility
of up to Rs.2 lakh in the name of women or girls for two years at a fixed interest rate.
• It can be done only in the name of a girl child or woman. A woman or the guardian of a minor girl child can open a
Mahila Samman Saving Certificate scheme.
• The minimum deposit amount under the Mahila Samman Savings Certificate is Rs.1,000 in multiples of rupees one
hundred. The maximum deposit amount is Rs.2 lakh.
• The maturity period of the Mahila Samman Savings Certificate account is two years.
PUBLIC TECH PLATFORM FOR FRICTIONLESS CREDIT

Context: The Reserve Bank of India announced the launch of the Public Tech Platform for Frictionless Credit (PTPFC)
pilot project.
About the Public Tech Platform for Frictionless Credit (PTPFC)

• The PTPFC has been created by the Reserve Bank Innovation Hub (RBIH), a wholly owned subsidiary of the central bank.
− The fully owned Subsidiaries of RBI include the following:
Deposit Insurance and Credit Guarantee Corporation of India (DICGC),
Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL),
Reserve Bank Information Technology Private Limited (ReBIT),
Indian Financial Technology and Allied Services (IFTAS), and
Reserve Bank Innovation Hub (RBIH).
• The aim of the pilot project is to connect borrowers and lenders, which will make credit more accessible to millions
of individuals looking for small loans.
• The PTPFC will be enabling the disbursal of non-collateral-based loans for Micro, Small and Medium Enterprises
(MSMEs), Kisan Credit Card loans up to Rs 1.6 lakh, dairy loans, personal loans, and home loans.
How RBI’s PTPFC works?

• It will have an open architecture, open Application Programming Interfaces (API) and standards, to which all financial
sector players would be able to connect seamlessly in a ‘plug and play’ model.
− An open API, also called public API, is an application programming interface made publicly available to software
developers.
− Open APIs are published on the internet and shared freely, allowing the owner of a network-accessible service
to give universal access to consumers.
• The digital platform allows central and state government entities, banks, credit information companies, and digital
identity authorities to share information.
• This allows the various stakeholders in the lending process to collate the data for each borrower faster leading to
speedier processing of loan requests.
• Apart from faster dispersion of loans to borrowers, the digital platform will help in reducing costs while increasing
transparency, efficiency, and scalability.
RESERVE BANK – INTEGRATED OMBUDSMAN SCHEME (RB-IOS)

Context: The number of complaints received under the Reserve Bank of India’s ombudsman schemes and consumer
education and protection cells has seen an increase of 9.39 per cent compared to the previous year.
About Ombudsman
• An ombudsman is an official of the government who deals with complaints made by ordinary citizens against public
organizations. This concept originated in Sweden.
• It refers to an officer appointed by the Legislature to handle complaints against a service or administrative authority.
• Need for an ombudsman in an organisation:

− Address concerns: Ombudsman gives an opportunity for the public to express their grievances against an
organisation. This feedback will help in improving service to the public.
− Impartial working: Ombudsman works in an impartial, confidential and independent manner. They function
independently without the influence of the organisation.
− Avoid duplication of work: The ombudsman can carry out a single investigation into multiple complaints about
the same topic, which avoids duplication and excessive cost.
− Streamlining complaints: Ombudsman will establish a procedure for taking and resolving complaints from the
public.
The Integrated Ombudsman Scheme of the RBI

Launch •
The Reserve Bank – Integrated Ombudsman Scheme (RB-IOS) was launched in November 2021 after
integrating three erstwhile ombudsman schemes of RBI.
•
These included the Banking Ombudsman Scheme, 2006; the Ombudsman Scheme for Non-Banking Financial
Companies, 2018; and the Ombudsman Scheme for Digital Transactions, 2019.
•
The scheme will also bring under its ambit Non-Scheduled Primary Co-operative Banks with a deposit size
of Rs 50 crore and above.
Legality RBI framed the scheme by exercising powers under:
•
Section 35A of the Banking Regulation Act, 1949 (10 of 1949)
•
Section 45L of the Reserve Bank of India Act, 1934 (2 of 1934)
•
Section 18 of the Payment and Settlement Systems Act, 2007 (51 of 2007)
Objectives The scheme will provide cost-free redressal of customer complaints involving deficiency in services provided
by entities regulated by RBI, which have not been resolved within a period of 30 days by the regulated entity.
Appellate Executive Director-in charge of Consumer Education and Protection Department of RBI.
authority
Filing complaints •
Visiting the website
under the scheme •
Through a dedicated email id
•
Physical application directed to ‘Centralized Receipt and Processing Centre’ in Chandigarh
•
Contacting a dedicated toll-free number
Features of the • Category neutral: Complainant need not identify under which scheme he/she should file complaint with
scheme the Ombudsman.
• Narrowing grounds for rejection: ‘Deficiency in service’ has been provided as the ground for filing a
complaint, with a specified list of exclusions. Hence, complaints would no longer be rejected simply on
account of “not covered under the grounds listed in the scheme”.
• Jurisdiction neutral: The scheme operates on a ‘One Nation One Ombudsman’ approach, making it
jurisdiction neutral.
• Usage of technology: RBI will make use of Artificial Intelligence tools so that regulated entities and
investigating agencies could coordinate in a better way in the fastest time possible.
• Representing regulated entity: The Principal Nodal Officer in the rank of a General Manager in a Public Sector
Bank or equivalent will be responsible for representing the Regulated Entity and furnishing information in
respect of complaints filed by customers.
• Single email id: Customers can file complaints, submit documents, track status, and give feedback through
a single email address.
• Right to appeal: Regulated entity will not have the right to appeal against the order in cases where the
ombudsman has ruled against it for not furnishing satisfactory and timely information/documents.
Significance of • Customer satisfaction: The ombudsman scheme is expected to enhance grievance redressal mechanism
the scheme against RBI’s regulated entities and improve customer satisfaction.
• Uniform standards: The scheme will ensure uniformity and streamline user-friendly mechanisms across
the country.
• Easy access to services: The integrated platform allows for easy lodging and tracking of complaints by
customers. This will benefit bank customers from rural areas.
PROJECT MARIANA
Context: Bank for International Settlements (BIS) and central banks of France, Singapore and Switzerland have
successfully tested cross-border wholesale CBDCs.
About the Project

• Project Mariana is a collaborative effort involving the Bank for International Settlements (BIS) and the central banks
of France, Singapore, and Switzerland
• The project tested the cross-border trading and settlement of wholesale central bank digital currencies (wCBDCs)
between financial institutions, using new decentralised finance (DeFi) technology concepts on a public blockchain.
• The project’s proof of concept successfully tested the cross-border trading and settlement of hypothetical euro,
Singapore dollar and Swiss franc wCBDCs between simulated financial institutions. The process relied on three
elements:
− A common technical token standard provided by a public blockchain to facilitate exchange and interoperability
between the different currencies.
− Bridges for the seamless transfer of wCBDCs between different networks.
− An Automated Market Maker (AMM), which is a specific type of decentralised exchange to trade and settle spot
FX transactions automatically.
PROMPT CORRECTIVE ACTION (PCA) FRAMEWORK

Context: RBI has extended the PCA framework to government-owned non-banking financial companies (NBFCs). This
move aims to enhance the regulatory oversight of NBFCs and mitigate the risks associated with their financial operations.
Meaning of the Framework

PCA is a framework under which banks with weak financial metrics are put under watch by the RBI. The Prompt
Corrective Action (PCA) is a framework introduced by the Reserve Bank of India (RBI) in 2002. It serves as a structured
early-intervention mechanism for banks that face financial distress due to factors such as poor asset quality and loss of
profitability.
Parameters of PCA Framework

The PCA framework uses three parameters as regulatory trigger points to determine the financial health of banks:
• Capital to Risk Weighted Assets Ratio (CRAR): It measures a bank’s capital adequacy by comparing its capital to its
risk-weighted assets.
• Net Non-Performing Assets (NPA): It indicates the quality of a bank’s loan portfolio by measuring the percentage of
loans that are not being repaid.
• Return on Assets (RoA): It assesses a bank’s profitability by measuring its ability to generate returns from its assets.
Objectives of PCA Framework

The PCA framework aims to achieve the following objectives:
• Enable supervisory intervention at an appropriate time to address financial distress in banks.
• Require banks to implement remedial measures in a timely manner to restore their financial health.
• Address the issue of Non-Performing Assets (NPAs) in the Indian banking sector.
• Alert regulators, investors, and depositors about the potential risks associated with a bank’s financial health.
Significance of PCA Framework

The PCA framework plays a crucial role in maintaining the stability and soundness of the banking sector in India. It
helps in:
• Identifying banks that are at risk of financial distress and taking corrective measures to prevent their failure.
• Ensuring timely and effective intervention by the RBI to address issues related to capital adequacy, asset quality, and
profitability of banks.
• Building confidence among depositors, investors, and stakeholders by promoting transparency and accountability in
the banking system.
PREPAID PAYMENT INSTRUMENTS (PPIS)

Context: The National Payments Corporation of India (NPCI) has recommended interchange fee on certain merchant
UPI transactions made using prepaid payment instruments (PPI) like online wallets.
About Prepaid Payment Instruments (PPIs)

• Payment and Settlement Act, 2005 defined Prepaid Payment Instruments (PPIs) as instruments of payment that
facilitate buying of goods and services, including the transfer of funds, financial service and remittances, against the
value stored within or on the instrument.
• The value stored in the instrument is represented by the value that has already been paid for by the holder or the
instrument by any method such as, by cash, by debit from a bank account, credit card or even from other PPIs.
• PPIs can come in the form of payment wallets, smart cards, magnetic chips, vouchers, mobile wallets etc. any instrument
that can be used to access a prepaid amount is a PPI.
Types of PPIs
• According to the RBI, PPIs in the country can be issued under three systems. They are as follows:
− Closed system: PPI issued is only valid when used against purchases from the entity which issued it in the first place.
− Semi-closed system: PPIs can only be issued by banking institutions approved by the RBI or non-banking institutions
authorized by the RBI.
− Open system: PPIs under this system can only be issued by banking institutions that have been approved by
the RBI.
− These instruments can be used to facilitate purchases, remittances, cash withdrawals, etc. Examples of PPIs
issued under this system are debit cards and credit cards.
UPI-PAYNOW INTEGRATION
Context: India’s Unified Payments Interface (UPI) and Singapore’s PayNow have been recently integrated
More on the News

• UPI Integration: To enable faster remittances between India and Singapore, India’s retail payment system, UPI, and
its equivalent network in Singapore, PayNow, have been integrated.
− Singapore has now become the first country with which cross-border Person to Person (P2P) payment facilities
have been launched.
• Process: The PayNow-UPI linkage is the world’s first such linkage featuring cloud-based infrastructure and participation
by non-bank financial institutions.
− It will allow users of the two quick payment systems in either nation to send money across borders quickly, securely,
and affordably via their respective mobile apps.
− It is possible to send or receive money from India using only a UPI-id, cellphone number, or Virtual Payment
Address for money held in bank accounts or e-wallets (VPA).
− Additional information such as bank account number, IFSC code are not required.
• Benefits: This linkage will allow users from both countries to access faster and more cost-efficient cross-border
remittances.
• Eligibility for Remittances: Currently, participating banks in India for receiving remittances through the UPI-PayNow
interlinkage are:
− Axis Bank
− DBS Bank India
− ICICI Bank
− Indian Bank
− Indian Overseas Bank
− State Bank of India
Unified Payments Interface (UPI) and PayNow

• UPI: UPI or Unified Payments Interface, developed by National Payments Corporation of India (NPCI), is a quick
payment method that enables the instantaneous transfer of funds through a mobile phone.
− Through the creation of a Virtual Payment Address (VPA), the risk of sharing bank account details is eliminated.
− The real-time system supports both Person-to-Person (P2P) and Person-to-Merchant (P2M) payments.
• PayNow: It is a fast payment system in Singapore.
− It enables peer-to-peer funds transfer service, available to retail customers through participating banks and Non-
Bank Financial Institutions (NFIs) in Singapore.
− It allows users to send and receive instant funds from one bank or e-wallet account to another in Singapore
by using just their mobile number, Singapore National Registration Identity Card (NRIC)/Foreign Identification
Number (FIN), or VPA.
Advantages of this Linkage

• Low- Cost Money Transfer: The UPI-PayNow Linkage will enable users of each of the two fast payment systems to
make instant, safe, convenient, quick, low-cost fund transfers on a reciprocal basis without a need to get on board
the other payment system.
− This linkage will reduce the remittance cost by 10%.
− This move will also bolster the trade and remittance flow between the two countries.
• Facilitate Indian Diaspora: This Linkage will help the Indian diaspora in Singapore, especially migrant workers/students.
• Interoperability: There will be interoperability of the two digital payment networks, allowing seamless remittances
between the two countries at a highly competitive rate.
• Boost Tourism and Business: This integration will also help Indian tourists pay in Singapore using UPI. It will benefit
the individuals and businesses in both the countries.
• Digital Connectivity: The link between the two systems also paves the way for establishing more comprehensive
digital connectivity between the two countries.
• Less Dependence on SWIFT: A global real-time linkage of the payment systems reduces the dependency on the SWIFT
network, thereby optimizing time and resources and enhancing cross-border remittance.
• Incentive for Innovators: This Linkage will create an enabling environment for innovators and regulators to accelerate
the delivery of effective digital payments solutions.
ACCOUNT AGGREGATOR (AA)

Context: SEBI has joined RBI’s AA framework system.
About AA ecosystem
• AA ecosystem aims to transform how credit is processed and accessed in the country.
• It is a type of RBI regulated non-banking finance company (NBFC).
• It helps an individual securely and digitally access and share information from one financial institution they have an
account with to any other regulated financial institution in AA network.
• Significance of AA: Consolidated dashboard of all bank accounts of user in one place, User controlled data sharing etc.
GLOBAL CONFERENCE ON FINANCIAL RESILIENCE

Context: Reserve Bank of India Governor addressed the Global Conference on Financial Resilience.
About Global Conference on Financial Resilience

• Conference Theme: Financial Stability: Framework, Monitoring and Implementation.
• It is being organised by the College of Supervisors in collaboration with the Centre for Central Banking Studies (CCBS),
Bank of England, London.
About College of Supervisors (CoS)

• It is an academic advisory council setup by RBI to further strengthen supervision over regulated entities.
• The CoS is headed by former deputy governor N S Viswanathan, and it has five other members.
• Objective: To identify areas where skill building or upskilling is required, plan and develop curricula of all programmes,
benchmark the programmes with international standards or best practices, and develop appropriate teaching methods.
About Centre for Central Banking Studies (CCBS)

• Bank of England’s CCBS runs an extensive programme of events for central bankers and financial regulators from
around the world.
• CCBS was established in 1990 and is one of the oldest providers of international central banking technical cooperation
and assistance.
DOMESTIC SYSTEMICALLY IMPORTANT BANKS (D-SIBS)

Context: The failure of Silicon Valley Bank in the US raises questions about the safety of banks in India, especially the
domestic systemically important banks (D-SIBs).
Background
• India remained a safe haven during the 2008 global financial crisis, with domestic banks, backed by sound regulatory
practices, showing strength and resilience.
• A decade and a half on, Indian banks remained unaffected by the failure of Silicon Valley Bank (SVB) in the US last
week, despite the global interconnectedness in the financial sector.
What is the basis for the confidence in the resilience of Indian banks?
• Different balance sheet structure: A reason why an SVB-like failure is unlikely in India is that domestic banks have a
different balance sheet structure, where bulk withdrawal of deposits is not allowed.
• Deposits from households: A major portion of bank deposits in India comes from household savings, unlike the US,
where a large portion of bank deposits are from corporates.
• Public sector dominance: A large chunk of Indian deposits is with public sector banks, and most of the rest is with
very strong private sector lenders such as HDFC Bank, ICICI Bank, and Axis Bank.
• Government support: The Indian government has always stepped in when banks have faced difficulties, giving
customers assurance about the safety of their savings.
− The rescue of Yes Bank is a prime example of the government and regulators’ commitment to protecting depositors’
money.
Domestic Systemically Important Banks (D-SIBs)

• A D-SIB is a bank that is considered to be so important to the financial system that its failure could cause significant
disruption.
• These banks are perceived as banks that are ‘Too Big To Fail (TBTF)’ because of their size, cross jurisdictional activities,
complexity and lack of substitute and interconnection.
• Origin of the concept: The concept of D-SIBs originated after the 2008 global financial crisis.
− The crisis which highlighted the need to identify and regulate banks that pose a potential risk to the stability of
the financial system.
− G-SIBs: The Financial Stability Board (FSB), in consultation with the Basel Committee on Banking Supervision (BCBS)
and national authorities, has identified Global Systemically Important Banks (G-SIBs) since 2011.
− In line with the G-SIBs, the Reserve Bank of India (RBI) identified Indian banks that are important to the country’s
financial system and designated them as D-SIBs.
RBI ANNUAL REPORT 2022-23

Context: The Reserve Bank of India (RBI) released its annual report for 2022-23, where it shed light on different aspects
of the Indian economy, ranging from GDP growth to inflation.
Key takeaways from the RBI’s report

GDP Growth •
The RBI projects India’s real GDP growth for FY24 at 6.5%, consistent with its previous predictions.
Forecast •
Despite challenges from the global economic outlook, strong macroeconomic factors, favourable financial
conditions, and expected dividends from past reforms put India in an advantageous position.
Moderate •
Inflation has moderated due to downward corrections in global commodity and food prices.
Inflation •
The RBI’s monetary policy measures, including a cumulative 250 basis point increase in the key repo rate, have
Risks helped steer the disinflationary process.
•
With a stable exchange rate and a normal monsoon, headline inflation is expected to decrease to 5.2% from the
average level of 6.7% recorded last year.
Consumer • The RBI’s consumer confidence survey indicates that consumers perceive an improvement in the current economic
Confidence situation and household income.
Growth • Future expectations remain positive, and households are expected to increase spending on non-essential items.
• Burgeoning credit growth, especially in housing and personal loans, reflects steady domestic household demand.
Monsoon •
The prospects of the kharif crop depend on the progress of rainfall during the South-West Monsoon (SWM).
and El Nino •
The Indian Meteorological Department forecasts normal SWM rainfall at 96% (+/- 4%) of the long period average.
Factor •
However, the actual performance of the SWM rains will depend on factors like possible rainfall deficiency due to
an El Nino event and counterbalancing effects like the positive Indian Ocean Dipole.
Capex and • The sustained increase in the government’s capital expenditure is expected to stimulate higher private investment
Private in 2023-24.
Investment • The Union Budget 2023-24 has increased the budgeted capital expenditure by 37.4%, with a significant allocation
for railways and interest-free loans to states for capital expenditure.
• Measures like the production-linked incentive (PLI) scheme and initiatives to enhance logistics efficiencies are
expected to boost growth momentum.
Resilient •
Despite recent financial sector turmoil globally, the domestic banking sector remains resilient.
Banking •
However, the RBI emphasizes the need to reassess risks to financial stability and strengthen the resilience of
Sector financial institutions in the context of monetary policy tightening.
•
Constant review and strengthening of capital buffers and liquidity positions are necessary.
•
The RBI plans to announce policy measures, such as guidelines on expected loss-based provisioning, during
2023-24.
EVERGREENING OF LOANS
Context: RBI Governor has raised red flags against innovative methods employed by banks for evergreening of loans.
Evergreening of loans
• Evergreening of loans is a form of zombie lending that acts as a temporary fix for the bank. It prevents an account
from turning into a non-performing asset (NPA), thus impacting their profitability.
− Banks usually dress up bad loans and provide additional funds to companies who don’t have the capacity to repay.
− Evergreening usually takes place due to the unholy relationship between bankers and borrowers.
• Different methods adopted:
− Bringing together two lenders to evergreen each other’s loans through sale and buyback of loans or debt
instruments.
− Persuading good borrowers to enter into structured deals with a stressed borrower to conceal the stress;
− Adjust borrower’s repayment obligations by using internal or office accounts.
− Disbursing new/additional loans to the stressed entities closer to the repayment date of the earlier loans.
• Need for evergreening:
− Evergreening of loan accounts is done to keep the reported NPA levels low. This was encouraged between 2000
and 2014 as a form of liberal restructuring.
− In some cases, evergreening becomes a necessity to try save a borrower from becoming NPA by extending
temporary liquidity.
• Effects of evergreening:
− Evergreening of loans leads to crowding-out effect where credit is being diverted to weak entities without creation
of any assets.
− Good borrowers will be excluded from credit for expanding their business.
• Preventing evergreening:
− Regular audit must be conducted by RBI to detect such cases.
− Imposition of penalties through cancellations of unvested stock options.
− Withdrawal of monetary bonuses of officers involved in evergreening.
RISK WEIGHT FOR LENDING

Context: The Reserve Bank of India (RBI) has issued regulatory measures to banks and NBFCs to increase risk weights
associated with consumer credit and bank credit by an additional 25 percentage points.
More about the news

• The Reserve Bank of India (RBI) has directed banks and non-banking financial companies (NBFCs) to reserve more
capital for risk weights.
• The RBI increased the risk weight on categories of unsecured loans namely credit cards, consumer durable loans and
personal loans.
• The mandatory risk weight requirement has been increased by 25 percentage points. i.e.
− Bank lending to non-banking finance companies which are catering to segment like credit cards, consumer durable
loans and personal loans will see an increase in risk weights to 125 per cent as against the present 100 per cent.
• This would be applicable to unsecured personal loans, credit cards and lending to NBFCs.
• The directions are expected to result in higher capital requirements for lenders and thereby, an increase in lending
rates for consumers.
What are risk weights?

• It refers to the risk entailed by a borrower being unable to meet their obligations or defaulting on commitments. ‘Risk
weights’ are an essential tool for banks to manage this risk.
• It is an indicator of the essential holding the lender should ideally have to adjust the associated risk. This is what
the RBI has directed be increased.
− Every rupee lent by the bank is a cost or has an implication on its capital position. Depending on the nature
of the loan and the inherent risk associated with it, risk weights are attributed. Banks have to ensure that their
capital is enough to cover these risk weighted assets.
− Each asset class has varying risk weights. For instance, risk weights for home loans could range from 50 per cent
to 75 per cent, for gold loans it is 75 per cent. Corporate loans are charged 100 per cent given the risk they carry.
How do Risk weight affect borrowers?

• Lower the risk weight, lower is the rate of interest. Therefore, risk weights impact borrowers indirectly and is felt
through the pricing of loans.
• For instance, home loans have the lowest interest rate among retail products because lower risk weights allow
banks to pass on the advantage of capital consumption. Personal loans and credit cards have the highest interest
rate because of their tenure and charge on capital.
Note: For the banking system, share of unsecured loans has risen to 10 per cent and has been the fastest growing segment in the
last two years. These loans are including consumer durable loans, largely used for self-consumption or to acquire non-income
generating assets. Since it is not possible to monitor the end use of these loans, the true repayment ability of the borrower cannot
be ascertained.
PRICE MONITORING CENTRES

Context: The Ministry of Consumer Affairs, Food & Public Distribution suggested having price monitoring centres for
essential commodities in all districts of India.
More about news

• Centre intended to have 750 price monitoring centres by March 31st 2023.
• As per current status, 50% will be funded by State government and 50% will be funded by Central Government for
infrastructure.
Current setup for Price Monitoring

• Price Monitoring Division (PMD) in the Department of Consumer Affairs is responsible for monitoring prices of selected
essential commodities.
• The activities of the division include monitoring of the retail and wholesale prices, and spot and future prices of
selected essential commodities on a daily basis.
• Prices are reported daily on the website.
• Price Monitoring Division analyses the price situation and gives advance feedback for taking preventive measures to
help policy interventions at appropriate time to prevent undesired shortfall in the availability of essential commodities.
• Price is monitored for twenty two essential commodities (Rice, Wheat, Atta, Gram Dal, Tur (Arhar) Dal, Urad Dal
, Moong Dal, Masur Dal, Sugar, Gur, Groundnut Oil, Mustard Oil, Vanaspati, Sunflower Oil, Soya Oil, Palm Oil, Tea,
Milk, Potato, Onion, Tomato and Salt) based on data collected from 505 market centres spread across the country
representing North, West, East, South and North-eastern regions of the country.
PAYMENTS VISION 2025

Context: In June 2022, the Reserve Bank of India (RBI) has unveiled ‘Payments Vision 2025’, to outline the thought
process for the period up to December 2025.
Payment System in India

• Payment System is defined as ‘the system which enables payment to be effected between a payer and a beneficiary,
involving clearing, payment or settlement service or all of them, but doesn’t include a stock exchange’.
• It is the backbone of any economy and plays a vital role in economic development, financial stability, and financial
inclusion.
• With the deepening digitalization of payments and other financial services, the Indian payment system is also fast
becoming digital. E.g. India recorded >500% growth in merchants accepting digital modes of payments between 2019
and 2021.
• In digital payments, UPI, IMPS and PPI transactions registered a CAGR of 104%, 39% and 13% respectively during
the same period.
Payments Vision 2025

• Building upon the four goalposts (competition, cost, convenience and confidence) of the Payments Vision 2021, the
Payments Vision 2025 has set five anchor goalposts as:
− Integrity, Inclusion, Innovation, Institutionalisation and Internationalisation for enhanced outreach, customer
centricity, cyber security and digital deepening.
• Core Theme: E-payments for everyone, everywhere, everytime (4Es).
• Vision: Provide every user with Safe, Secure, Fast, Convenient, Accessible, and Affordable e-payment options.
Key Features of Payments Vision 2025

• Bring Central bank Digital Currencies (CBDC) with Framework for regulation of all significant intermediaries in payments
ecosystem, i.e. BigTechs, Fintechs, Buy Now Pay Later (BNPL) etc.
• Check the feasibility of the creation of a Digital Payments Protection Fund to protect victims of online payment frauds.
• Enabling Geo-tagging of digital payment infrastructure and transactions with revisiting guidelines for prepaid payment
instruments (PPIs), including closed system PPIs.
• Link credit cards and credit components of banking products to UPI.
• Bringing in enhancements to Cheque Truncation System (CTS), including One Nation One Grid clearing and settlement
perspective.
• Real-time reporting of payment frauds.
INCREMENTAL CRR
Context: The Reserve Bank of India (RBI) has decided to discontinue the Incremental Cash Reserve Ratio (I-CRR) in
a phased manner.
More about the news

• The I-CRR, which was introduced as a temporary measure to manage surplus liquidity, required scheduled banks
to maintain a 10 percent reserve on the increase in their net demand and time liabilities (NDTL) between May 19,
2023, and July 28, 2023.
• The measure was implemented to absorb excess liquidity generated by various factors, notably the return of Rs 2,000
notes to the banking system.
Incremental Cash Reserve Ratio (I-CRR)

• The I-CRR is an additional cash balance which the RBI can ask banks to maintain over and above the cash reserve
ratio (CRR).
• CRR is the minimum amount of the total deposits that banks have to keep with the central bank – for a specific period.
• The I-CRR, like the Cash Reserve Ratio (CRR), required banks to set aside a portion of their funds with the RBI.
• However, the I-CRR specifically targeted the increase in net demand and time liabilities during the specified period.
• This tool is used when the banks see a sudden surplus of deposits. This would lead to banks’ lending more and
infusing more money in the economy and creating inflation.
• Therefore, a different CRR is used for the deposits from a particular date, to ensure that excess liquidity is absorbed
by the RBI in the form of Incremental CRR.
Term in News
Greedflation •
Greedflation simply means (corporate) greed is fuelling inflation. In other words, instead of the wage-price spiral,
it is the profit-price spiral that is in play.
•
In essence, greedflation implies that companies exploited the inflation that people were experiencing by putting
up their prices way beyond just covering their increased costs and then used that to maximise their profit margins.
That, in turn, further fuelled inflation.
RECESSION
Context: There is a growing sense that a global recession may not happen and that some of the biggest economies,
such as the US and the Eurozone countries, may achieve a soft landing.
About Recession
• Recession is when the economy stops growing and starts shrinking. It means not only shrinking GDP but also declining
incomes, employment, industrial production and retail sales.
• It occurs when the value of goods and services produced in a country known as the gross domestic product declines
for two consecutive quarters, or half a year.
• Causes:
− Rising unemployment.
− Rises in bankruptcies, defaults, or foreclosures.
− Falling interest rates.
− Lower consumer spending and consumer confidence.
− Falling asset prices, including the cost of homes and dips in the stock market.
• Recession can be prevented by targeted tax cuts or spending increases on safety net programs like unemployment
insurance etc.
CHAPTER 2
Fiscal Policy and Taxation

STATE FINANCES
Context: In January 2023, RBI has released its annual publication titled “State Finances: A Study of Budgets of 2022-
23” with the theme “Capital Formation in India - the Role of States”.
Key Findings of Report

• Aggregate Revenue Receipts of State Governments and UTs was 14.9% of the GDP, out of which 55% was from own
taxes.
• Aggregate Expenditure of State Governments and UTs was 18.5% of the GDP, out of which 83% was revenue expenditure
and capital expenditure was 17%.
• Improved fiscal health of States on the back of a broad-based economic recovery after a sharp pandemic-induced
deterioration in 2020-21.
− States’ gross fiscal deficit (GFD) is budgeted to decline in 2022-23 due to high revenue collections.
− States’ debt is budgeted to ease in 2022-23 as against 31.1% in 2020-21. (Although improved, but it is still higher
than 20% as recommended by FRBM Review Committee.)
− Higher Budgeted Capital Outlay from states in 2022-23.
DISCARD RETURN OPTION

Context: The Income Tax Department has launched a new feature called Discard Return.
More about the news

• The Income Tax Department has launched a new feature dubbed ‘Discard Return’ wherein individuals could delete
their previously submitted income tax return (ITR) and file a completely new ITR.
• This new feature allows an individual to completely discard, i.e., delete their previously filed unverified income tax
return (ITR).
− This means that the ITR that was previously submitted by an individual but not verified can now be deleted from
the income tax department’s records.
• This will help an individual to avoid going through the revised ITR process of correcting mistakes in the originally filed
ITR.
TRANSFER PRICING
Context: Supreme Court has altered the approach to resolving transfer pricing disputes in India.
More about the news

• In a significant ruling, the Supreme Court on April 19, 2023, set aside an earlier Karnataka High Court ruling which
held that in all cases where the Income Tax Appellate Tribunal (ITAT) has determined the arm’s length price (ALP),
the determination of the ITAT is final and cannot be the subject matter of scrutiny by the High Court.
• The Supreme court held that any ALP determined outside the purview of relevant transfer pricing (TP) provisions
can be considered as ‘perverse’ and may be considered as a substantial question of law. And in such cases, the
decision of the tribunal is not final.
Fiscal Policy and Taxation 23
− In such cases, both, the Indian Revenue Authorities (IRA) as well as taxpayers, can approach a HC after a decision
by the ITAT.
About Transfer Pricing

• Transfer Price is the actual price charged in a transaction between related entities which are part of the same Multi
National Enterprises (MNE) group.
• The tax rates vary from country to country.
• So, there is incentive for MNE group to set transfer prices for transactions between its group members such that tax
liability for the group as a whole is minimized. This involves setting transfer prices in such a way that less profits are
booked in countries with higher tax rates.
• For example: A company which is a member of group, manufactures products in a high tax country. The company
would sell them at a low price/ profit to its affiliates/associates in tax haven countries at lower prices/ profits. These
prices are lower than the prices that would have obtained had these enterprises been unrelated and dealt at “arm’s
length” and erode the tax revenues of the host country. Thus, transfer pricing refers to tax avoidance practiced by
MNE groups by setting transfer prices of intra group transactions such that these differ from the prices that would
be obtained had the group members been unrelated entities dealing at arm’s length.
How does transfer pricing work?

• The I-T Department gives the following example: “Suppose a company A purchases goods for 100 rupees and sells it
to its associated company B in another country for 200 rupees, who in turn sells in the open market for 400 rupees.
• “Had A sold it (the good) direct, it would have made a profit of 300 rupees. But by routing it through B, it (A) restricted
it (profit) to 100 rupees, permitting B to appropriate the balance.
• “The transaction between A and B is arranged and not governed by market forces. The profit of 200 rupees is, thereby,
shifted to the country of B. The goods is transferred on a price (transfer price) which is arbitrary or dictated (200
hundred rupees), but not on the market price (400 rupees).”
About Arm’s Length Principle (ALP)

• ALP was agreed upon by all OECD member countries and adopted as an objective guideline for use by multinational
companies and tax administrations in international taxation.
• It means a price, at which transactions between persons other than associated enterprises are carried out in
uncontrolled circumstances.
− In other words, it means that the price a company pays to purchase goods or services from a related company
entity should be the same as if the two entities were unrelated (known as arm’s length price).
UN FRAMEWORK ON INTERNATIONAL TAX COOPERATION

Context: India voted for the ‘UN international tax convention’ proposal and the proposal to establish the terms of
reference for a ‘United Nations framework on international tax cooperation’ by August 2024.
About the news

• The resolution titled “Promotion of Inclusive and Effective International Tax Cooperation at the United Nations,” was
introduced by Nigeria.
• The resolution was backed by 125 countries, including India, China and Russia, and passed in the UN General Assembly.
• Developed nations such as the US, UK, Netherlands, Switzerland, Japan, France and Germany voted against it.
About the Framework

• The UN resolution proposes creating an ad-hoc committee accessible to all UN member-states.
• This committee, limited to 20 members selected for gender and regional balance, must establish guidelines for a
“United Nations Framework Convention on International Tax Cooperation” by August 2024.
• It advocates for a comprehensive strategy, intertwining economic, social and environmental policies, with a focus on
combating illicit financial flows.
Need of the Resolution

• The resolution marks an watershed moment, transferring rulemaking authority from the OECD to the UN.
• Address various issues related to global taxation:
− Tax evasion from MNCs and wealthy individuals
− Illicit financial flows
− Recovery of stolen assets
− Fair taxation of the digital economy etc
• Allows all countries to participate in developing the rules, by respecting tax sovereignty.
ONLINE GAMING
Context: The Goods and Services Tax (GST) Council, in its 50th meeting (July 2023) decided to levy a uniform 28 per
cent tax on full face value for online gaming, casinos and horse-racing. It also reduced the rate for uncooked/ unfried
snack pellets, cancer medicine and imitation zari thread.
Key Highlights
• This Tax would be on the initial amount paid on the game upon entry and not on the total value of each bet placed.
• GST would not be applicable on the winnings which could be used to place further bets.
− For instance, if an individual buys chips worth Rs 1000 in a casino, places a bet of Rs 100, and wins Rs 300, that
makes the net total amount Rs 1,300. The individual would be taxed at 28% on the initial entry amount of Rs
1,000 and not on the net amount of Rs 1,300
• Tax on offshore online gaming firms: Such companies will have to register themselves with the GST authorities and pay
the tax to offer their services to Indian gamers. Amendment to the Integrated GST Act 2017 will be made to enforce this.
Online Gaming
• Online games refer to games that are played over some form of computer network, most often the Internet. Online
games can range from simple text-based games to games incorporating complex graphics and virtual worlds.
• There are a variety of games from existing outdoor games like cricket, football, kabaddi, basketball, and hockey, to
indoor games like Rummy played in a virtual mode - mostly on mobile phones.
• Fantasy sport is an online prediction game, often played using the Internet in which participating users select, build
and act as managers of their virtual teams (constituted of real players or teams) that compete against virtual teams
of other users. The game occurs over a predetermined number of rounds which may extend from a single match to
an entire league or series.
• Game of skill: In a game of skill, the outcome is mainly determined by the player’s ability to apply his mental
capabilities. The player has major control and say how the game should proceed. To excel in a ‘game of skill’ a player
needs to have knowledge, training, strategy, and experience.
• Game of chance: In a game of chance, an outcome is mainly determined by the happening of a random event like
the throwing of dice, turning of the wheel, and drawing and stacking of cards.The player has little to no say in the
proceedings of the game. Example: gambling and betting
Online Gaming Industry in India

• Online gaming has seen a significant spike in demand across various online games such as Multiplayer online games,
Role-playing games, real-time strategy or skill games.
• Status & Potential:
− Current Value: Estimated to be worth $ 2.6 Bn.
− Projected Growth: A Compound Annual Growth Rate (CAGR) of approximately 27% over the next five years.
− User Base: India has the largest fantasy sports market, with a user base of 180 Mn.
− FDI: Attracted ₹15,000 crore in FDI till FY2022.
MUNICIPAL FINANCES
Context: In November 2022, the Reserve Bank of India (RBI) has released the Report on Municipal Finances.
Key highlights from the report

• The Reserve Bank of India (RBI) has highlighted several lacunae in the working of municipal corporations, stating that
there has been no appreciable improvement in their functioning despite institutionalisation of the structure of local
governance in India.
• Most municipalities only prepare budgets and review actuals against budgeted plans but do not use their audited
financial statements for balance sheet and cash flow management, resulting in significant inefficiencies.
• The RBI has said municipal corporations (MC) should adopt sound and transparent accounting practices with proper
monitoring and documentation of various receipt and expenditure items.
• MCs should explore different innovative bond and land-based financing mechanisms to augment their resources.
• The size of the municipal budgets in India are much smaller than peers in other countries, revenues are dominated
by property tax collections and devolution of taxes and grants from upper tiers of government, resulting in lack of
financial autonomy.
• According to the report, municipalities in India need to balance their budgets by law, and any municipal borrowing
needs to be approved by the State government. Municipal revenues/expenditures in India have stagnated at around
1 per cent of GDP for over a decade. In contrast, municipal revenues/ expenditures account for 7.4 per cent of GDP
in Brazil and 6 per cent of GDP in South Africa.
About Finance of Municipalities

The 74th Amendment Act 1992, through the 12th Schedule institutionalized the urban local bodies (ULBs) as the third
tier of the government to promote grassroots level democracy. It doesn’t provide for a corresponding ‘municipal finance
list’ in the Constitution and it has been completely left to the discretion of the State Governments.
52ND GST COUNCIL MEETING

Context: The 52nd GST Council met under the Chairpersonship of the Union Minister for Finance
Key Recommendations of 52nd GST Council Meeting

• Changes in GST rates of goods:
− Nil rate for millet flour: Food preparation of millet flour in powder form, containing at least 70% millets by weight,
will be exempt from GST when sold in loose form. This is aimed at promoting the consumption of millets.
− 5 % GST for packaged millet flour: If the millet flour is sold in pre-packaged and labeled form, it will be subject
to a 5% GST. This encourages the packaging and sale of millet flour in a consumer-friendly manner.
• Exemption of Extra Neutral Alcohol (ENA): Extra Neutral Alcohol (ENA) used for the manufacture of alcoholic liquor for
human consumption will be kept outside the ambit of GST. This simplifies the taxation structure for alcoholic beverages.
• Reducing GST on molasses: GST on molasses, which was previously taxed at a rate of 28%, will now be reduced to 5%.
• Conditional IGST exemption for foreign-going vessels: Foreign-flagged foreign-going vessels, when they convert to
coastal run (domestic routes), will receive conditional IGST exemption. This exemption is subject to the condition
that the vessels must be converted back to foreign-going vessels within six months. This measure aims to promote
tourism and coastal shipping.
SECURITIES TRANSACTION TAX

Context: The Government has raised the Securities Transaction Tax (STT) on futures and options contracts, in the
stock market by 25% from April 1, 2023.
About Securities transaction tax (STT)

• It is a tax levied at the time of purchase and sale of securities listed on stock exchanges in India.
• STT is governed by the Securities Transaction Tax Act (STT Act).
• Taxable securities include equity, derivatives, unit of equity-oriented mutual funds, unlisted shares sold under an
offer for sale to the public included in initial public offering (IPO) and where such shares are subsequently listed in
stock exchanges.
• Objective: To mitigate tax evasion as the same is taxed at source.
Impact of STT hike

• It will increase revenues of the government to a certain extent, while discouraging excessive trading in the futures
and options (F&O) segment where a large number of retail traders end up losing money.
• It could lead to shifting of F&O traders to other locations that do not attract such taxes for participants.
NEW ANGEL TAX RULES

Context: The Central Government has issued new rules that determine the value of investments made by both non-
resident and resident investors under the new angel tax system introduced in the Finance Act of 2023
Understanding Angel Tax

• An angel tax is imposed on unlisted businesses that get funding from an angel investor.
− Angel Investor: An angel investor provides initial seed money for startup businesses, usually in exchange for
ownership equity in the company.
• When an angel investor funds the new business ventures, the startup is obliged to pay a part of their investment as
tax to the government under Section 56 (2) (vii) (b) of the Income Tax Act of 1961.
• It is levied when an unlisted company issues shares to an angel investor at a price higher than its fair market value
(FMV).
− FMV: The fair market value represents what a single share of stock would be worth on the open market.
• Rate: The angel tax is imposed at 30.9% if the amount invested exceeds the startup’s FMV.
• Need: The Central Government introduced the angel tax in Finance Act, 2012 to curb money laundering and make
it easier for businesses to comply with the tax norms.
New Norms for Angel Tax

• Background: Earlier, only investments by domestic investors or residents in closely held companies or unlisted firms
were taxed over and above the fair market value. This was referred to as an angel tax.
− But the Finance Act, 2023 said that such investments over and above the FMV will be taxed irrespective of whether
the investor is a resident or non-resident.
− Post the amendments in the Finance Act, concerns were raised over the methodology of calculation of fair market
value.
− Start-ups also raised concerns on angel tax being extended to non-resident investors as it could have impacted
foreign investments – a key source of their funding.
• Key Amendments in Income Tax Act:
− In addition to the two methods for valuation of shares, namely, Discounted Cash Flow (DCF) and Net Asset Value
(NAV) method, available to residents, the Govt has introduced five different valuation methods for non-resident
investors:
Comparable company multiple method,
Probability weighted expected return method,
Option pricing method,
Milestone analysis method and
Replacement cost methods.
− The Govt has also offered a 10% tolerance for deviations from the accepted share valuations.
− The Govt has also introduced a mechanism for arriving at the fair market value of Compulsorily Convertible
Preference Shares (CCPS) for investment from residents as well as non-resident residents.
Compulsory Convertible Preferential Shares are a type of financial instrument issued by companies to raise
funds from investors.
These shares have a mandatory conversion feature, which requires the conversion of the shares into equity
within a predetermined period.
Thus, if an early investor has CCPS, he can have more rights than other investors who come in later at a higher
valuation.
Compulsorily Convertible Preference Shares are a key element of start-up financing.
− The fair value of the shares will be as determined by the methods provided. Anything above, after accounting for
a 10% margin, will be deemed as “taxable premium”.
• Significance of Amendment:
− The amended rules are aimed at bridging the gap between the rules outlined in FEMA and the Income Tax.
− The amendments to Indian Income Tax Act will bring positive changes by:
offering taxpayers flexibility through multiple valuation methods,
simplifying the valuation date consideration,
incentivizing venture capital investments,
facilitating investments from notified entities,
adopting internationally recognized approaches for valuation, thereby attracting foreign investments.
− Also, the inclusion of a tolerance threshold for minor valuation discrepancies further enhances efficiency and
fairness in tax assessments, ultimately benefiting both taxpayers and the government.
NEW TAX REGIME

Context: During the Union Budget 2023-24 speech, Finance Minister announced new tax slabs and scrapped the old
twin-structure system that was unboxed in 2020.
Major changes announced in the new tax regime

• Tax Rebate Limit Raised to ₹7 lakh from ₹5 lakh:
− Meaning: It means that the person whose income is less than ₹7 lakhs need not invest anything to claim
exemptions and the entire income would be tax-free irrespective of the quantum of investment made by such
an individual.
− Impact: This will result in giving more consumption power to the middle-class income group as they could spend the
entire amount of income without bothering too much about investment schemes to take the benefit of exemptions.
• Number of tax slabs has been reduced to five and the tax exemption limit has been increased to ₹3 lakh.
− The move is aimed at incentivizing people to shift to the new tax regime, which has not seen much traction
since launch in FY21.
− Tax assessors will still be able to choose from the prior regime
• For Pensioners:
− The finance minister announced extending the benefit of the standard deduction to the new tax regime.
− Each salaried person with an income of ₹15.5 lakh or more will benefit by ₹52,500.
• New Tax Regime as the Default Option:
− From FY 2023-24, the new tax regime will be the default option.
− Every fiscal year, an individual or Hindu Undivided Family (HUF) must select between the old and new tax regimes.
If they do not have any business income, this is applicable.
− Individual taxpayers and HUFs with business income are eligible to choose the new income tax regime.
− However, once they have opted in, they will only have a once-in-a-lifetime opportunity to return to the old tax
structure. They cannot choose the new income tax regime in future fiscal years once they have chosen the old one.
GLOBAL MINIMUM TAX

Context: India has pushed for higher taxes on Multinational Companies’ Excess Profits at G20 Meeting.
About Global Minimum Tax

• Definition: It is a global agreement announced by the Organization of Economic Corporation and Development (OECD)
to assure big companies like Apple or Amazon pay a minimum tax rate of 15% in order to minimise the chances of
avoiding taxation and it has been signed by 136 countries.
− It is estimated that the minimum tax rate would boost global tax revenues by $150 billion annually.
• Application: The global minimum tax rate would apply to overseas profits of multinational firms with 750 million
euros ($868 million) in sales globally.
− Governments could still set whatever local corporate tax rate they want, but if companies pay lower rates in a
particular country, their home governments could “top up” their taxes to the 15% minimum, eliminating the
advantage of shifting profits.
− A second track would allow countries where revenues are earned to tax 25% of the largest multinationals’ excess
profit – defined as profit in excess of 10% of revenue.
• Need: The COVID-19 crisis has strained the budget of many governments which now want to discourage multinationals
from shifting profits and tax revenues to low-tax countries regardless of where their sales are made.
− Increasingly, income from intangible sources such as drug patents, software and royalties on intellectual property
has migrated to these jurisdictions, allowing companies to avoid paying higher taxes in their traditional home
countries.
− The minimum tax and other provisions aim to put an end to decades of tax competition between governments
to attract foreign investment.
− The deal will encourage multinationals to send back capital to their country of headquarters, giving a boost to
those economies.
• Problems:
− Some governments, particularly those of traditional tax havens, are likely to disagree and stop the implementation
of the OECD’s tax plan.
− High tax jurisdictions like the EU are more likely to fully adopt the minimum tax plan as it saves them from having
to compete against low tax jurisdictions.
− Low tax jurisdictions are likely to resist the OECD’s plan unless they are compensated sufficiently in other ways.
− Even within the EU, countries such as Poland have already tried to stop the adoption of the global minimum tax
proposal citing various non-economic reasons.
− Since the OECD’s plan essentially tries to form a global tax cartel, it will always face the risk of losing out to low-
tax jurisdictions outside the cartel and cheating by members within the cartel.
Also, countries both within and outside the cartel will have the incentive to boost investments and economic
growth within their respective jurisdictions by offering lower tax rates to businesses. This is a structural problem
that will persist as long as the global tax cartel continues to exist.
Financial Market 29
CHAPTER 3
Financial Market
MUNICIPAL BOND INDEX
Context: NSE Indices launched India first ever Nifty India Municipal Bond Index
About the Index

• The new Nifty India Municipal Bond Index will track the performance of municipal bonds issued by Indian municipal
corporations across maturities and having investment grade credit rating.
• The index was launched at a Securities and Exchange Board of India.
• Presently, the index has 28 municipal bonds issued by 10 issuers all having credit rating in the AA category. The index
constituents are assigned weights based on their outstanding amount.
• The index is computed using the total return methodology including price return and coupon return.
• The index has a base date of January 1, 2021, and a base value of 1,000. The index will be reviewed quarterly.
CORPORATE BOND INDEX

Context: The Securities and Exchange Board of India has allowed exchanges to introduce future contracts on Corporate
Bond Indices.
More about the news

• SEBI has allowed futures contracts on corporate bond indices rated AA+ and above.
• The constituents of the index should have adequate liquidity and diversification at the issuer level and it should be
reviewed periodically.
• The constituents should be aggregated at the issuer level for the purpose of determining exposure limits for a single
issuer, group and sector.
• A single issuer should not have more than 15% weight in the index, which should have at least eight issuers.
Other related Information

• Debt Market: The Debt Market is part of the securities market where debt securities, also known as ‘fixed income
securities’, of various types and features are issued and traded. Issuers in this market include Central and State
Governments, Municipal Corporations, Financial Institutions, Banks, Public Sector units, public limited companies,
private companies, Real Estate Investment Trusts, Infrastructure Investment Trusts etc. Instruments that are normally
traded in debt market:
− Government Securities
− Public Sector Bonds
− Private Sector Bonds
• Corporate Bond: It is a type of debt security issued by a firm to raise capital.
− Corporate bond index measures the changes in select corporate bonds over a period of time.
SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

Context: The Securities and Exchange Board of India (SEBI) has approved a broad framework of Application Supported by
Blocked Amount or ASBA-like process for trading in secondary market based on blocked funds in investor’s bank account,
instead of transferring them upfront to the trading member, thereby providing enhanced protection of cash collateral
More about news

• The facility is based on blocking of funds for trading in the secondary market through UPI.
• The facility will be provided by integrating Reserve Bank of India approved Unified Payments Interface (UPI) mandate
service of single-block-and-multiple-debits with the secondary market trading and settlement process and ‘UPI block
facility’.
About ABSA
• ASBA is a process developed by SEBI to apply for IPOs, Rights and Debts Issue, FPS and more. It entails that the amount
to be paid for subscribing the shares does not get debited from the investor’s account until the shares have been
allotted by the company.
• Investors can apply for ASBA and have the bank block out the application money until the shares get allotted to the
investor. ASBA will provide the authorization of the investor to subscribe only when the application is selected for
the issue.
• This blocking is carried out by Self-Certified Syndicate Banks (SCSB). Upon the approval of the issue to the investor,
the funds are paid accordingly.
− Self Certified Syndicate Banks (SCSBs) are SEBI authorized banks that confirm to the conditions laid by SEBI to
accept the applications, verify and block the amount to the extent of what the application requires, upload the
details to the web and stay updated with the process until the shares are allotted.
Benefits of Application Supported by Blocked Amount (ASBA) facility

• Client continues to earn interest on his blocked funds in his savings account till the time amount is debited.
• Direct settlement with Clearing Corporation (CC), without passing through pool accounts of the intermediaries, thereby
providing client level settlement visibility to CC and thus avoiding the risk of co-mingling of clients’ funds and securities.
• Independent and reliable identification of ownership of cash collateral available to CCs without the need to rely on
reporting/ allocation by members (Trading Member / Clearing Member), thereby eliminating risk of inadvertently
erroneous or fraudulent reporting by intermediaries.
• Elimination of custody risk of client collateral which is presently retained by the members and not transferred to CC.
• Hassle-free and immediate unblocking of client’s funds and/or return/ release of securities in case of member default.
• No adverse impact on client pay-out even in case of member/ fellow client default.
• In case of member default, ease of porting of non-defaulting client to another member (as there will be no need for
transfer of collateral from defaulting member to another member).
CALCUTTA STOCK EXCHANGE (CSE) CLOSED

Context: Trading has ceased completely in one of India’s oldest stock exchanges, the Calcutta Stock Exchange (CSE),
in November after the National Stock Exchange (NSE) terminated its contract with the bourse.
More about the news

• CSE was barred from trading on its platform by SEBI in April 2013 due to regulatory and compliance issues.
• Since then, CSE’s only function was to provide its members a platform to trade on the NSE.
Origins of Calcutta Stock Exchange

• Stock-broking in Calcutta (now Kolkata) was first conducted in the 1830s under a neem tree.
• In 1908, an association of brokers was established under the Companies Act 1850, with the name ‘Calcutta Stock
Exchange Association’.
• It was the second stock exchange to be set up in India -- and Asia - after the BSE, which was established in 1875.
• CSE was granted permanent recognition by the Central government on April 14, 1980, under provisions of the Securities
Contracts (Regulation) Act, 1956.
Note: Currently, apart from CSE, NSE, the Bombay Stock Exchange (BSE), there are four other recognised stock
exchanges in the country: The Multi Commodity Exchange of India, National Commodity & Derivatives Exchange, Indian
Commodity Exchange, and the Metropolitan Stock Exchange of India (MSE).
Financial Market 31
Decline of CSE and other regional exchanges

•
With the establishment of the NSE in 1994, the stock trading in India’s nineteen regional exchanges including the CSE has
considerably reduced.
•
Another reason for their decline is the total ban on badla trading by SEBI in 2001.
− The ‘badla’ system first used in the 1990s allowed cash market transactions using borrowed funds in Indian stock markets.
− The ‘badla’ was completely banned in 2001 and regional bourses lost all their trade to the NSE.
− The CSE was also hit by the Ketan Parekh scam in 2001.
OVERNIGHT INDEX SWAP

Context: Indian overnight index swap (OIS) rates rose to their highest levels in 10 months on Monday due to offshore
paying and triggering of stop losses.
More on the news

• The one-year swap rate hit 7.10 per cent, the highest level since March, while the five-year swap rate rose to 6.85
per cent, a level last seen in November 2022.
What Is an Overnight Index Swap (OIS)?

• An Overnight Index Swap (OIS) is a derivative contract in which two parties agree to exchange, or ‘swap’, interest
rates over a specified period.
− Derivative refers to a type of financial contract whose value is dependent on an underlying asset, group of assets,
or benchmark.
− Common derivatives include futures contracts, forwards, options, and swaps.
• One party will pay a fixed interest rate and receive a floating interest rate.
− Floating rate is usually overnight interbank rate {reference rate for Indian OIS contracts is Mumbai Interbank
Outright Rate (MIBOR)}.
− The ‘overnight’ refers to the continual resetting of the rate based on the index’s daily fluctuations.
• In financial transactions, OIS is primarily used to hedge interest rate risk.
− Banks and other financial institutions utilize OIS to lock in a fixed rate, protecting against potential hikes in the
overnight rate.
− Additionally, it serves as a benchmark for pricing other financial instruments.
• Significance of a rise in the OIS rates:
− An increase in the OIS rate typically means that borrowing costs for financial institutions and other market
participants will rise.
− An increase in the OIS rate may be seen as an indicator of tightening liquidity or a more restrictive monetary
policy stance in the broader financial markets.
About MIBOR
• The Mumbai InterBank Overnight Rate, or MIBOR, is the overnight lending offered rate for Indian commercial banks.
• MIBOR is calculated based on input from a panel of 30 banks and primary dealers.
• MIBOR was first established in 1998 and modeled after the more famous London InterBank Overnight Rate (LIBOR).
About LIBOR
• The London Interbank Offered Rate (LIBOR) is a benchmark interest rate at which major global banks lend to one
another in the international interbank market for short-term loans.
• LIBOR is administered by the Intercontinental Exchange, which asks major global banks how much they would charge
other banks for short-term loans.
• In the United States, LIBOR was replaced by the Secured Overnight Financing Rate (SOFR) in June 2023.
− SOFR is published by the Federal Reserve Bank of New York and is based on actual transactions in the U.S.
• In India, the RBI advised banks to stop entering LIBOR-linked contracts latest by December 31, 2021.
DEBT MARKET
Context: SEBI eased the norms for large corporates tapping debt market.
More about the news

• SEBI had mandated LCs to meet 25 per cent of their financing needs from the debt market, with an aim of deepening
the corporate bond market in India.
• The move would also aid investors such as insurers, pension and provident funds which are required to invest a
particular percentage of their incremental receipts in corporate bonds and could be hurt by lack of supply of issuances.
• SEBI had found that about a third of the identified LCs did not raise the minimum 25 per cent of their incremental
borrowing through issuance of debt securities in FY21-22.
• The SEBI board has proposed removing the penalty on LCs which are not able to raise a certain percentage of
incremental borrowing from the debt market. At present, a monetary penalty of 0.2 per cent of the shortfall in the
borrowed amount at the end of three years is to be levied.
• SEBI will provide incentives and moderated disincentives for corporates to raise money from the debt market.
BAAP OF CHART
Context: SEBI has banned ‘Baap of Chart’ from securities market.
Background
• Securities and Exchange Board of India (SEBI) on October 25 barred Mohammad Nasiruddin Ansari, who owns a firm
called ‘Baap of Chart’, from buying, selling, or dealing in the securities market.
• On the pretext of providing educational training related to the securities market, Ansari was allegedly giving stock
recommendations through social media platforms to investors, with a promise of guaranteed returns. SEBI also
ordered Ansari to pay back Rs 17.2 crore which he had made by allegedly “misleading investors and influencing
them to deal in securities”.
Related information
• The rise of financial influencers or finfluencers, who charge as high as Rs 7.5 lakh for a post on social media has
introduced a new way for people to access and interpret financial information.
• Finfluencers are people with public social media platforms offering advice and sharing personal experiences about
money and investment in stocks. Their videos cover budgeting, investing, property buying, cryptocurrency advice
and financial trend tracking.SEBI has taken note of it and is working on guidelines for content creators in the sector.
• Now Fininfluencers will soon come under the regulatory purview as Sebi proposed measures to curb their mushrooming
numbers.
• The proposed move by Sebi not only ensures that investors receive accurate and unbiased information but also helps
in preserving authenticity and reducing fraud.
• Under the proposal, finfluencers need to be registered with Sebi and adhere to specific guidelines. Also, it has been
proposed to ban unregistered finfluencers from partnering with mutual funds and stockbrokers for promotional
activities.
INVESTOR PROTECTION FUND (IPF) AND INVESTOR SERVICES FUND (ISF)

Context: Securities and Exchange Board of India (Sebi) has come out with comprehensive guidelines for Investor
Protection Fund (IPF) and Investor Services Fund (ISF) maintained by stock exchanges and depositories.
Investor Protection Fund (IPF)

• Stock exchanges and depositories are required to establish IPF administered through separate trusts.
• The IPF Trust will consist of five trustees including three Public Interest Directors, one representative from the investor
associations, and a chief regulatory officer or compliance officer.
Financial Market 33
• The maximum tenure of a trustee (excluding the chief regulatory officer or compliance officer) would be of five years
or as specified by SEBI.
• The stock exchange and depository will ensure that the funds in the IPF are well segregated and that their IPF is
immune from any liabilities of the stock exchange and depository respectively.
• Further, supervision of utilization of IPF and interest or income from IPF will rest with the IPF Trust.
• The stock exchanges and depositories shall conduct half-yearly review to ascertain the adequacy of the IPF corpus.
Contribution to IPF
• Depositories have to contribute 5% of their profits from depository operations every year, all fines and penalties
recovered from depository participants (DPs) and other users including and income received out of any investments
made from the IPF.
− Depositories should utilise the fund to promote investor education, meet legitimate claims of beneficial owners,
support initiatives of depository participants, and fulfil other purposes permitted by Sebi.
• Stock exchanges will have to contribute 1% of the listing fees received on quarterly basis and the entire interest
earned on the security deposit kept by the issuer companies at the time of the offering of securities for subscription
to the public.
− Stock exchanges should use the fund to address investment claims from clients of defaulting trading members
and provide interim relief to affected investors.
Investor Services Fund (ISF)

• Stock exchanges have also been directed to allocate 20 per cent of listing fees to the ISF, which will be utilised for
public services, including investor education, awareness programs, and training initiatives.
• The Regulatory Oversight Committee will oversee the management and utilisation of the ISF funds.
INVESTOR RISK REDUCTION ACCESS PLATFORM

Context: The Securities and Exchange Board of India (SEBI) has initiated the Investor Risk Reduction Access (IRRA)
platform.
About IRRA platform

• IRRA platform has been developed to reduce risks faced by investors in the eventuality of technical glitches at the
trading member’s end at both the primary site and disaster recovery site.
• Its purpose is to provide investors with an opportunity to square off/close their open positions and cancel pending
orders using the IRRA platform in case of technical glitches or unforeseen outages that render the trading member’s
site inaccessible.
• IRRA has been jointly developed by all the stock exchanges – BSE, NSE, NCDEX, MCX and Metropolitan Stock
Exchange of India (MSE).
Need for IRRA

• There has been a rise in instances of glitches in trading members’ systems due to increasing dependence on technology
in the securities market.
• The glitches lead to disruption of trading services and investor complaints.
− In such instances, investors with open positions are at risk of non-availability of avenues to close their positions,
particularly if markets are volatile.
• Its activation by trading members in the event of a technical glitch on their side, which is applicable across exchanges
from both their primary and disaster recovery sites.
• Stock exchanges also have the authority to independently activate this service, regardless of a request from trading
members, particularly when there’s a disruption across all exchanges where the trading member is a participant.
Investors can log into the IRRA platform through

• A secure login process using their Unique Client Code (UCC) or PAN number.
• Verification via OTP sent to their mobile and email.
• The platform is accessible through a new Internet-based Trading (IBT) web URL and a mobile app.
As for the protocol for trading members to switch to the IRRA platform, they must notify the stock exchange through
email before the market opens or at least 2.5 hours before the scheduled end of the market hours of the segment where
they have an open position.
SHORT SELLING
Context: Short seller Hindenburg Research disclosed short positions in Adani Group, alleging stock manipulation and
accounting fraud in its latest investigative report.
About Short selling

• It is a trading strategy based on the expectation that the price of the security will fall.
• While fundamentally it is based on the “buy low, sell high” approach, the sequence of transactions is reversed in short
selling — to sell high first and buy low later.
• It occurs when an investor borrows a security and sells it on the open market, planning to buy it back later for less
money.
• Short sellers bet on, and profit from, a drop in a security’s price. This can be contrasted with long investors who want
the price to go up.
• Short selling has a high risk/reward ratio: It can offer big profits, but losses can mount quickly and infinitely due to
margin calls.
ADDITIONAL SURVEILLANCE MECHANISM

Context: The national stock exchange (NSE) has placed adani enterprises, adani ports, and ambuja cements under the
additional surveillance mechanism (ASM).
Additional surveillance mechanism

• The ASM was introduced on March 26, 2018, with the intention to protect investors from market volatility and unusual
changes in share price.
• It is an initiative to enhance market integrity and safeguard the interest of investors.
• Stocks under asm get monitored for factors such as volatility and price fluctuation.
• Shortlisted stocks are monitored on pre-determined objective criteria and are moved into trade for trade segment
once the criteria are satisfied.
• The criteria for shortlisting securities to be placed in asm cover the following parameters:
− High Low Variation
− Client Concentration
− Close-to-Close Price Variation
− Market Capitalisation
− Volume Variation
− Delivery Percentage
− Number of Unique PANs
− Price to Earnings (PE) ratio
• Stocks under ASM cannot be pledged.
• Corporate actions, such as bonuses and dividends are not impacted if a stock is placed under ASM.
• However, if a person has already pledged a stock that has been moved under ASM, they will cease to get collateral
margins for that stock. In such case, the stock can be unpledged or kept without collateral till it is taken out of ASM.
PERPETUAL FUNDS
Context: Securities and Exchange Board of India (SEBI) is mulling to introduce permanent capital vehicles (PCVs),
also referred to as evergreen or perpetual funds.
Financial Market 35
About Perpetual Funds

• They are funds in which the capital available is managed for an unlimited period.
• Unlike a limited-life private investment fund, which takes a term of 10 years prior to the liquidation, PCVs can exist
for perpetuity.
• These are aimed at long-term investors such as pension funds and insurance companies.
• The funds could be structured in such a way that an investor can get an option to redeem a specific sum of their
investment after a lock-in period of say, 5, 10 and 15 years.
• Types: PCVs can be of various types, including limited partnerships traded publicly on an exchange, real estate
investment trusts, closed-ended funds, interval funds and variable funds such as annuities and life insurance.
CAPTIVE INVESTORS
Context: EPFO subscribers are ‘captive investors’ of two Adani stocks
About Captive Investors

• “Captive investors” refers to individuals, institutions or organizations that invest their funds primarily or solely in a
particular company or group of companies.
• Captive investors are somewhat limited in their investment options, as they are not diversifying their portfolio across
a range of companies or sectors.
• Captive investors may be bound by legal or contractual obligations to invest in a specific entity or group, or they may
simply have a preference for investing in a particular industry or company.
• Employees who invest heavily in their employer’s stock or pension plan, as well as venture capital firms or private
equity funds that invest in a portfolio of companies within a specific industry or geographic region are the example
of captive investors.
About Captive Funds

• A captive fund is a private pooled investment fund that is managed for a select group of investors or in affiliation
with a single entity.
• It is often created for the benefit of an organization’s members or a firm’s employees. These funds are “captive”
since they are limited in who can invest and in their transferability.
• Investors in a captive fund can only cash out by selling shares back to the fund members or administrator.
• Captive funds can also be created by companies to manage targeted investments, such as venture capital assets
invested in private market companies.
DABBA TRADING
Context: National Stock Exchange (NSE) has issued notices against entities involved in ‘dabba trading’.
About Dabba Trading

• Dabba or box trading is an informal trading practice that occurs outside the purview of the stock exchanges.
− It involves traders betting on stock price movements without carrying out a real transaction to take physical
ownership of a particular stock as is done in an exchange.
− It can be equated to gambling centered around stock price movements.
• How is it different?
− In legal trading, it is mandatory for investors to open a demat (dematerialised) account with a broker to buy and
sell stocks on the stock exchanges.
• Purpose: The main purpose of dabba trade is to stay outside the purview of the regulatory mechanism, and hence,
transactions are carried out using cash and the mechanism is operated using unrecognized software terminals.
− Kaccha (rough) records, sauda (transaction) books, challans, DD receipts, cash receipts alongside bills/contract
notes are used as proof of trading.
• Legal status: ‘Dabba trading’ has been recognised as an offence under Section 23(1) of the Securities Contracts
(Regulation) Act (SCRA), 1956.
− Conviction can attract imprisonment for a term extending up to 10 years or a fine up to Rs 25 crore, or both.
Why Dabba Trading is Illegal?

• Price manipulation: Dabba trading has been considered illegal as it involves fraudulent activities, such as price
manipulation and insider trading.
• Affects investor interests: Since it occurs beyond official stock exchanges, it can cause significant losses for investors
who participate in stock trading.
• Financial losses to the government: Dabba trading takes place through unofficial channels, without participation of
banking channels, it leads to loss of revenues for the government.
Concerns Associated with Dabba Trading

• Bypass taxation: With no proper records of income or gain, dabba traders can escape taxation associated with stock
market trade. They need not pay the Commodity Transaction Tax (CTT) or the Securities Transaction Tax (STT) on
their transactions.
• Informal banking system: Use of cash means that they are outside the purview of the formal banking system. Control
of cash flow is not possible.
• Grievance redressal: In case the broker defaults in paying the investor or becomes bankrupt, investors do not have
formal provisions for dispute resolution and grievance redressal.
• Promotes black money: Since activities are carried out using cash without any auditable records, it could promote
growth of ‘black money’.
• Criminal activities: Black money allows running of a parallel economy, which is supported through money laundering
and other criminal activities.
ONE HOUR TRADE SETTLEMENT

Context: Securities and Exchange Board of India (SEBI), which had announced that it was working to launch real-time
settlement of trades, is now planning to implement one-hour settlement of trades first.
What is Trade Settlement?

• Settlement is a two-way process which involves the transfer of funds and securities on the settlement date.
• A trade settlement is said to be complete once purchased securities of a listed company are delivered to the buyer
and the seller gets the money.
• The current cycle of T+1 means trade-related settlements happen within a day, or 24 hours of the actual transactions.
• The migration to the T+1 cycle came into effect in January 2023.
• India became the second country in the world to start the T+1 settlement cycle in top-listed securities after China,
bringing in operational efficiency, faster fund remittances, share delivery, and ease for stock market participants.
What is One Hour Trade Settlement?

• In one-hour settlement, if an investor sells a share, the money will be credited to their account in an hour, and the
buyer will get the shares in their demat account within an hour.
• A Demat Account or Dematerialised Account provides the facility of holding shares and securities in an electronic
format.
− During online trading, shares are bought and held in a Demat Account, thus facilitating easy trade for the users.
− It holds all the investments an individual makes in shares, government securities, exchange-traded funds, bonds
and mutual funds in one place.
AGRI COMMODITY TRADE

Context: SEBI recently suspended futures trading in seven agricultural commodities and their derivatives on the
exchanges.
Financial Market 37
More about the news

• The commodities include wheat, paddy (non-basmati), moong, chana, soyabean, mustard seed and palm oil.
• Agri commodity trading is an agreement to purchase or sell a specified quantity of a particular agricultural commodity
at predetermined prices on a future date.
• Agricultural commodities like cotton, paddy, soyabean, soya oil, mustard seed, etc., are traded on the National
Commodities and Derivatives Exchange (NCDEX) and the Multi Commodity Exchange (MCX).
− Derivatives are short-term financial contracts that are bought and sold in the market. Profits are made in the
derivatives trade by predicting the price movements of the asset that underlies the contract. The derivatives trade
can be in futures and options.
• In a futures contract, a supplier pledges to sell a certain quantity at a fixed price at a future date. Also, farmers can
put fixed amounts of their produce, which fits the quality standards of the exchange, to be sold at a fixed price —
almost like price insurance.
• Both contracts can be exited by either the producer or the trader by paying a margin price to the exchange.
SUSTAINABILITY BONDS & EXIM BANKS

Context: Exim Bank listed its inaugural 10-year $1 billion sustainability bond on the London Stock Exchange’s Sustainable
Bond Market.
About Sustainability Bonds

• These bonds are designated for funding projects that are both environmentally friendly and beneficial to society,
and they align with the issuer’s Environmental Social Governance (ESG) guidelines.
− These guidelines are a set of criteria that inform investors about an organisation’s strategy in handling environmental,
social, and governance-related challenges and potentialities.
• EXIM Bank’s bond underwent a third-party evaluation after issuance to assess the effectiveness of the funded projects.
• Following this, the London Stock Exchange performed its verification process before admitting the bond for trading
on its Sustainable Bond Market (SBM).
• The bond is influenced by various factors, including governmental policies, market volatility, financing for climate
change adaptation, and the issuer’s reputation.
• In addition to the London Stock Exchange, the India Exim Bank has debuted its initial 10-year sustainability bond,
valued at $1 billion, on the India International Exchange (INX), India’s first international exchange situated in the
Gujarat International Finance Tec-City (GIFT City).
• This bond has also been listed on AFRINEX Ltd.’s AFEX Green platform, which focuses on financing for social, green,
and sustainable initiatives, as part of the Singapore Exchange Securities Trading Limited (SGX-ST).
Export-Import Bank of India (EXIM Bank)

• India’s foremost institution dedicated to financing the country’s export and import activities.
• Formation: Established by the Indian government via the Export-Import Bank of India Act of 1981.
• Ownership: Operates under the ownership of the Government of India.
• Headquarters: Located in New Delhi.
• Provides financial assistance to exporters and importers.
• Offers Lines of Credit (LOCs) to various entities including foreign financial institutions, regional development banks,
sovereign governments, and other entities outside India.
• Serves as the central financial agency to coordinate the efforts of all institutions engaged in financing the export and
import of goods and services, aiming to boost India’s trade on a global scale.
External Sector: Trade, Balance of Payment 39
CHAPTER 4
External Sector: Trade, Balance of Payment

WTO: NEW AGREEMENT ON FISHERIES SUBSIDIES
Context: In January 2023, Switzerland became the first WTO member to formally submit its acceptance of the WTO’s
new Agreement on Fisheries Subsidies.
More about News

• Agreement was adopted during the 12th Ministerial Conference of WTO in 2022 held in Geneva, Switzerland under
‘Geneva Package’.
• It sets new rules to curb harmful subsidies and protect global fish stocks in a manner that also recognizes the needs
of fishers in developing and least-developed countries (LDCs).
About the Agreement on Fisheries Subsidies

• The agreement prohibits subsidies from being provided for Illegal, Unreported and Unregulated (IUU) fishing and
overfished stocks.
• Under the Special and Differential Treatment (S&DT), Developing Countries and Least Developed Countries (LDCs)
have been allowed a transition period of two years from the date of entry into force of this Agreement.
• The Agreement also prohibits providing subsidies for fishing on high seas, which are outside the jurisdiction of
coastal countries and Regional Fisheries Management Organizations/ Arrangements (RFMO/As).
• As per the Agreement, no prohibition has been imposed on a WTO Member regarding granting or maintaining subsidy
to its vessel or operator as long as it is not carrying out IUU.
• Similarly, no prohibition on providing subsidies has been imposed for fishing regarding overfished stocks as long as
such subsidies are implemented to rebuild the stock to a biologically sustainable level.
India’a stand
• India’s stand is that it is one of the lowest fisheries subsidisers despite such a large population and one of the disciplined
nations in sustainably harnessing the fisheries resources.
• India does not exploit the resources indiscriminately like other advanced fishing nations and India’s fisheries sector
primarily depends on several millions of small-scale and traditional fishers.
• Therefore, those WTO Members who have provided huge subsidies in the past, and engaged in large-scale industrial
fishing, which is responsible for the depletion of fish stocks, should take more obligations to prohibit subsidies
based on the ‘polluter pay principle’ and ‘common but differentiated responsibilities’.
DOLLARISATION OF AN ECONOMY
Context: The Argentina has promised to make the U.S. dollar as legal tender in its country replacing its own national
currency the peso.
More about the news

• The newly elected Argentinian President has proposed to:
− Severely cut government spending starting with disbanding several departments.
− Disband the domestic currency and the central bank and shift to the US dollar as the official currency. This is
called Dollarisation. In doing so, Argentina will give up its ability to control its monetary policy — its monetary
sovereignty.
− In other words, there would be no authority in Argentina (neither the government nor the central bank) that can
either print money or decide the price of parting with it (also referred to as the interest rate in the economy).
− The basic idea behind Milei’s plan to dollarise is two-fold:
To bring price stability to the economy in a quick manner. Since the US dollar is the default currency of the world
To ensure that the government and the central bank are in no position to influence monetary policy.
• Since there is no domestic currency to print — and the US central bank, the Fed will not alter its policy stance based
on Argentina’s demands—
What Is Dollarisation?
• Dollarization is the process by which a country adopts the United States dollar (USD) as its official currency or as a
substitute for its domestic currency.
• Dollarization usually happens when a country’s own currency loses its usefulness as a medium of exchange, due to
hyperinflation or instability.
Types Of Dollarisation
• Complete dollarization means that a foreign currency is the only official currency in the country.
− This means that all transactions must be conducted in the foreign currency, and the local currency is no longer
considered official.
• Partial dollarization means that both the foreign currency and the local currency are official currencies in the country.
− It implies that people can use either currency for transactions, but the government may prefer the foreign currency
for some purposes.
• Official dollarization means that the government of a country has officially adopted a foreign currency as its official
currency.
− The government uses the foreign currency for its own transactions and requires businesses to use it for tax
payments and other purposes.
• Unofficial dollarization occurs when people in a country choose to use a foreign currency instead of the local currency
for their savings and transactions.
− This can happen because people believe that the foreign currency is more stable or valuable than the local currency.
Reasons for adopting Dollarisation

• Dollarisation can act as a solution to hyperinflation by breaking the feedback link between rising prices and rising
money supply.
− If the domestic currency is replaced by dollars, money supply can no longer be controlled by vested political
interests who can increase spending for political ends.
− The rise of prices would be forced to moderate since consumers would no longer be able to access currency
easily, thus slowing down consumption demand.
• Dollarization can provide the direct benefit of encouraging outside foreign direct investment (FDI).
− When individual investors or corporations see that the local currency of a region is already established, and they
do not need to incur exchange rate fees or monitor currency fluctuations, they may be more likely to invest and
expand operations into that country.
• One of the strongest advantages of dollarization for smaller, less developed countries is the ability to trade in a
currency that is stronger and more internationally recognized.
− It will often bring about a positive effect on international trade for the countries, as the outside currency they use
is more widely accepted and can be more stable and less prone to market volatility.
• Dollarisation can also have positive effects on growth.
− Since a small economy can only access dollars through foreign trade and/or capital inflows, it would incentivise
the economy to focus on export successes and easing conditions for foreign capital, who would be more willing
to invest in an economy with a stable currency.
• The stable value of the dollar would ensure that economic agents —both foreign and domestic — would be able to
make long-term plans regarding economic activity.
Challenges associated with Dollarisation

• dopting another country’s currency means relinquishing the ability to independently manage monetary policy and
exchange rate regimes, thereby losing a significant tool for directly influencing the economy.
• Securities must be repurchased in U.S. dollars, necessitating sufficient reserves. Without ample reserves, countries
might have to run a current account deficit or find ways to generate a surplus to manage these obligations.
• Countries lose the ability to devalue their currency to enhance export competitiveness, relying solely on export
promotion strategies to prevent economic downturns.
REVERSE FLIPPING
Context: start-ups are flipping in reverse
More about the news

Indian start-ups are now opting to reverse flip back into India due to its favourable economic policies, burgeoning
domestic market and growing investor confidence in the country’s start-up ecosystem.
About Flipping and Reverse Flipping

• Flipping: It has been observed that many Indian companies have been getting headquartered overseas, especially
in destinations with favourable legal environments and taxation policies.
− The technical word for this is identified as ‘Flipping’. It is the process of transferring the entire ownership of
an Indian company to an overseas entity, accompanied by a transfer of all IP and all data hitherto owned by the
Indian company.
− It effectively transforms an Indian company into a 100 per cent subsidiary of a foreign entity, with the founders
and investors retaining the same ownership via the foreign entity, having swapped all shares.
− Flipping happens at the early stage of the Start-ups, driven by commercial, taxation and personal preferences of
founders and investors.
− Some companies decide to “Flip” because the major market of their product is offshore. Sometimes, investor
preferences like access to incubators drive the companies to “Flip” as they insist on a particular domicile.
− Some companies prefer to domicile in countries where they would like to access Capital Market later for better
valuations and ticket size.
− Better protection and enforcement of IP and tax treatment of Licensing revenue from IP, residential status of
Founders, and agile corporate structures have been the reasons for “Flipping” in the Past.
• Reverse Flipping: In recent times have seen the emergence of a counter-trend: ‘Reverse Flipping’.
− Indian start-ups are now opting to reverse flip back into India due to its favourable economic policies, burgeoning
domestic market and growing investor confidence in the country’s start-up ecosystem.
− Reverse flipping is the antithesis of the flipping trend. Here, start-ups that once relocated their holding companies
outside India are now considering a strategic move back to India, primarily because the start-up ecosystem has
now matured significantly.
− There is a large pool of untapped domestic retail investors who want to invest in emerging companies they believe
have the potential to grow. Additionally, steps taken by the government in the recent times is making it easier
for start-ups to go public, which could make it more attractive for start-ups to reverse flip.
− Various targeted initiatives of Indian Government have given a major boost to start-ups. For instance, under the
Start-up India Initiative, eligible companies get recognised as Start-ups by DPIIT to access a host of tax benefits,
easier compliance, and IPR (Intellectual Property Rights) fast-tracking.
− As part of the umbrella schemes of the National Initiative for Developing and Harnessing Innovations (NIDHI)
and Atal Innovation Mission (AIM), entrepreneurship and innovation are fostered across the start-up ecosystem
in the country.
GLOBAL SOVEREIGN DEBT ROUNDTABLE (GSDR)

Context:The Global Sovereign Debt Roundtable (GSDR) has agreed on urgently improving information sharing, including
on macroeconomic projections and sustainability assessments, at an early stage of debt restructuring processes.
About GSDR
• The objective of the Global Sovereign Debt Roundtable is to build greater common understanding among key
stakeholders involved in debt restructurings, and work together on the current shortcomings in debt restructuring
processes, both within and outside the Common Framework, and ways to address them.
• The focus of the Global Sovereign Debt Roundtable is on process and standards, not to discuss country cases. The
GSDR will not replace existing restructuring mechanisms such as the Common Framework. Instead, it will support
those mechanisms by fostering greater common understanding on concepts and principles, which will in turn facilitate
individual restructurings.
• The roundtable is co-chaired by the IMF, World Bank and India (G20 Presidency) and comprises official bilateral creditors
(both traditional creditors members of the Paris Club and new creditors), private creditors and borrowing countries.
FOREIGN PORTFOLIO INVESTORS (FPIS)

Context: SEBI has proposed additional disclosure for high-risk foreign portfolio investors.
More on News
• SEBI has released a consultation paper on framework for mandating additional disclosures from Foreign Portfolio
Investors (FPIs) especially those who have either concentrated single group exposures or significant overall holdings
in their equity investment portfolio.
• The paper said that some FPIs have been observed to concentrate a substantial portion of their equity portfolio in
a single investee company/ company group. In some cases, these concentrated holdings have also been near static
and maintained for a long time.
• Such concentrated investments in a single investee company or group raise the concern and possibility that promoters
of such corporate groups, or other investors acting in concert, could be using the FPI route for circumventing regulatory
requirements such as that of maintaining Minimum Public Shareholding (MPS).
SEBI’s proposal for FPI regulation

• The paper has proposed to categorize FPIs into high, moderate and low risk.
− High risk: All FPIs except for government and government related entities such as central banks, sovereign wealth
funds, and pension funds or public retail funds will be categorized as high risk FPIs.
− Low risk : Government and related entities such as central banks, sovereign wealth funds, etc.
− Moderate risk: Pension Funds or Public Retail Funds with widespread and dispersed investors in such funds. ALlso,
FPIs whose India-oriented holdings are relatively small in comparison to their global portfolio may be classified as
‘moderate risk’ and not be subjected to additional disclosure requirements
• High-risk FPIs holding more than 50% of their equity asset under management (AUM) in a single corporate group
would have to make additional disclosures.
• New FPIs that have just begun investments would be allowed to breach the threshold criteria up to a period of six
months, following which, they too would have to make the disclosures.
• Existing FPIs in the process of winding down their investments in a single corporate group would be temporarily
allowed to breach the criteria. This is provided they are able to wind down within six months.
• Failure to provide the above-mentioned granular disclosures wherever required would render the registration of the
FPI invalid. Such FPIs would have to wind down operations within six months.
CORPORATE DEBT MARKET DEVELOPMENT FUND (CDMDF)

Context: Sebi has put in place framework for corporate debt market development fund
About Corporate Debt Market Development Fund (CDMDF)

• It is an institutional framework to enhance secondary market liquidity in the corporate bond market during stressed
market situations.
• It will work as an Alternative Investment Fund that will purchase investment grade corporate bonds from fund houses
in distress to help them meet redemption requests.
− Alternate Investment Fund (AIF) refers to any privately pooled fund established or incorporated in India for investing.
Investment grade refers to the quality of a company’s credit. The company must be rated at ‘BBB’ or higher to
be considered an investment grade issue.
• How will the CDMDF work?
− Registration: Established as a registered alternative investment fund under a separate sub-category.
− Initial corpus: To be funded by the mutual funds (MFs) having debt oriented schemes and asset management
companies (AMCs) up to 0.25% and 0.02% of their respective assets under management.
− Market dislocation: SEBI has been authorised to identify the triggers of such disruptions causing market dislocation.
To be linked to the financial stress index (FSI), which is likely to be .
− Registration: Established as a registered alternative investment fund under a separate sub-category.
− Initial corpus: To be funded by the mutual funds (MFs) having debt oriented schemes and asset management
companies (AMCs) up to 0.25% and 0.02% of their respective assets under management.
− Market dislocation: SEBI has been authorised to identify the triggers of such disruptions causing market dislocation.
To be linked to the financial stress index (FSI), which is likely to be .
− Liquidity backstop: MFs and AMCs permitted to only sell corporate debt securities to CDMDF up to their contribution
during market dislocation.
− Borrowings by CDMDF: Permitted to undertake external financings from banks and financial institutions to purchase
corporate debt securities from the secondary market in periods of market dislocations with a back-stop guarantee
upto INR 30,000 Crores from ‘Guarantee Scheme for Corporate Debt’.
− Permitted Investments: To only invest in
Investment grade listed debt securities from the secondary market with a maximum residual maturity of 5 years.
Unlisted debt securities with rating below BBB- or defaulted debt securities or securities which have a material
possibility of default or adverse credit impact ineligible.
Loss Absorption: Risk of first loss rests with the MF schemes selling to the CDMDF in the prescribed loss
absorption waterfall.
US BOND YIELD
Context: On 24th October 2023, the yield on 10-year government bonds in the US rose to hit 5.02 per cent, its highest
level since July 2007. Similarly, in India, the yield on 10-year government bonds was already at a high of 7.38 per cent,
a rise on 24 basis points in the last one month of September.
Bonds and Yeilds

• Bond: A bond is an instrument to borrow money. A bond could be issued by a country’s government or by a company
to raise funds.
• Since government bonds (referred to as G-secs in India, Treasury in the US, and Gilts in the UK) come with the
sovereign’s guarantee, they are considered one of the safest investments.
− As a result, they also give the lowest returns on investment (or yield).
• Investments in corporate bonds tend to be riskier because the chances of failure (and, therefore, the chances of the
company not repaying the loan) are higher.
• Bond Yeilds: The yield of a bond is the effective rate of return that it earns. But the rate of return is not fixed — it
changes with the price of the bond.
− Every bond has a face value and a coupon payment. There is also the price of the bond, which may or may not
be equal to the face value of the bond.
− For instance: Suppose the face value of a 10-year G-sec is Rs 100, and its coupon payment is Rs 5. Buyers of this
bond will give the government Rs 100 (the face value); in return, the government will pay them Rs 5 (the coupon
payment) every year for the next 10 years, and will pay back their Rs 100 at the end of the tenure. In this case,
the bond’s yield, or effective rate of interest, is 5%. The yield is the investor’s reward for parting with Rs 100
today, but for staying without it for 10 years.
Why and how do yields go up and down?

• Imagine a situation in which there is just one bond, and two buyers (or people willing to lend to the government).
• In such a scenario, the selling price of the bond may go from Rs 100 to Rs 105 or Rs 110 because of competitive
bidding by the two buyers.
• However, even if the bond is sold at Rs 110, the coupon payment of Rs 5 will not change. Thus, as the price of the
bond increases from Rs 100 to Rs 110, the yield falls to 4.5%.
Why yields are high in US?

• The US 10-year bond yield has shot up by nearly 400 basis points from 1.01 per cent in 2020. Factors like rising crude
oil prices, inflation risks and interest rate signals from the US Federal Reserve have contributed to the hardening of
bond yields.
• A higher government borrowing is also a reason for the rise in bond yields.
Implication
• Historically, it was observed the bond yields in other countries, including India, rose when US yields showed any
uptrend and vice versa.
• However, the quantum of increase varies depending on domestic factors. India’s 10-year yield rose by 162 basis points
from 5.76 per cent (July 10, 2020) while US yields jumped by 400 bps to 5.02 per cent.
• The rise indicates that the cost of funds in the financial system is rising and interest rates are on the upswing. The
rising bond yield means the government will have to pay more as yield (or return to the investors), leading to a rise
in cost of borrowings.
• This will have an overall impact on the financial system, putting upwards pressure on the general interest rates in
the banking system.
Impact on bond investors

• The rise in bond yield means that investors are expecting a rise in interest rates and are therefore selling the bond
papers they are holding.
• Since a rise in interest rates would result in decline in bond price of existing bonds (and thereby capital loss on sale
before maturity), investors rush to sell those bonds so as to limit the capital loss.
T+1 SETTLEMENT
Context: After China, India will become the second country in the world to start the ‘trade-plus-one’ (T+1) settlement
cycle in top-listed securities.
What’s the T+1 settlement plan?

• The T+1 settlement cycle means that trade-related settlements must be done within a day, or 24 hours, of the
completion of a transaction.
• For example, under T+1, if a customer bought shares on Wednesday, they would be credited to the customer’s demat
account on Thursday. This is different from T+2, where they will be settled on Friday.
• Benefits:
− Liquidity in the market: T+1 settlement lead to faster settlements, which can improve the liquidity in the market.
− Safer markets: According to a paper published by the SEBI, a T+1 settlement cycle not only reduces the timeframe
but also reduces and frees up capital required to collateralize that risk.
− Reduced settlement risk: The narrower the settlement cycle, the narrower the time window for a counterparty
insolvency/ bankruptcy to impact the settlement of a trade.
• Why are foreign investors opposed?
− As foreign investors operate from different geographies, they have raised issues such as time zone differences,
information flow processes, and foreign exchange problems.
− Foreign investors said they would also find it difficult to hedge their net India exposure in dollar terms at the
end of the day under the T+1 system.
GRESHAM’S LAW
Context: The Law came into play most recently during the economic crisis in Sri Lanka, during which the Central Bank
of Sri Lanka fixed the exchange rate between the Sri Lankan rupee and the U.S. dollar.
About the law

• Gresham’s law refers to the dictum that “bad money drives out good.”
• Gresham’s law comes into play when the exchange rate between two moneys or currencies is fixed by the government
at a certain ratio that is different from the market exchange rate.
• Such price fixing causes the undervalued currency — that is, the currency whose price is fixed at a level below the
market rate — to go out of circulation. The overvalued currency, on the other hand, remains in circulation but it does
not find enough buyers.
TERMS IN NEWS
Fed’s dot plot The dot plot is the expected trajectory of interest rate hikes proposed by US Fed members in graphical form.
The US Federal Reserve’s Federal Open Market Committee (FOMC) releases its dot plot along with its projections
on other major economic indicators like GDP, inflation, etc.
Peak margin To ensure that buyers in the stock market do have actual cash backing their trades, stock exchanges usually require
something called a ‘margin’, or a minimum amount of cash or securities, to be held in one’s trading account to
do a trade of a certain value. In India, SEBI recently brought in the concept of ‘peak margins’.
Buy Now Pay BNPL is a short term credit facility extended by banks directly or retailers (through their tie-ups with banks and
Later (BNPL) NBFCs), that allow consumers to defer payment on their purchases for 15 to 365 days. Depending on the service
provider, the interest-free period may vary from 15-30 days, beyond which the customer can repay in a single shot
or in EMIs spread over 1-12 months. Unlike the paperwork for traditional loans, customers can enrol for this credit
facility almost instantly using their mobile phones, by finishing basic e-KYC procedures.
HUID NUMBER
Context: The Union Ministry of Consumer Affairs, Food and Public Distribution has notified that the sale of gold jewellery
will not be allowed without a Hallmark Unique Identification (HUID) number from April 1, 2023.
About HUID number:

• HUID number is a six-digit alphanumeric code given to every piece of jewellery at the time of hallmarking and is a
unique identifier for each gold item.
• The jewellery is stamped with the unique number manually at the Assaying & Hallmarking centre.
• The HUID makes it easy to trace the individual piece of jewellery, and is a guarantee of quality.
• In HUID-based Hallmarking, registration of jewellers is automatic with no human interference.
• It is aimed at ensuring the purity of Hallmarked jewellery and check any malpractice.
• HUID is a secure system and poses no risk to data privacy or security and brings about transparency, ensures consumers’
rights and obviates the chances of Inspector Raj.
What is a Hallmark?
• Hallmark is a mark on gold jewellery which is affixed by an entity recognized by Bureau of Indian Standards (BIS) to assure its
fineness and purity.
• A BIS Hallmark consists of three symbols — the BIS logo, a symbol to indicate the purity and fineness of the jewellery, and then
the HUID.
• No gold jewellery is made of 100 per cent gold, as gold in itself is very soft and has to be mixed with other metals to shape it into
jewellery items. The “purer” the jewellery, i.e., the more gold a piece of jewellery has, the more expensive it will be.
• The three categories of hallmarked jewellery are:
− 22K916 means that it is a 22-caratgold and the piece of jewellery has 91.6 percent gold.
− 18K750 means that it is an 18-caratgold and the piece of jewellery has 75 percent gold.
− 14K585 means that it is a 14-caratgold and the piece of jewellery has 58.5 percent gold.
CANTILLON EFFECT
Context: The financial measures, introduced across the world, to tackle slowdown has created Cantillon Effect.
About Cantillon Effect

• The Cantillon Effect is a monetary phenomenon where the initial recipients of new money see a disproportionate
benefit while the latter users face a diminished effect.
• The term was coined by economist Richard Cantillon, who observed that the impact of monetary inflation is not
evenly distributed.
How does it Work?

• When new money is introduced, a few privileged individuals or groups (banks, government agencies, or wealthy
business owners) have the power to spend or invest the money before it impacts the economy.
• When the money makes way into the hands of the general public, its value is diminished due to the initial spending
and investing by privileged individuals.
Implications of Cantillon Effect

• It can lead to wealth inequality as few privileged individuals who receive the new money can boost their wealth
before the general public can access it.
• The new money spent and invested by the initial recipients can create inflationary pressures in the economy, impacting
purchasing power for everyday goods and services of the general public.
VOSTRO ACCOUNT
Context: According to recent reports, twenty Russian banks, including Gazprom, Rosbank, Tinkoff Bank, Centro Credit
Bank and Credit Bank of Moscow, have opened rupee vostro accounts with authorised dealer banks in India to enable
rupee trade between the two countries.
About Vostro Account

• A vostro account is an account that domestic banks hold for foreign banks in the former’s domestic currency, in this
case, the rupee.
• Domestic banks use it to provide international banking services to their clients who have global banking needs.
• It is an integral offshoot of correspondent banking that entails a bank (or an intermediary) to facilitate wire transfer,
conduct business transactions, accept deposits and gather documents on behalf of the other bank.
• It helps domestic banks gain wider access to foreign financial markets and serve international clients without having
to be physically present abroad.
About Special Rupee Vostro Accounts (SRVA)

• SRVA is an additional arrangement to the existing system that uses freely convertible currencies and works as a
complimentary system.
• Freely convertible currencies refer to currencies permitted by rules and regulations of the concerned country to be
converted to major reserve currencies (like U.S. dollar or pound sterling) and for which a fairly active market exists
for dealings against major currencies.
• Functioning of SVRA
− Invoicing entails that all exports and imports must be denominated and invoiced in INR.
− Exchange rate between the currencies of the trading partner countries would be market-determined.
− Settlement in Indian National Rupee (INR): The authorised domestic dealer banks (those authorised to deal in
foreign currencies) are required to open SRVA accounts for correspondent banks of the partner trading country.
• Eligibility criteria of banks
− The domestic bank would then seek approval from the apex banking regulator providing details of the arrangement.
All reporting of cross-border transactions is to be done in accordance with the extant guidelines under the Foreign
Exchange Management Act (FEMA), 1999.
− Responsibility of the domestic banks to ensure that the correspondent bank is not from a country mentioned in
the updated Financial Action Task Force (FATF) Public Statement on High Risk & Non-Co-operative jurisdictions.
− Authorised banks can open multiple SRV accounts for different banks from the same country.
− Balances in the account can be repatriated in freely convertible currency and/or currency of the beneficiary
partner country depending on the underlying transaction.
Significance
• Economic Survey (2022-23) said that such framework could largely reduce the net demand for foreign exchange,
the U.S. dollar in particular, for the settlement of current account related trade flows.
− It would reduce the need for holding foreign exchange reserves and dependence on foreign currencies, making
the country less vulnerable to external shocks.
− As per the Bureau for International (BIS) Settlements’ Triennial Central Bank Survey 2022, the U.S. dollar was the
most dominant vehicle currency accounting for 88% of all trades.
− The INR accounted for 1.6%.
• In July 2022, the RBI allowed international trade in rupees, creating the possibility of doing business with Russia in
rupees
− Trade in rupee will insulate India’s exports from foreign currency fluctuations.
− In long-term, it could promote INR as an international currency once the rupee settlement mechanism gains
traction
• Rupee trade mechanism will allow India to pay for Russian oil and fertilisers in rupees, which can be then used by
Russian companies to pay for their imports from India or invest in the country.
• It could marginally narrow India’s widening trade deficit by reducing the price of commodity imports.
Nostro Account
• Nostro means ‘ours’ and Vostro means ‘yours’ in Latin.
• Both Vostro and Nostro are technically the same type of account, with the difference being who opens the account and where.
• Therefore, the accounts opened by IndusInd and UCO are Vostro, and the ones opened by Russia’s Sberbank and VTB Bank are
Nostro accounts.
LIBERALISED REMITTANCE SCHEME (LRS)

Context: Recently RBI asked to monitor card spending under Liberalised Remittance Scheme (LRS) for tax purposes.
About Liberalised Remittance Scheme (LRS)

• The Reserve Bank of India introduced the Liberalised Remittance Scheme in 2004.
• The scheme permits all resident individuals, including minors, to remit up to USD 2,50,000 per financial year (April -
March) without any restrictions for any permissible current or capital account transaction or a combination of both.
• There are no limitations on the frequency of remittances under LRS; a resident individual may not make any further
remittances under this scheme during the financial year once they have already made a remittance of up to USD
2,50,000.
• Payments for foreign tours through credit cards are not being captured under the Liberalised Remittance Scheme
(LRS) and such payments escape tax collection at source (TCS).
• Requirements: It is mandatory for the resident individual to provide his/her Permanent Account Number (PAN) for
all transactions under LRS made through Authorized Persons.
• Ineligibility: The Scheme is not available to corporations, partnership firms, Hindu Undivided Family (HUF), Trusts etc.
Remitted Money can be used for:
•
Expenses related to travelling (private or for business), medical treatment, study, gifts and donations, maintenance of close
relatives and so on.
•
Investment in shares, debt instruments, and buy immovable properties in the overseas market.
•
Individuals can also open, maintain and hold foreign currency accounts with banks outside India for carrying out transactions
permitted under the scheme.
FOREIGN EXCHANGE MANAGEMENT ACT (FEMA)

Context: The BBC has been booked under Foreign Exchange Management Act (FEMA) by ED for alleged foreign
exchange violation.
About FEMA
• FEMA, 1999 is a law relating to foreign exchange, which aims to facilitate external trade and payments and promotes
the orderly development and maintenance of foreign exchange market in the country.
• FEMA replaced the the Foreign Exchange Regulation Act (FERA), which had become incompatible, owing to pro-
liberalization policies of the government. It made offences related to foreign exchange civil offenses.
• Classification of transactions: FEMA act classifies all foreign exchange transactions either as capital or current
account transactions.
− Capital account transactions:
Capital Account transaction refers to transaction that alters the assets or liabilities, including contingent
liabilities, outside India of Indian residents or alters the assets or liabilities in India of individuals residing
outside India.
Ex: Capital inflows like Equities, Grants and Debt.
− Current account transactions:
These are the transactions carried out by a resident that do not alter his / her assets or liabilities, including
contingent liabilities, outside India.
Ex: Foreign remittances, trade, student remittances etc.
• Defining resident: Under Section 2(v) of FEMA, 1999. An Indian is:
− A person staying in India for more than 182 days during the course of the preceding financial year.
− Any person or body corporate registered or incorporated in India.
− An office, branch or agency in India owned or controlled by a person staying outside India.
− An office, branch or agency outside India owned or controlled by a person staying in India.
• Guidelines:
− The Central Government has the power to regulate the flow of payments to and from a person located outside India.
− All financial transactions regarding foreign securities or exchange cannot be performed without the approval of
FEMA. They must go through “Authorised Persons.”
− The Government of India has powers to restrict an authorized individual from carrying out foreign exchange deals
within the current account, in the general interest of the public.
− RBI has been empowered to impose restrictions on transactions from capital Account even though it is carried
out via an authorized individual.
Foreign Exchange Regulation Act Foreign Exchange Management Act
• The FERA law was passed with a notion that Foreign Exchange • FEMA was based on the belief that Foreign Exchange is an asset
is a scarce resource and need to be conserved. and had to be properly managed.
• The definition of “Authorized Person” was narrow as banking • It widened the definition of “Authorized Person” by including
units did not come under the definition. banking units.
• Violation amounted to a criminal offence. There was direct • Violation of FEMA rules constitutes a civil offence and there is
punishment without provision for fine. a provision for paying a penalty.
• Prior approval of RBI was needed for transferring of funds for • No prior approval of RBI is need for external trade and
external operations. remittances.
• Appeals against convictions were directly sent to High Courts • It has options of Special Director (Appeals) and Special
due to absence of tribunals. Tribunal.
• Citizenship was the basis for determining the residential status • The residential status can be determined if they stay more
of the entity. than 6 months stay in India.
RBI’S GOLD RESERVES

Context: The gold reserves held by RBI have touched 794.64 metric tonnes in fiscal 2023, a near increase of 5 per
cent over fiscal 2022.
Reasons for increase in buying gold:

• The RBI has kept buying gold as part of the diversification process, considering the fact that gold is more safe, secure,
and liquid asset, amidst global uncertainty and a rising inflation scenario.
• In addition, gold is a safe asset due to its liquid nature, has a transparent international pricing, and it can be traded
anytime.
• Gold purchasing by countries: Recent trends
− Currently, RBI is among the top five central banks that are buying gold.
− On the global front, the People’s Bank of China (PBoC) and the Central Bank of the Republic of Turkey have been
purchasing gold.
− The central banks from the Middle East, including Egypt Iraq, the UAE, Qatar and Oman have also boosted their
gold reserves in recent years.
− The Central Bank of Uzbekistan in 2022 also became a net purchaser of gold.
− The Monetary Authority of Singapore in January 2023 became the largest single buyer of gold after it bought 69
tonnes to its gold reserves.
Why RBI and other central banks hold gold as a reserve?

• Mitigating investment risk: Gold is believed to be a safe investment option that grows positively even during uncertainty
and market volatility.
− In case the financial system collapses due to weakening of currency, gold supply provides the means to recover.
• Tackle inflation: Countries need an investment option that is not tied to the value of US Dollars. Even during inflation,
gold does not lose its value.
• Domestic financial stability: Central banks need to stabilize their domestic economy in case of crisis. Gold acts as an
important way to control size and speed of market growth.
• Long term investment: Gold values are not affected negatively, despite global instability. This makes it an attractive
long-term investment option.
• Credit worthiness: A credit worthiness of a country is also determined by how much gold reserves it holds. This is
because gold is an asset that carries no credit risk.
• Containing money supply: Gold is available in limited quantity. Creation of money backed by gold asset constraints
and limits central banks’ ability to create money.
How do central banks buy Gold?

• Open market: The main source of buying gold is through the Over-the-Counter (OTC) market. This means that a central
bank purchases the gold directly from a bullion bank or an internationally-recognized gold refinery.
• IMF: Central Banks can also buy gold from the International Monetary Fund which occasionally holds limited period
sale of gold.
• Bank of International Settlements: Another source of gold is the Bank of International Settlements (BIS). This financial
institution based in Basel, Switzerland, serves as “a bank for central banks”.
• Local production: Central Banks can also buy locally produced gold. This occurs in gold-producing countries like China,
Russia, Canada etc.
INDIANS TO TRADE IN SELECT US STOCKS

Context: Indian retail investors got permission to trade in select US stocks through the NSE International Exchange.
About NSE International Exchange (NSE IFSC)

• NSE IFSC Limited is a fully owned subsidiary company of National Stock Exchange of India Limited (NSE).
• NSE International Exchange has been launched to grow the financial market as well as expected to bring capital into
India.
• It offers longer trading hours in various products including in Index Derivatives, Stock Derivatives, Currency Derivatives,
Commodity Derivatives and Debt Securities.
• Exchange and Financial Services units located in Gujarat International Finance Tech City (GIFT) are offered competitive
tax structure and facilitative regulatory framework.
− GIFT city, which is a special economic zone, is India’s first International Financial Service Centre.
Trade in Select US Stocks

• NSE IFSC has launched trading in unsponsored depositary receipts, which will offer Indian retail investors an opportunity
to invest in the US stocks .
• The trading in unsponsored depositary receipts - NSE IFSC Receipts has been launched in association with HDFC Bank.
− It will undertake related activities besides opening the depositary accounts of investors.
• Following this launch, Indian retail investors will be able to transact on the NSE IFSC platform under the Liberalised
Remittance Scheme (LRS) prescribed by the Reserve Bank of India.
− LRS allows Indian residents to freely remit up to USD $250,000 per financial year for current or capital account
transactions or a combination of both.
− Any remittance exceeding this limit requires prior permission from the RBI.
Important Terms
• NSE IFSC Receipts: It is a negotiable financial instrument in the nature of an unsponsored depository receipt.
− It means that it is a derivative product and investors can directly trade in these stocks without having to do so through registered
online brokers.
− Now shares can be bought in the US and issued receipts against them, which will be known as NSEIFSC Receipts.
• Depository Account (DEMAT): A demat account helps investors hold shares and securities in an electronic format.
− This kind of account is also called a Dematerialised Account.
PAPER IMPORT MONITORING SYSTEM (PIMS)

Context: The Directorate General of Foreign Trade has introduced a Paper Import Monitoring System.
About PIMS
• The Directorate General of Foreign Trade has introduced Paper Import Monitoring System (PIMS) by amending the
import policy of major paper products from ‘Free’ to ‘Free subject to compulsory registration under PIMS’.
• PIMS came into effect from 1st October, 2022.
• The PIMS shall be applicable on import by a Domestic Territory Area unit on a wide range of paper products covering
201 tariff lines, such as newsprint, handmade paper, coated paper, uncoated paper, Litho and offset paper, tissue
paper, toilet paper, cartons, labels, etc.
• However, paper products like currency paper, bank bond and Cheque paper, security printing paper, etc. have been
excluded from mandatory registration.
• The Union Government has already created an interface for the implementation of the Paper Import Monitoring System.
• The development comes in the backdrop of the domestic paper industry raising issues of dumping of paper products
in the India market by under-invoicing.
INDIAN BUSINESS PORTAL

Context: The Union Minister of State for Commerce & Industry recently launched the Indian Business Portal in New Delhi.
About Indian Business Portal

• It is an International Trade Hub for Indian Exporters and Foreign Buyers.
• Federation of Indian Export Organisations (FIEO) in partnership with GlobalLinker, has designed and developed the
Indian Business Portal.
• Indian Business Portal is the only such marketplace that is exclusive for exporters registered in India and is custom-
built to support exporters with a range of bespoke features and relevant partners integrated to build this ecosystem.
Features
• Global Visibility : FIEO will promote the marketplace worldwide to help Indian exporters, SMEs, artisans promote
their products and services globally.
• Business Meetings: Facility to create buyer and seller meetings has been provided, and also the option for overseas
consumers to directly buy from artisans and exporters who offer smaller quantities of their products.
• Geographical Indication (GI) products: A special focus has been dedicated to empowering Indian artisans, farmers, and
producers dealing in over 370 Indian Geographical Indication (GI) Categories by helping them digitise their catalogues
and showcase their unique offerings globally through Indian Business Portal.
BRENT CRUDE VS. WEST TEXAS INTERMEDIATE (WTI)

Context: The global crude oil prices have risen due to a weak U.S. oil output and extended production cuts by Saudi
Arabia and Russia.
About Brent Crude and West Texas Intermediate (WTI)

• They are two of the most commonly traded types of crude oil in the world.
• They serve as benchmark prices for the global oil market and are used to determine oil prices for various products,
including gasoline, diesel, and other refined petroleum products.
Differences Between Brent Crude and West Texas Intermediate (WTI)

Parameter Brent Crude West Texas Intermediate (WTI)
Extraction Extracted from the North Sea region of the Atlantic Extracted in the United States, mainly from the Permian
Locations Ocean. Basin (west Texas and southeastern New Mexico).
Composition It is a light, sweet crude oil, which means it has a It is also a light, sweet crude oil, but WTI enjoys lower
relatively low density and sulfur content. sulfur content than the Brent.
Benchmark Brent crude price is the international benchmark WTI is the benchmark for oil prices in the United States.
Prices price used by the OPEC. (Since India imports primarily
from OPEC countries, Brent is the benchmark for oil
prices in India)
Trading Exchange It trades on London’s ICE Futures exchange. It trades on the New York Mercantile Exchange.
Transportation As the Brent crude is produced near the sea, so West Texas Intermediate is produced in landlocked
Costs transportation costs are significantly lower. areas, which makes it more expensive to transport.
Related Facts
• About Crude Oil:
− Crude oil is made up of a mixture of hydrocarbons - hydrogen and carbon atoms.
− It exists in liquid form in underground reservoirs in the tiny spaces within sedimentary rocks. Or it can be found
near the surface in oil sands.
− Crude oil is formed from the remains of dead organisms (diatoms) such as algae and zooplankton that existed
millions of years ago in a marine environment.
− Petroleum products are materials derived from crude oil as it is processed in oil refineries through Fractional
distillation.
• The top five crude oil producers in the world: United States, Russia, Saudi Arabia, Canada, and Iraq.
• The largest producer of crude oil in India is Rajasthan, followed by Assam and Gujarat.
• India is dependent on imports for about 83% of its crude oil requirement.
CHAPTER 5
Human Development Indicators

ILO MONITOR ON THE WORLD OF WORK–11TH EDITION
Context: According to the International Labour Organisation’s (ILO) Monitor on the World of Work–11th edition (June
2023), global unemployment is likely to return to the pre-pandemic level.
About the report

• Global unemployment is likely to return to the pre-pandemic level in 2023
• The ILO’s estimates project that the global unemployment rate will fall by 0.1 percentage points in 2023.
− This implies a decline in the total number of globally unemployed people of one million, which is due to greater-
than-anticipated labour market resilience in high-income countries in the face of the economic slowdown.
− There are signs that further interest rate hikes in high-income countries will be limited as central bankers start to
prioritize concerns about the health of the economy.
− Interest rates in many low- and middle-income countries are expected to remain stable or decline.
− Nevertheless, the risk of the global economy entering a recession remains sizeable, creating a major downside
risk for global labour markets.
• Global estimates of unemployment for the years 2020 through 2022 have been revised substantially in light of new
data.
− In 2023, global unemployment is projected to fall to 191 million, corresponding to an unemployment rate of 5.3
per cent.
− Yet, unemployment in low-income countries and in the regions of Africa and the Arab States is not expected to
recover to pre-pandemic levels in 2023.
• Jobs gap indicator points to large employment deficits, particularly in developing countries.
− While unemployment numbers provide important information on the extent of labour underutilization, especially
in developing countries, the jobs gap, offers a more comprehensive measure of the unmet demand for employment
around the world. It captures all persons who would like to work but do not have a job.
− In 2023, the global jobs gap is projected to stand at 453 million people or 11.7 per cent, more than double the
unemployment count.
− There is an unequal jobs gap globally.
Recommendations
• The report stresses the critical importance of creating fiscal space for social investments in low-income countries.
• The report also suggested policy steps such as wider social security net to take on the crisis and ensure recovery
and reconstruction.
• Implementing a social protection floor for older persons could contribute to boosting economic growth, mainly through
accelerating the demographic transition and decreasing countries’ reliance on agriculture.
PERIODIC LABOUR FORCE SURVEY (PLFS)

Context: Periodic Labour Force Survey (PLFS) Annual Report 2022-2023 was Released in October 2023.
Human Development Indicators 53
About the Repot

• In rural areas, Labour Force Participation Rate (LFPR) increased from 50.7% in 2017-18 to 60.8% in 2022-23 while for
urban areas it increased from 47.6% to 50.4%.
− LFPR for male in India increased from 75.8% in 2017-18 to 78.5% in 2022-23 and corresponding increase in LFPR
for female was from 23.3% to 37.0%.
• Increasing Trend in Worker Population Ratio (WPR) for persons of age 15 years and above
− In rural areas, WPR increased from 48.1% in 2017-18 to 59.4% in 2022-23 while for urban areas it increased from
43.9% to 47.7%.
− WPR for male in India increased from 71.2% in 2017-18 to 76.0% in 2022-23 and corresponding increase in WPR
for female was from 22.0% to 35.9%.
• Decreasing Trend in Unemployment Rate (UR) for persons of age 15 years and above
− In rural areas, UR decreased from 5.3% in 2017-18 to 2.4% in 2022-23 while for urban areas it decreased from
7.7% to 5.4%.
− UR for male in India decreased from 6.1% in 2017-18 to 3.3% in 2022-23 and corresponding decrease in UR for
female was from 5.6% to 2.9%.
About PLFS
• National Sample Survey Office (NSSO) launched Periodic Labour Force Survey (PLFS) in April 2017. The objective of
PLFS is primarily twofold:
− to estimate the key employment and unemployment indicators (viz. Worker Population Ratio, Labour Force
Participation Rate, Unemployment Rate) in the short time interval of three months for the urban areas only in
the ‘Current Weekly Status’ (CWS).
− to estimate employment and unemployment indicators in both ‘Usual Status’ (ps+ss) and CWS in both rural and
urban areas annually.
− Five Annual Reports covering both rural and urban areas giving estimates of all important parameters of employment
and unemployment in both usual status (ps+ss) and current weekly status (CWS) have been released.
VOCATIONAL EDUCATION
Context: NITI Aayog has proposed setting up separate central board for vocational education.
More about the news

• The separate central board for recognition of vocational education should be on the lines of an education board
such as the central board of secondary education.
• NITI Aayog also suggested conducting national centralised examinations for admission to Industrial Training Institute
(ITIs) to streamline the system and ensure transparency.
• There is a need for a centrally sponsored scheme for uplifting poor performing ITIs
− A comprehensive continuous monitoring process for concurrent review of their functioning and operations, and
providing trainee instructors (on the lines of the BEd system) to improve the quality of future trainers while
addressing the shortage of human resource at ITIs.
• NITI Aayog also suggested to extend the current role of National Council for Vocational Education and Training as a
National Board for Skill Development which can be a vocational education counterpart of CBSE.
− Vocational board can be empowered to conduct examinations and award degrees to ITI students which will be
equivalent to academic degrees awarded by education boards such as the CBSE.
• The Aayog suggested that admissions to ITIs be done through a national level centralised portal, similar to the
model that exists for all-India entrance tests such as the Joint Entrance Examination (JEE) and National Eligibility
Cum Entrance Test (NEET).
• Admission in ITIs should not be based only on 8th and 10th marks but also include a mechanism for checking aptitude
and inclination of candidates for vocational skills.
About Vocational Education (VE)

• Vocational Education and Training (VET) is also called as Career and Technical Education (CTE).
− It prepares learners for jobs that are based in manual or practical activities, traditionally non-academic and
totally related to a specific trade, occupation or vocation, hence the term, in which the learner participates.
• The Directorate General of Training (DGT) is the national-level apex organization for the development & coordination
of vocational training activities in the country.
• The DGT frames overall norms, policies, and standards for vocational training programmes and training of instructors
and operates the Apprenticeship Act, 1961.
• DGT under the DGE&T was transferred in 2015 from the Ministry of Labour & Employment (MoLE) to Ministry of Skill
Development & Entreprenurship (MSDE). After 2015, DGT is entrusted with the accreditation of ITIs.
• Vocational training is a concurrent subject of both Central and State Governments.
− The development of training schemes at the National level, the evolution of policy, laying of training standards
and norms, the conduct of examinations, certification, etc. are the responsibilities of the Central Government.
− The day-to-day administration including admission in ITIs rests with the respective State Governments /Union
Territory.
GIG ECONOMY
Context: A popular online service’s delivery agents went on strike after the company changed the basis and amount
of their payment, highlighting issues specific to gig-platform workers.
Reasons for the protest: Volatility of Platform Work

• Platform workers have little control over their terms of work, and their wages can be changed quickly by the platform
companies.
• The recent policy change by the company reduced the base pay and introduced effort-based pay, which is calculated
based on the distance ridden rather than the effort required to complete a delivery.
• The incentive-driven payout structures create volatility and uncertainty, forcing workers to compete for an increasing
number of tasks within compressed periods with the promise of bonus pay.
About Gig Economy

• The gig economy refers to a free market system in which temporary positions are common characterised by the
prevalence of short-term contracts or freelance work, as opposed to permanent jobs.
• Gig workers ar those engaged in livelihoods outside the traditional employer-employee arrangement. They can be
broadly classified into: platform and non-platform-based workers.
− Platform workers are those whose work is based on online software apps or digital platforms.
− Non-platform gig workers are generally casual wage workers and ownaccount workers in the conventional sectors,
working part-time or full time.
Status of Gig Economy

• According to a report titled ‘India’s Booming Gig and Platform Economy’ released by NITI Aayog, 77 lakh workers
were engaged in the gig economy in 2020–21. They constituted 2.6% of the non-agricultural workforce or 1.5% of
the total workforce in India.
• The gig workforce is expected to expand to 2.35 crore (23.5 million) workers by 2029–30. Gig workers are expected
to form 6.7% of the non-agricultural workforce or 4.1% of the total livelihood in India by 2029–30.
• At present, about 47% of the gig work is in medium skilled jobs, about 22% in high skilled, and about 31% in low
skilled jobs.
• Trend shows the concentration of workers in medium skills is gradually declining and that of the low skilled and
high skilled is increasing.
Recommendations by NITI Aayog for Gig Economy

• Code on Social Security: The report puts forth suggestions for platform-led transformational and outcome-based
skilling, enhancing social inclusion through gender sensitization and accessibility awareness as envisaged in the Code
on Social Security 2020. NITI Aayog has also proposed the RAISE Approach for operationalizing the CoSS, 2020
• Access to Skill and Finance: Provide financial products and cash flow-based loans to platform workers. Platforms can
collaborate with the Ministry of Skill Development to promote skilling and job creation in the gig economy.
• Focus on Women: It recommends businesses to implement programmes for workers and their families that raise
knowledge of gender issues and accessibility, especially to advance the rights of women and people with disabilities.
• Data Collection: Other recommendations include undertaking a separate enumeration exercise to estimate the size
of the gig and platform workforce and collecting information during official enumerations (Periodic Labour Force
Survey) to identify gig workers.
• Free trade agreement: creating pathways for education and certification acquired in India to be recognised globally,
such as through FTAs.
• Innovation: Platforms and businesses can innovate to create new models that provide gig workers with better pay,
benefits, and job security. This could include the development of new technologies, such as blockchain and AI that
enable more transparent and secure gig work arrangements.
STAND UP INDIA
Context: In April 2023, Prime Minister acknowledged StandUp India’s role in empowering the SC/ST communities,
women, and job creation at the completion of 7 years of the Scheme.
About Stand Up India scheme

• Stand Up India scheme launched in 2016 to promote entrepreneurship at grassroot level ( women and Scheduled
Caste & Scheduled Tribe (SC & ST) communities) focusing on economic empowerment and job creation. This scheme
has been extended up to the year 2025.
• The scheme is anchored by Department of Financial Services (DFS), Ministry of Finance, Government of India.
• Stand-Up India Scheme facilitates bank loans between Rs 10 lakh and Rs 1 Crore to at least one Scheduled Caste
(SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a greenfield
enterprise.
− This enterprise may be in manufacturing, services or the trading sector. In case of non-individual enterprises at
least 51% of the shareholding and controlling stake should be held by either an SC/ST or woman entrepreneur.
• Eligibility
− SC/ST and/or woman entrepreneurs, above 18 years of age.
− Loans under the scheme is available for only green field project. Green field signifies, in this context, the first time
venture of the beneficiary in the manufacturing or services or trading sector.
− In case of non-individual enterprises, 51% of the shareholding and controlling stake should be held by either SC/
ST and/or Women Entrepreneur.
− Borrower should not be in default to any bank/financial institution.
− The Scheme envisages ‘up to 15%’ margin money which can be provided in convergence with eligible Central/
State schemes. In any case, the borrower shall be required to bring in minimum of 10 % of the project cost as
own contribution.
STARTUP20
Context: Hyderabad hosted a two-day inception meeting of the Startup 20 Engagement Group, set up under India’s
G20 presidency.
About Startup20
• Startup20 aspires to create a global narrative for supporting start-ups and enabling synergies between start-ups,
corporates, investors, innovation agencies and other key ecosystem stakeholders.
• Startup20 has three different tracks, namely, foundation and alliance, finance and inclusivity and sustainability.
• The purpose of this group is to provide a common platform for start-ups from G20 member countries to come
together to develop actionable guidance in the form of building of enabler’s capacities, identification of funding
gaps, enhancement of employment opportunities, achievement of SDG targets and climate resilience, and growth
of an inclusive ecosystem.
STARTUP ECOSYSTEM
Context: The Union government asserted that it will always act as a facilitator to strengthen the start-up ecosystem
in the country and not act as a regulator.
About Startups
• Startups are newly founded companies or businesses that are often characterized by their innovative ideas, scalable
business models, and high growth potential.
• These ventures are typically established by entrepreneurs or small groups of individuals who aim to introduce a new
product, service, or technology to the market.
Startups in India
• The Indian startup ecosystem has evolved dynamically over the last two decades.
• Startups in India are emerging in the fields of IT, agriculture, aviation, education, energy, health and space sectors.
• Since the launch of Startup India initiative in 2016, DPIIT has recognised 92,683 entities as startups as on 28th
February 2023.
• As per the Economic Survey 2021-22:
− India has become the third-largest startup ecosystem in the world after the US and China.
− Most of the startups are in the services sector and 49% of the startups are from tier-2 and tier-3 cities.
− A record 44 Indian startups achieved unicorn status in 2021, taking the overall tally of startup unicorns in India
to 83.
− Some of the successful Indian unicorns are Lenskart, Cred, Meesho, PharmEasy, Licious, Grofers, etc.
What is a Unicorn?
• A unicorn is any privately owned firm with a market capitalization of more than $1 billion.
• Unicorns are developing innovative solutions and technologies and also generating large-scale employment.
• 1 out of every 10 unicorns globally have been born in India.
• Unicorns are active in Tier I cities. Bengaluru is India’s unicorn capital
Various programs undertaken under Startup India initiative,

• Startup India scheme: Startup India is a flagship initiative launched by the Government of India on 16th January, 2016
to build a strong eco-system for nurturing innovation and startups in the country which will drive economic growth
and generate large scale employment opportunities.
• Fund of Funds for Startups (FFS) Scheme: The Government has established FFS with corpus of Rs. 10,000 crore, to
meet the funding needs of startups. DPIIT is the monitoring agency and Small Industries Development Bank of India
(SIDBI) is the operating agency for FFS. The total corpus of Rs. 10,000 crore is envisaged to be provided over the 14th
and 15th Finance Commission cycles based on progress of the scheme and availability of funds.
• Credit Guarantee Scheme for Startups (CGSS): The Government has established the Credit Guarantee Scheme for
Startups for providing credit guarantees to loans extended to DPIIT recognized startups by Scheduled Commercial
Banks, Non-Banking Financial Companies (NBFCs) and Venture Debt Funds (VDFs) under SEBI registered Alternative
Investment Funds. CGSS is aimed at providing credit guarantee up to a specified limit against loans extended by
Member Institutions (MIs) to finance eligible borrowers viz. DPIIT recognised startups.
• Regulatory Reforms: Over 50 regulatory reforms have been undertaken by the Government since 2016 to enhance
ease of doing business, ease of raising capital and reduce compliance burden for the startup ecosystem.
• Ease of Procurement: To enable ease of procurement, Central Ministries/ Departments are directed to relax conditions
of prior turnover and prior experience in public procurement for all DPIIT recognised startups subject to meeting quality
and technical specifications. Further, Government e-Marketplace (GeM) Startup Runway has been developed which
is a dedicated corner for startups to sell products and services directly to the Government.
• Support for Intellectual Property Protection: Startups are eligible for fast-tracked patent application examination and
disposal. The Government launched Start-ups Intellectual Property Protection (SIPP) which facilitates the startups to
file applications for patents, designs and trademarks through registered facilitators in appropriate IP offices by paying
only the statutory fees. Facilitators under this Scheme are responsible for providing general advisory on different IPRs,
and information on protecting and promoting IPRs in other countries. The Government bears the entire fees of the
facilitators for any number of patents, trademark or designs, and startups only bear the cost of the statutory fees
payable. Startups are provided with an 80% rebate in filing of patents and 50% rebate in filling of trademark vis-a-vis
other companies.
• Self-Certification under Labour and Environmental laws: Startups are allowed to self-certify their compliance under
9 Labour and 3 Environment laws for a period of 3 to 5 years from the date of incorporation.
• Income Tax Exemption for 3 years: Startups incorporated on or after 1st April 2016 can apply for income tax exemption.
The recognized startups that are granted an Inter-Ministerial Board Certificate are exempted from income-tax for a
period of 3 consecutive years out of 10 years since incorporation.
• International Market Access to Indian Startups: This has been done though international Government to Government
partnerships, participation in international forums and hosting of global events. Startup India has launched bridges
with over 15 countries (Brazil, Sweden, Russia, Portugal, UK, Finland, Netherlands, Singapore, Israel, Japan, South
Korea, Canada, Croatia, Qatar and UAE) that provides a soft-landing platform for startups from the partner nations
and aid in promoting cross collaboration.
• Faster Exit for Startups: The Government has notified Startups as ‘fast track firms’ enabling them to wind up operations
within 90 days vis-a-vis 180 days for other companies.
• Startup India Hub: The Government launched a Startup India Online Hub on 19th June 2017 which is one of its kind
online platform for all stakeholders of the entrepreneurial ecosystem in India to discover, connect and engage with
each other. The Online Hub hosts Startups, Investors, Funds, Mentors, Academic Institutions, Incubators, Accelerators,
Corporates, Government Bodies and more.
• National Startup Advisory Council: The Government in January 2020 notified constitution of the National Startup
Advisory Council to advise the Government on measures needed to build a strong ecosystem for nurturing innovation
and startups in the country to drive sustainable economic growth and generate large scale employment opportunities.
Besides the ex-officio members, the council has a number of non-official members, representing various stakeholders
from the startup ecosystem.
• Startup India Seed Fund Scheme (SISFS):. The Scheme aims to provide financial assistance to startups for proof
of concept, prototype development, product trials, market entry and commercialization. Rs. 945 crore has been
sanctioned under the SISFS Scheme for period of 4 years starting from 2021-22.
• Startup Champions on Doordarshan: Startup Champions program on Doordarshan is a one-hour weekly program
covering stories of award winning/ nationally recognised startups. It is telecasted in both Hindi and English across
Doordarshan network channels.
• Startup20 Engagement Group: Startup20 Engagement Group under India’s G20 Presidency has been institutionalised
which is working towards harmonisation and cross collaboration amongst the largest global economies. The engagement
group acts as the voice of the global startup ecosystem bringing together varied stakeholders on a common platform.
The group aims to support startups by enabling synergies between startups, corporates, investors, innovation agencies
and other key ecosystem stakeholders internationally and to create global synergies.
GLOBAL LIVEABILITY INDEX 2023

Context: In June 2023, the Economist Intelligence Unit (EIU) has unveiled its highly anticipated list of the ‘Most Liveable
Cities in the World 2023’.
About the Index

• The index covered 172 cities.
• Ranking is based on matrics i.e. healthcare, culture, environment, entertainment reliable infrastructure, education,
and stability. This ranking offers insights into the cities that excel in providing an exceptional quality of life.
• Vienna, Austria, has been named the best city to live in the world.
• The cities which are plagued by ongoing civil unrest and military conflicts, amongst other issues, remained at the
bottom of the list. Algeria’s Algiers, Libya’s Tripoli and Syria’s Damascus were ranked the three least liveable cities
in the world.
• From India, New Delhi and Mumbai are at 141st position.
PRADHAN MANTRI GARIB KALYAN ANN YOJANA (PMGKAY)

Context: Centre names new integrated food security scheme launched from 1 January 2023 as “Pradhan Mantri Garib
Kalyan Ann Yojana (PMGKAY).
More about the news

• The government has named its new free foodgrain scheme under the National Food Security Act, 2013, as ‘Pradhan
Mantri Garib Kalyan Anna Yojana (PMGKAY).
• The name of the new scheme is similar to that of the free foodgrain scheme implemented as part of the Centre’s
Covid-19 package announced in 2020.
− Previous scheme: the difference between the two schemes is that about 81 crore NFSA beneficiaries were entitled
to get free of cost 5 kg foodgrain per person in a month over and above their monthly entitlements.
However, they were required to pay the subsidised rate of foodgrains (Rs 3 per kg rice, Rs 2 per kg wheat and
Rs 1 per kg coarse grains) to purchase the quantity for which they were entitled–35 kg per Antyoday Anna
Yojana Household and 5kg per person to a Priority Household in a month.
− New Scheme: In the new scheme, the government has done away with the subsided prices and is providing
foodgrains free of cost. But now the additional quantity, which was available during the Covid pandemic, will
not be provided to these beneficiaries. They will receive as much quantity of foodgrains, for which they are
entitled under the NFSA.
• It means the scheme would be providing free foodgrains to Antodaya Anna Yojna (AAY) & Primary Household (PHH)
beneficiaries under the NFSA beginning January 1, 2023.
• For effective and uniform implementation of NFSA 2013, PMGKAY will subsume the two subsidy schemes of
Department of Food & Public Distribution (a) Food Subsidy to FCI (b) Food Subsidy for decentralized procurement
states dealing with procurement, allocation and delivery of free foodgrains to the states under NFSA.
Background of Pradhan Mantri Garib Kalyan Anna Yojana

• Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY) is a scheme as part of Atmanirbhar Bharat to supply free food
grains to migrants and poor.
• Phase-I and Phase-II of this scheme was operational from April to June, 2020 and July to November, 2020 respectively.
Phase III of the scheme was operational from May to June, 2021. Phase-IV of the scheme during July-November, 2021
and Phase V from December 2021 till March, 2022 .
• Under this scheme, the center provided 5kg of free food grains per month to the poor. This was in addition to the
subsidized (Rs 2-3 per kg) ration provided under the National Food Security Act (NFSA) to families covered under the
Public Distribution System (PDS).
• Eligibility: Families belonging to Antyodaya Anna Yojana (AAY) and Priority Households (PHH) categories are eligible
for the scheme.
− PHH are to be identified by State Governments/Union Territory Administrations as per criteria evolved by them.
AAY families are to be identified by States/UTs as per the criteria prescribed by the Central Government.
GLOBAL HUNGER INDEX

Context: India ranked 111 out of 125 countries in Global Hunger Index 2023.
Key highlights from the Global Hunger Index 2023

Indian Scenario:
• India’s ranking is based on a Global Hunger Index score of 28.7 on a 100-point scale where 0 is the best score (no
hunger) and 100 is the worst. This categorises India’s severity of hunger as “serious”.
• While India made significant strides between 2000 and 2015, with its score improving from 38.4 in 2000 to 35.5 in
2008 and 29.2 in 2015, over the past eight years, the country has advanced on the GHI by only 0.5 points.
Global Scenario
• Globally, the share of people who are undernourished, which is one of the indicators used in the index, actually rose
from 7.5% in 2017 to 9.2% in 2022, reaching about 735 million.
• South Asia and Africa South of the Sahara are the world regions with the highest hunger levels, with GHI scores of
27.0 each, indicating serious hunger. West Asia and North Africa is the region with the third-highest hunger level with
a score of 11.9 indicating “moderate” hunger level.
• Latin American and the Caribbean is the only region in the world whose GHI scores have worsened between 2015
and 2023.
• East and Southeast Asia, dominated by populous China, has the second-lowest 2023 GHI score of any region in the
report.
• The region with the lowest 2023 GHI score is Europe and Central Asia, whose score of 6.0 is considered “low”.
What is the Global Hunger Index (GHI)?
• About:
• It is an annual report jointly published by two European NGOs, Concern Worldwide and Welthungerhilfe.
• It was first published in 2006. It is published every October. The 2022 edition marks the 17th edition of the GHI.
• Objective: To comprehensively measure and track hunger at global, regional, and national levels.
How the GHI Is Calculated?
• Each country’s GHI score is calculated based on a formula that combines four indicators:
− Undernourishment: the share of the population with insufficient caloric intake.
− Child stunting: the share of children under age five who have low height for their age, reflecting chronic undernutrition.
− Child wasting: the share of children under age five who have low weight for their height, reflecting acute undernutrition.
− Child mortality: the share of children who die before their fifth birthday, partly reflecting the fatal mix of inadequate nutrition
and unhealthy environments.
EMPLOYEES PROVIDENT FUND ORGANISATION (EPFO)

Context: Employees Provident Fund Organisation (EPFO) has fixed the interest rate at 8.15% for financial year 2022-23.
More on the News

− There is a hike in the EPF account interest rate by 0.05%. Last year, the interest rate for EPF account was 8.10%
for FY 2021-22.
− Interest rate is fixed by the Central Board of Trustees (CBT).
About EPFO
• EPFO stands for Employees’ Provident Fund Organisation.
− It is a statutory body established under Employees’ Provident Funds & Miscellaneous Provisions Act, 1952.
− It is an autonomous body that regulates and manages the Provident Funds (PF) in India.
− It comes under the Ministry of Labour and Employment.
• EPFO provides social security to the employees through these 3 schemes-
− The Employees’ Provident Funds Scheme, 1952 (EPF)
− The Employees’ Pension Scheme, 1995 (EPS)
− The Employees’ Deposit Linked Insurance Scheme, 1976 (EDLI)
• Administration: Schemes framed are administered by a tri-partite Board known as the Central Board of Trustees,
consisting of representatives of Government (Both Central and State), Employers, and Employees.
− EPFO assists the Central Board of Trustees (EPF) in the administration of a provident fund scheme, pension scheme
and an insurance scheme for the registered establishments in India and includes employees of such establishments
and international workers who are covered.
• Other roles: EPFO is the nodal agency for implementing Bilateral Social Security Agreements with other countries.
• Significance: EPFO is one of the world’s largest Social Security Organisations in terms of clientele and the volume
of financial transactions undertaken.
About Employees Provident Fund (EPF)

• It is a mandatory contribution for salaried employees.
• An employee makes 12% of his wages contribution to the EPF account on monthly basis.
− The employees’ full contribution is deposited to the EPF account.
• An employer is required to make the matching contribution to the EPF account.
− In case of employer, only 3.67 percent is deposited to the EPF account. The balance 8.33% goes towards the
Employees Pension Scheme (EPS).
CAPTIVE EMPLOYMENT INITIATIVE

Context: Recently, Union Minister for Rural Development onboarded 19 Captive Employers, a unique initiative under
the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY).
About Captive employment Initiative

• The ‘Captive Employment’ initiative is a unique effort to establish a dynamic and responsive skilling ecosystem that
meets the demands of industry partners, while also ensuring sustainable employment opportunities for rural youth
from underprivileged backgrounds.
• This initiative is a significant boost to the DDU-GKY programme, guaranteeing that trainees will be placed in jobs for
a minimum of six months, with a minimum monthly salary of Rs 10,000/-.
• This program will be a game-changer for rural communities, providing a much-needed solution to their employment
needs and elevating their standard of living.
• Additionally, the program will also contribute to achieving the United Nations’ sustainable development goals.
Captive Employment
•
Captive employment refers to a situation where an employee is bound to work exclusively for a particular company or
organization, usually through a contractual agreement or obligation.
•
Captive employment is commonly used in industries such as finance, outsourcing, and manufacturing, where companies set
up their own captive centres or subsidiaries to handle certain business processes or operations.
•
It aims at addressing the vision of a dynamic and demand-based skilling ecosystem catering to the requirements of industry
partners assuring sustainable placements for rural poor youth.
Captive Employer
•
Any industry or employer that employs candidates within its own organisation or one of its subsidiaries and has adequate in-
house training facilities is referred to as a captive employer.
•
Captive placements are those that are offered by captive employers.
Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY)

• The Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) is a skilling program initiated by the Ministry of
Rural Development.
• It is operating under the National Rural Livelihood Mission (NRLM), that focuses on providing employment opportunities
to disadvantaged rural youth.
• The program is funded by the Government of India’s Ministry of Rural Development and has been implemented in
27 states and 4 Union Territories.
• The primary goal of the program is to place trained rural youth in jobs, making it a placement-linked skilling initiative.
GLOBAL RISKS REPORT 2023

Context: The World Economic Forum (WEF) has published the Global Risks Report 2023.
Key findings of the report

• Major global risks:
− In the next 2 years: Cost of living; Natural disasters and extreme weather events; Geoeconomic confrontation
− In the next 10 years: Failure to mitigate climate change; Biodiversity loss and ecosystem collapse
• Major risks for India: Digital inequality; geopolitical confrontation for resources, the rising cost of living, debt crisis,
natural disasters and extreme weather events.
− Technologies such as AI, Quantum and Biotechnology are going to exacerbate the inequalities and digital divide
(if no action is taken to mitigate it).
• Economic and geopolitical risks:
− Covid-19 and Ukraine war has resulted in rising inflation, rapid normalization of monetary policies, low-growth
and low-investment era.
− A miscalibration between monetary and fiscal policies will raise the likelihood of liquidity shocks, signalling a
more prolonged economic downturn and debt distress on a global scale.
− Geopolitical fragmentation will drive geoeconomic warfare and heighten the risk of multi-domain conflicts.
• Dangerous interconnections: Over the next 10 years or by 2033, the interconnections between biodiversity loss,
pollution, natural resource consumption, climate change and socioeconomic drivers will make for a dangerous mix.
• Disasters and extreme weather events:
− The impact of natural disasters or extreme weather events disproportionately affects low- and middle-income
countries.
− Such events figure among the top five risks in 25 countries, especially developing coastal countries across Latin
America, Africa and South-East Asia including India.
• Climate action, biodiversity loss:
− The world has struggled to make the required progress on climate change despite 30 years of global climate
advocacy and diplomacy, the report flagged.
− Biodiversity within and between ecosystems is already declining faster than at any other point during human
history.
− The Kunming-Montreal Global Biodiversity Framework (GBF) adopted at the UNCBD’s COP15 is thus a significant
breakthrough as far as global action on biodiversity is concerned.
About the Report

• The report examines global risk perceptions across five categories: economic, environmental, geopolitical, societal,
and technological.
• Highest Risk: Climate action failure is also considered the most critical threat to the world in both the medium term (2-5
years) and long term (5-10 years), with the highest potential to severely damage societies, economies, and the planet.
• Other important risks: The societal and environmental risks have worsened the most since the start of the pandemic,
with “social cohesion erosion” and “livelihood crises” taking the top spots. Other risks identified as having worsened
significantly are “debt crises”, “cybersecurity failures”, “digital inequality” and “backlash against science”.
Global risks ranked by severity over the short and long term
2 years 10 Years
Cost-of-living crisis Failure to mitigate climate change
Natural disasters and extreme weather events Failure of climate-change adaptation
Geoeconomic confrontation Natural disasters and extreme weather events
2 years 10 Years
Failure to mitigate climate change Biodiversity loss and ecosystem collapse
Erosion of social cohesion and societal polarization Large-scale involuntary migration
Large-scale environmental damage incidents Natural resource crises Erosion of social cohesion and societal polarization
Failure of climate change adaptation Widespread cybercrime and cyber insecurity
Widespread cybercrime and cyber insecurity Geoeconomic confrontation
Natural resource crises Large-scale environmental damage incidents
Large-scale involuntary migration
GINI COEFFICIENT
Context: Higher procurement and free distribution of cereals, helping lower inequality in India, a recent report by the
State Bank of India’s research team showed.
About Gini Coeffecien
• The Gini Coefficient, which is derived from the Lorenz Curve, can be used as an indicator of economic development
in a country.
• The Gini Coefficient measures the degree of income equality in a population.
• The Gini Coefficient can vary from 0 (perfect equality) to 1 (perfect inequality).
• A Gini Coefficient of zero means that everyone has the same income, while a Coefficient of 1 represents a single
individual receiving all the income.
REPORT ON INEQUALITY
Context: In January 2023, a global report of Oxfam, a non-government organisation, has presented a bleak picture of
widening inequality all over the world, and particularly in India.
About the report

• The report has been titled as “Survival of the Richest: The India Story,”.
• The report highlighted that just 5 per cent of Indians own more than 60 per cent of the country’s wealth, while the
bottom 50 per cent of the population possess only 3 per cent of the wealth.
• The report has also highlighted that between 2012 and 2021, 40 per cent of the wealth created in India has gone
to just 1 per cent of the population and only a mere 3 per cent of the wealth has gone to the bottom 50 per cent.
• The total number of billionaires in India increased from 102 in 2020 to 166 billionaires in 2022.
• The combined wealth of India’s 100 richest has touched $660 billion (Rs 54.12 lakh crore) — an amount that could
fund the entire Union Budget for more than 18 months.
• While India suffers from multiple crises like hunger, unemployment, inflation and health calamities, India’s billionaires
are doing extremely well for themselves.
− The poor, meanwhile, in India are unable to afford even basic necessities to survive.
• Oxfam adds that India has the world’s highest number of poor at 228.9 million.
DEENDAYAL ANTYODAYA YOJANA – NATIONAL RURAL LIVELIHOOD MISSION (DAY-NRLM)

Context: The Union Minister for Rural Development and Panchayati Raj has asserted that the target of having 10 Crore
SHG members by 2024 will be achieved.
More about news

• An MoU has also been signed by the Ministry with “Meesho” ( an e-commerce platform owned by Bengaluru-based
Fashnear Technologies Private Limited), for marketing of products made by the Self Help Groups under the Deendayal
Antyodaya Yojana - National Rural Livelihood Mission.
• NRLM and State Rural Livelihood Missions (SRLMs) have taken several steps to promote curated products from
SHGs through multiple channels such as Saras Gallery, State specific retail outlets, e-Commerce platforms like GeM,
Flipkart, Amazon.
About DAY-NRLM
• It was launched by the Ministry of Rural Development (MoRD), Government of India in June 2011 as a restructured
version of Swarna Jayanti Gram Swarozgar Yojna (SGSY).
• It is a flagship poverty alleviation program that aims to reduce poverty by enabling the poor household to access
gainful self-employment and skilled wage employment opportunities resulting in sustainable and diversified livelihood
options for the poor.
• This is one of the world’s largest initiatives to improve the livelihoods of the poor. The Mission seeks to achieve its
objective through investing in four core components viz.,
− social mobilization and promotion and strengthening of self-managed and financially sustainable community
institutions of the rural poor women;
− financial inclusion;
− sustainable livelihoods; and
− social inclusion, social development and access to entitlements through convergence.
• Sub-scheme under Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY - NRLM
− Aajeevika Grameen Express Yojana: The Government of India has introduced this sub-scheme from 2017-18. The
objective is to provide an alternative source of livelihoods to members of SHGs under DAY - NRLM by facilitating
them to operate public transport services in backward rural areas, as identified by the States.
− Start-up Village Entrepreneurship Progam: The Start-up Village Entrepreneurship Programme (SVEP) is being
implemented as a sub-scheme under National Rural Livelihood Mission (NRLM) to promote start - up enterprises
in rural areas.
• In April 2023, DAY-NRLM launched “Sangathan Se Samridhhi– Leaving no Rural Woman Behind”, aimed at mobilizing
10 crore women from eligible rural households.
− The Sangathan Se Samridhhi campaign aspires to bring all the vulnerable and marginalized rural households under
the Self-Help Group (SHG) fold to enable them to draw benefits provided under the programme.
PRAJJWALA CHALLENGE
Context: The Ministry of Rural Development (MoRD) has announced the launch of “Prajjwala Challenge” for bringing
about “Transformation of the Indian Rural Economy” with special focus on rural women belonging to the marginalised
rural communities in India.
About the challenge

• The Prajjwala Challenge seeks to expand interest and partnership, mobilise and harvest the power of experts,
academia, practitioners, youth, startups, Community Based Organisations (CBOs), Self – Help Groups (SHGs) to bring
new and innovative ideas to transform the rural economy.
• This is a first of its kind nationwide initiative to provide thoughtful minds a platform to present new, innovative and
scalable pathways for rural economic transformation in India.
FINANCIAL INCLUSION INDEX

Context: The value of Financial Inclusion (FI) Index has improved to 60.1 in March 2023 vis-à-vis 56.4 in March 2022.
About Financial Inclusion Index

• The index captures the extent of financial inclusion across India in a single value ranging between 0 and 100, where
0 represents complete financial exclusion and 100 indicates full financial inclusion.
• It is a comprehensive index incorporating details of banking, investments, insurance, postal as well as the pension
sector in consultation with the government and respective sectoral regulators.
• The FI Index comprises of three broad parameters (weights indicated in brackets) – access (35 per cent), usage (45
per cent), and quality (20 per cent) with each of these consisting of various dimensions, which are computed based
on a number of indicators.
• The index is responsive to ease of access, availability and usage of services, and quality of services.
• According to the RBI, a unique feature of the index is the quality parameter which captures the quality aspect of
financial inclusion as reflected by financial literacy, consumer protection and inequalities and deficiencies in services.
• It was developed by the RBI in 2021, without any ‘base year’.
• Highlights from the recent report:
− The value of the FI Index for March 2023 stands at 60.1.
− When FI Index was first published in August 2021, the Index for FY ending March 2021 was at 53.9. This index
was at 43.4 for the period ending March 2017.
WORLD SOCIAL PROTECTION REPORT 2020-22

Context: In 2022, International Labour Organisation (ILO) recently released World Social Protection Report 2020-22:
Regional companion report for Asia and the Pacific.
Highlights of the Report

• In 2020, only 46.9% of the global population benefitted from at least one protection under the ambit of social security.
• Pervasive challenges such as high levels of economic insecurity, persistent poverty, rising inequality, extensive informality
and a fragile social contract have been exacerbated by Covid-19.
• There are significant regional inequalities in social protection, with Europe and Central Asia having the highest rates
of coverage - 84% of people are covered by at least one benefit.
• Globally, the vast majority of children still have no effective social protection coverage – only one in four children
(26.4%) receives a social protection benefit.
• A mere 18.6% of unemployed workers worldwide have effective coverage for unemployment and thus actually receive
unemployment benefits.
Social protection
• It is defined as a set of policies and programs designed to reduce poverty and vulnerability by promoting efficient
labour markets, diminishing people’s exposure to risks, and enhancing their capacity to protect themselves against
hazards and income loss.
• It includes access to health care and income security measures related especially to old age, unemployment, sickness,
disability, maternity, etc.
Steps taken by India to provide social protection

• Pradhan Mantri Jan Aarogya Yojana (PM-JAY)
• National Health Policy 2017
• Social Security Code 2020
• Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM)
• Atmanirbhar Bharat Abhiyan
• PM Garib Kalyan Ann Yojana (PMGKAY)
• One Nation One Ration Card
• Atmanirbhar Bharat Rozgar Yojana
• Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
GREEN GROWTH
Context: Finance Minister listed ‘Green Growth’ as one of the seven priorities of the Budget. The 2023-24 budget has
allocated Rs 3,079.40 crore to the Ministry of Environment, Forest and Climate Change, which is a 24 per cent increase
from last year’s Rs 2,478 crore.
Component elements of the Budget’s Green Growth push

Component Details
National Green •
It will facilitate transition of the economy to low carbon intensity, reduce dependence on fossil fuel imports,
Hydrogen Mission and make the country assume technology and market leadership in this sunrise sector.
•
India aims to reach a target of an annual production of 5 MMT of green hydrogen by 2030.
Green Credit •
It will be notified under the Environment (Protection) Act.
Programme •
It will incentivize environmentally sustainable and responsive actions by companies, individuals and local
bodies, and help mobilize additional resources for such activities.
PM-PRANAM • PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth.
• Aim: To incentivize States and Union Territories to promote alternative fertilizers and balanced use of
chemical fertilizers.
• Objective: To bring down the government’s subsidy burden, which is estimated to reach Rs 2.25 lakh crore
in 2022-23.
Bhartiya Prakritik • To facilitate the adoption of 1 crore farmers to adopt natural farming, over the next three years.
Kheti Bio-Input • For this, 10,000 Bio-Input Resource Centres will be set-up, creating a national-level distributed micro-
Resource Centres fertilizer and pesticide manufacturing network.
Need for Promoting Natural Farming:
• Though, Chemical fertilisers revolutionised agriculture, they are known to be a major source of water
pollution.
• Eutrophication caused by excessive use of chemical fertilisers, causes death to fishes and other aquatic
life.
• Over a long period of time, they can also harm the soil, causing acidification, and hence have an impact
on the land’s productivity.
• There is a link between the excessive use of chemical fertilisers and incidence of cancer among farmers.
GOBARdhan •
500 new ‘waste to wealth’ plants under GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan)
scheme scheme will be established for promoting circular economy.
•
These will include 200 compressed biogas (CBG) plants, including 75 plants in urban areas, and 300
community or cluster-based plants at total investment of Rs 10,000 crore.
Coastal Shipping •
It will be promoted as the energy efficient and lower cost mode of transport, both for passengers and
freight, through PPP mode with viability gap funding.
Vehicle • Replacing old polluting vehicles is an important part of greening our economy.
Replacement • Budget allocated funds to scrap old vehicles of Central Government.
• States will also be supported in replacing old vehicles and ambulances.
Renewable Energy •
The Inter-state transmission system for evacuation and grid integration of 13 GW renewable energy from
Evacuation Ladakh will be constructed with investment of Rs 20,700 crore including central support of 8,300 crore.
•
The Budget has provided Rs 35,000 crore for priority capital investments towards energy transition and
net zero objectives.
Energy Storage •
To steer the economy on the sustainable development path, Battery Energy Storage Systems with capacity
Projects of 4,000 MWH will be supported with Viability Gap Funding.
“LiFE”, or Lifestyle •
To spur a movement of environmentally conscious lifestyle, and that India was moving towards the
for Environment ‘panchamrit’ and net-zero carbon emission by 2070 to usher in green industrial and economic transition.
MIDDLE CLASS
Context: As per the estimates based on PRICE’s ICE 360° pan India primary surveys, the Middle Class will be nearly
1.02 billion in 2046-47, up from 715 million in 2030-31 and 432 million in 2020-21.
Key Highlights from PRICE ICE 3600 surveys

• The size of the Indian Middle Class, a major driver of economic growth, will jump from 31% of the population in
2020-21 to 61% in 2046-47.
• The middle class is the fastest-growing major segment of the Indian population in both percentage and absolute
terms, rising at 6.3 percent per year between 1995 and 2021.
• More than one billion Indians will make up the middle-class when India will turn 100.
• By the end of this decade, the structure of India’s demographics will change from an inverted pyramid, signifying a
small rich class and a very large low-income class, to a rudimentary diamond, where a significant part of the low-
income class moves up to become part of Middle Class.
• The income pyramid will have a smallish layer at the bottom comprising the Destitute and Aspirer groups, a huge
bulge of the Middle Class and a big creamy Rich layer on top.
− The percentage growth is much higher for the upper income groups than the lower income groups. In fact, for
the lowest income groups the growth could even be in the negative.
• Estimates based on the survey suggest that the population of the Destitute and Aspirer groups will decrease from
almost 928 million in 2020-21 to 647 million by 2030-31 and further to 209 million by 2046-47.
• The top income segment – the Rich – will soar from 56 million to an estimated 169 million and 437 million, while
the huge bulk of the population will comprise a Middle Class of nearly 1.02 billion in 2046-47, up from 715 million in
2030-31 and 432 million in 2020-21.
• Categories of Middle class: Within the category of the Indian Middle Class, the sub-group of Strivers—with an annual
household income of between Rs 15 lakh and Rs. 30 lakh—has grown at 6.4 per cent annually between 2015- 16
and 2020-21.
− The Seekers, another sub-group of the Middle Class earning between Rs 5 lakh and Rs. 15 lakh a year, has grown
by 4.8 per cent annually during this period.
• Categories of the Rich: There has been an even faster growth among various categories of the Rich. For instance,
the number of Super Rich, earning more than Rs 2 crore in 2020-21, has gone up from 1.06 million households (6.1
million consumers) in 2015-16 to 1.81 million households (10.2 million consumers) in 2021.
− By 2030-31, the number of Super Rich households is expected to increase even faster, to 9.1 million households
(46.7 million consumers), and by 2046-47 this is expected to go up to 32.7 million households (150 million
consumers).
Significance of Middle class

• The numerical strength of the Indian middle class will become the driving force of the Indian economy.
• Its aggregate purchasing power will result in the creation of one of the largest markets in the world.
• The discretionary spending power of this middle class could both spur investment and generate employment, thereby
providing a further boost to economic growth.
• A country’s middle class plays a pivotal role in the social and economic fabric because it participates in a wider range of
economic activities than any other section of society. The middle classes act as employers and employees, consumers
and producers, and agents of political change.
GOLDILOCKS SCENARIO
Context: The term was in news related to Indian economy.
About Goldilocks scenario

• A Goldilocks scenario for an economy refers to a point where it is running just perfectly — neither too hot (implying
high inflation) nor too cold (referring to faltering GDP growth).
• A steady-growing economy with moderate inflation and low unemployment rate can be optimal for long-term growth
and represents a Goldilocks economy.
Background
• In its policy review that was unveiled in June 2023, the MPC neither changed the repo rate nor its policy stance.
• The policy stance tells everyone what the MPC is trying to achieve by its actions. A policy stance tells us whether the
MPC is trying to contain inflation or boost growth while containing inflation or simply being neutral.
• There are two more things that observers watch out for in MPC statements: the outlooks on GDP growth and inflation.
Here, too, barely anything changed.
− At 6.5%, the GDP growth forecast for the financial year (2023-24 or FY24) stayed the same as it was in the April
policy.
− Further, at 5.1%, the inflation forecast for FY24 too stayed pretty similar to what it was in April.
SOCIAL PROGRESS INDEX FOR STATES AND DISTRICTS OF INDIA OF 2022

Context: The Social Progress Index (SPI) for States and Districts of India was released by the Economic Advisory Council
to the Prime Minister (EAC-PM) in December 2022.
About SPI of Indian States and District
• The SPI was compiled by the Institute for Competitiveness and Social Progress Imperative.
• The report also dwells on India’s performance based on the global SPI 2022
Findings of the Index

• Highest SPI Score: Puducherry
• Lowest SPI Score: Jharkhand and Bihar
• Basic Human Needs: Goa, Puducherry, Lakshadweep, and Chandigarh are the top four states with the best performance
in water, sanitation and shelter
• Foundations of Wellbeing: Mizoram, Himachal Pradesh, Ladakh, and Goa have emerged as the best-performing states
for the Foundations of Wellbeing.
• For Environmental Quality: Mizoram, Nagaland, and Meghalaya are the top three states.
• Opportunity: Tamil Nadu has achieved the highest component score for Opportunity dimension.
• Top Best Performing Districts: Aizawl (Mizoram), Solan (Himachal Pradesh) and Shimla (Himachal Pradesh) have
emerged as the top three best-performing districts.
HINDU RATE OF GROWTH

Context: Former RBI governor has said that India was “dangerously close” to the ‘Hindu rate of growth’.
About Hindu Rate of Growth

• Origin of term: The term was coined by economist Raj Krishna in 1978 to denote the around 4 per cent growth in
GDP from the 1950s to the 1980s.
− It is usually fuelled by subdued private-sector investment, rising rates of interest and a slowing global economy.
− A slow growth rate is called the Hindu rate of growth only if it is persistent and is followed by low per-capita GDP,
with population growth factored in.
• What does it indicate?
− Since economic growth rate remained steady despite change in governments, wars and other crises showed that
it was “an inherently cultural phenomenon”.
− The term is often regarded as a derogatory phrase concerning India not being able to meet its economic potential.
− It also indicates that the country is satisfied with the slow growth rate.
• Criticism of the term
− Earlier economists used the term “Hindu” to link the belief in Karma and Bhagya with the slow growth.
− Later, this connection was dropped, and the slow growth rate was attributed to the then governments’ protectionist
and interventionist policies.
ANDHRA PRADESH GUARANTEED PENSION SYSTEM

Context: The Andhra Pradesh Guaranteed Pension System Bill, 2023 was passed recently.
About the Andhra Pradesh Guaranteed Pension System (GPS)

• It is a hybrid model combining features of both the Old Pension Scheme (OPS) and the New Pension Scheme (NPS).
• This system ensures government employees a monthly pension equivalent to 50% of their last-drawn salary, including
dearness allowance relief.
• It was introduced as a response to resistance against NPS, which was viewed by many as inferior to the earlier
scheme. The return to OPS was considered fiscally unsustainable, with the potential to drive the state’s fiscal deficit
to 8% by 2050.
• The adoption of GPS signifies the state’s effort to balance fiscal prudence with the welfare of its employees, offering
them a secured pension while keeping the state’s financial health in check.
Other pension schemes

Old Pension Scheme (OPS)
• The Old Pension Scheme (OPS) is a retirement scheme approved by the government. Government employees receive
a monthly pension under the OPS.
• It provides a guaranteed pension for government employees who have completed at least ten years of service based
on their last drawn basic salary and the years of service.
• After retirement, government employees receive the pension amount and the benefit of the revision of Dearness
Allowance (DA) twice a year.
• Since they receive pensions based on their last drawn salary plus DA, their pensions increase when the DA increases
twice a year. However, OPS applies only to government employees.
National Pension Scheme (NPS)
• The National Democratic Alliance (NDA) government discontinued the OPS in 2004 and introduced the National
Pension Scheme (NPS) for government employees.
• The government extended the scope of NPS for all citizens, including self-employed and unorganised workers, in 2009.
• It is a pension scheme where citizens can contribute an amount every month till 60 years and receive a pension
after retirement.
• The government launched the NPS as an alternative to the existing OPS to provide citizens with a secure and stable
retirement income. However, it is a voluntary scheme administered by the Pension Fund Regulatory and Development
Authority (PFRDA).
• Under the NPS, government employees can contribute 10% of their basic salary plus Dearness Allowance (DA), and
the government contributes 14% of the basic salary plus DA every month. Other citizens can contribute a minimum
of Rs.500 monthly towards NPS.
Comparison between Old Pension Scheme (OPS) and the New Pension Scheme (NPS)
Particulars Old Pension Scheme New Pension Scheme
Eligible employees Only government employees Government employees, individual citizens between
18-60 years and NRIs
Pension payment Provides pensions to government employees based Provides pension based on the investments made in
basis on their last drawn salary plus DA the NPS scheme during their employment
Pension amount 50% of the last drawn salary plus DA or the average 60% lump sum after retirement and 40% invested in
earnings in the last 10 months of service, whichever annuities for getting a pension
is more, is given as a pension
Contribution Employees don’t contribute any amount Government employees contribute 10% of their salary
amount (basic + dearness allowance), and the government
contributes 14%
Income tax benefits No tax benefits Employees can claim tax deductions of up to 1.5 lakh
under Section 80C of income tax and up to Rs.50,000
on other investments under 80CCD (1b)
Tax on pension The pension amount is tax-free 60% of the NPS corpus is tax-free, while the remaining
amount 40% is taxable
Infrastructure: Industries, Service, Mining 69
CHAPTER 6
Infrastructure: Industries, Service, Mining

TECHNICAL TEXTILES DEGREE PROGRAMME
Context: The Ministry of Textiles has given clearance to two guidelines under the Flagship Programme of National
Technical Textiles Mission (NTTM).
About the Guidelines

• Two guidelines include:
− General Guidelines for Enabling of Academic Institutes in Technical Textiles- for Private & Public Institutes
− General Guidelines for Grant for Internship Support in Technical Textiles (GIST)
• The ‘General Guidelines for Enabling of Academic Institutes in Technical Textiles- For Private & Public Institutes’
will enable:
− New Technical Textiles Degree Programme (UG & PG) and updating of existing conventional degree programmes
with new papers of Technical Textiles.
− The Ministry of Textiles intends to develop eco-system in technical textiles not only in textile field but other
disciplines of Engineering like Civil, Mechanical, Electronics etc., Agriculture institutes, Medical Colleges, Fashion
institutes.
− The Guidelines cover the funding of upgradation/enhancement of laboratory equipment, training of lab personnel
in the University/Institute, with respect to the undergraduate (UG) and Postgraduate (PG) degree programmes.
− This will cover Public funded institutions and also private institutions having NIRF ranking.
− The guidelines will putemphasis on creating an effective and world-class knowledge ecosystem to make India a
world leader in the field of technical textiles in the next decade.
• The implementation of General Guidelines for Grant for Internship Support in Technical Textiles (GIST) shall be
conducted in two phases:
1. Empanelment of the eligible Companies
2. Internship Program, wherein the grant of upto INR 20,000 per student per month shall be provided to the
empaneled companies subject to the maximum period of 2 months of funding support for internship period.
• The eligible agencies will be textile industries with turn over more than 10 crores, Textile Research associations under
Ministry and textile machinery manufactures.
• The empanelled industries/ institutions can give training to engineering institutes of concerned discipline in Public
funded institutions and also to Private institutions with NIRF ranking upto 200.
• This move will support in creating quality manpower, especially industry-trained engineers and professionals, and highly
skilled workmen both for manufacturing and application areas of technical textiles along with fostering Academia –
Industry linkages in the field of Technical Textiles.
VEHICLE SCRAPPAGE AND UNITY MALLS

Context: Centre has approved Rs 2,000 crore to encourage states to scrap old vehicles and Rs 5,000 cr for Unity Malls
More about news

• States to get ₹5,000 crore for the construction of Unity malls and ₹3,000 crore for scrapping old vehicles as incentives
under the “Scheme for Special Assistance to States for Capital Investment’ in fiscal year 2023-24.
− The Scheme for Special Assistance to States for Capital Investment was announced in the Budget 2023-24.
− It has a total outlay of ₹1.30 crore.

− Under this, financial assistance will be provided to the State governments in the form of a 50-year interest-free
loan for capital investment projects.
− The entire amount of ₹1.30 lakh crore will be distributed in eight parts. While the first part has the largest
component of ₹1 lakh crore, and that is untied, the distribution of the remaining ₹30,000 crore is subject to
completing seven reform initiatives. Unity malls and the scrapping of old vehicles are two of the seven initiatives.
Unity malls
• Budget 2023–24 proposed the concept of Unity Malls.
• States will be encouraged to set up a Unity Mall in their State capital or most prominent tourism centre or the
financial capital for promotion
− From here, states would sale of their own ODOPs (one district, one product), GI products, and other handicraft
products, and for providing space for products of all other States.
Vehicle scrappage
• The second element of special assistance is to take out old and unfit private and commercial vehicles based on
Scrappage Policy 2021.
• The policy prescribes fitness tests for personal vehicles after 20 years, while for commercial vehicles, tests are required
after 15 years.
• The vehicles will be scrapped if they fail the fitness test. On the other hand, the policy also provides the owners of
the vehicles certain benefits for scrapping their old vehicles.
India’s Vehicle Scrappage Policy

• India introduced a scrappage policy for old and unsafe vehicles in 2021. It is a government-funded programme to
replace old vehicles with modern & new vehicles on Indian roads. This was a step forward for green India and to curb
urban pollution.
• The policy is expected to reduce pollution, create job opportunities and boost demand for new vehicles.
• According to the new policy, commercial vehicles aged >15 years and passenger vehicles aged >20 years will have
to be mandatorily scrapped if they do not pass the fitness and emission tests.
• The policy does not treat a vehicle as scrap just because of its age, but considers other factors such as quality of
brakes, engine performance and others.
• The objective is to phase out old cars, reduce urban pollution levels and stimulate automotive sales, which continues
to record slowdown amid India’s post-COVID recovery phase.
• Some incentives for scrapping old vehicles and buying new ones are as follows:
− Manufacturers can give up to 5% discount for buying new vehicles
− Zero registration fee for new vehicle purchase
− Owners can receive scrap value equivalent of 4–6% of ex-showroom price of new vehicles
− States can give up to 25% and 15% rebate on road tax for personal and commercial vehicles, respectively.
INDIA’S CAR SAFETY ASSESSMENT SYSTEM BHARAT NCAP

Context: The Ministry of Road Transport and Highway launched an indigenous star rating system for crash-testing cars
under the umbrella of the Bharat New Car Assessment Policy (NCAP).
More about the news

• India has launched its own crash test rating assessment system, joining half a dozen other countries and geographies
that have these norms.
• A crash test is a collision of a vehicle in a controlled environment to assess its safety parameters.
• The norms define safety standards of motor vehicles with type approval for seating up to eight people, and with a
gross weight of less than 3.5 tonnes, which are either manufactured or sold in the country.
• Bharat New Car Assessment Programme (NCAP) is voluntary and would be similar — but not identical — to international
NCAP tests.
− It will enable Indian auto manufacturers to get their vehicles tested and evaluated on a five-star rating scale as
per Automotive Industry Standard (AIS) 197.
AIS 197 contains the overall assessment method, vehicle selection procedure, various tests and their assessment
protocols.
• The standards will offer customers an objective metric to compare the crash safety of vehicle models before buying,
and will nudge manufacturers to progressively improve the safety ratings of models.
Features of NCAP
• The Bharat NCAP testing protocol is aligned with global crash test protocols, and will have ratings from 1 star to 5.
The higher the NCAP score (stars) the safer the car.
• Evaluation will cover (i) Adult Occupant Protection (AOP), (ii) Child Occupant Protection (COP), and (iii) Fitment of
Safety Assist Technologies. For this, three tests will be conducted: a frontal impact test, a side impact test, and a
side pole impact test.
• Based on the vehicle’s performance in these tests, the model will be offered separate star ratings for AOP and COP.
• Once the manufacturer offers a vehicle model for crash testing, the manufacturing facility will be visited by a Bharat
NCAP team that will pick a base variant of the model through random sampling.
− This vehicle will be taken to the Bharat NCAP testing centre, and put through the crash test in the presence of the
manufacturer’s representatives. The results will be compiled and shared with the manufacturer.
− After a Bharat NCAP standing committee approves the entire process, the crash test results and the star rating of
that vehicle will be published.
− The parameters under review include an assessment of the car’s structural integrity in the event of a frontal
collision or a sideways impact, provision of active and passive safety assist technologies, safety of adult and child
occupants in the vehicle, and the vehicle’s overall pedestrian-friendly design, which will be used to determine
the final rating.
• The Automotive Research Association of India (ARAI) is mandated with testing the vehicles under the scheme at its
laboratories in Pune and Chakan.
• Bharat NCAP will also test and rate CNG and electric vehicles based on their crash performance.
Significance of the testing

• Carmakers have been shipping models abroad for testing and star grading, an expensive and time-consuming affair.
• Carmakers have been shipping models abroad for testing and star grading, an expensive and time-consuming affair.
• India sees some 1.5 lakh fatalities on its roads every year, and has among the world’s highest rates of road accident
deaths. Under the Stockholm Declaration, India is committed to reducing the number of road traffic deaths and
injuries by 50 per cent by 2030.
E-PHARMACY SECTOR
Context: The Central Drugs Standard Control Organisation (CDSCO) had issued show cause notices to 31 firms based
on representations raising concerns over the sale of drugs online or through other electronic platforms in contravention
to the provisions of the Drugs and Cosmetics Act, 1940.
More about the News

• Cases concerning the quality of drugs, when reported, was is taken up with the State Licensing Authority (SLA)
concerned for necessary action under the provisions of the Drugs and Cosmetics Act.
About e-Pharmacy Sector in India

• A web-based pharmacy is an online system that allows customers to purchase medicinal medications and E-services
online, allowing them to obtain medicines/services in the comfort of their own homes in a timely manner.
• The Indian pharmaceutical market was primed for upheaval, and Covid-19 provided the much-needed impetus for
the e-pharmacy structure.
• E-pharmacies are gradually encroaching on the role traditionally played by local chemists, by providing over-the-counter
medicines for common ailments, chatbots for instantaneous first aid, reviews of local doctors/assistance in finding
doctors, suggestions for labs for taking tests, home delivery of medicines, explaining details about the medicines, etc.
• Growth Drivers of E-Pharmacies:
− Increasing Internet penetration
− Increasing e-commerce adoption
− Push to organized channels
− Changing disease profile
• Government Initiatives
− Draft of E-pharmacy Rules, 2018
According to the proposed guidelines, no person may sell, stock, exhibit, or offer for sale medications through
an e-pharmacy portal unless they are registered.
Furthermore, an e-pharmacy registration holder must provide customer support and grievance redressal
for all stakeholders. Customer service and grievance redressal must be available 24 hours a day, seven days
a week. In addition, the facility must have a registered chemist on board to address client questions via a
customer helpline.
The regulatory guidelines further provide that any information obtained from the consumer by prescription or
other means by the e-pharmacy registration holder should not be disclosed to any other third party.
Anyone wishing to operate an e-pharmacy business must apply to the Central Licencing Authority in Form
18AA via the online portal, along with an online fee of US$ 604.48 (Rs.50,000) and the documentation needed
in Form 18AA.
It is the registered chemist’s responsibility, on behalf of the e-pharmacy registration holder, to check the data
of the patients, and registered medical practitioners, and arrange for drug dispensing.
Furthermore, in the event of e-prescriptions, they must be submitted to the e-pharmacy site and maintained
on file by the dispenser.
− Ayushman Bharat Digital Mission (ABDM) or National Digital Health Mission (NDHM)
− Production Linked Incentive (PLI) Scheme for promotion of domestic manufacturing of critical key Starting materials
(KSMs)/Drug Intermediates (DIs)/ Active Pharmaceutical Ingredients (APIs) in India
− Promotion of Bulk Drug Parks
− Production Linked Incentive (PLI) Scheme for Promoting Domestic Manufacturing of Medical Devices.
NATIONAL MEDICAL DEVICES POLICY, 2023

Context: Union Cabinet has approved the National Medical Devices Policy, 2023.
Salient features of National Medical Devices Policy, 2023:

• Aim: To place the medical devices sector on an accelerated path of growth with a patient-centric approach to meet
the evolving healthcare needs of patients.
• Vision: Accelerated growth path with a patient-centric approach and to emerge as the global leader in the
manufacturing and innovation of medical devices by achieving 10-12 per cent share in the expanding global market
over the next 25 years.
− Policy is expected to help the medical devices sector grow from present $11 Bn to $50 billion by 2030.
• Mission: Policy lays down a roadmap for accelerated growth of the medical devices sector to achieve the following
missions viz, Access & Universality, Affordability, Quality, Patient Centred & Quality Care, Preventive & Promotive
Health, Security, Research and Innovation and Skilled manpower.
• It is expected to provide the required support and directions to strengthen the medical devices industry into a
competitive, self-reliant, resilient and innovative industry that caters to the healthcare needs of not only India but
also of the world.
Strategies to promote medical device sector

• Regulatory streamlining: Creation of a Single Window Clearance System’ for Licensing of Medical Devices co-opting all
the stakeholder departments / organisations such as AERB, MeitY, DAHD, etc, enhancing the role of Indian Standards
like BIS and designing a coherent pricing regulation, will be followed.
• Enabling infrastructure: The establishment and strengthening of large medical device parks, clusters equipped with
world class common infrastructure facilities in proximity to economic zones with requisite logistics connectivity.
• Facilitating R&D and innovation: The policy envisages to promote Research & Development in India and complement
the Department’s proposed National Policy on R&D and Innovation in the Pharma- MedTech Sector in India.
• Attracting investments in the sector: Along with resent schemes and interventions like Make in India, Ayushman
Bharat program, Heal-in-India, Start-up mission, the policy encourages private investments, series of funding from
Venture Capitalists, and also Public-Private Partnership (PPP).
• Human resources development: In order to have a steady supply of skilled work force across the value chain such as
scientists, regulators, health experts, managers, technicians, etc., the policy envisages:
− For skilling, reskilling and upskilling of professionals in the medical device sector, we can leverage the available
resources in Ministry of Skill Development and Entrepreneurship
− The policy will support dedicated multidisciplinary courses for medical devices in existing institutions to ensure
availability of skilled manpower for futuristic medical technologies, high-end manufacturing and research, to
produce future-ready MedTech human resources and to meet the evolving needs of the Sector
− To develop partnerships with foreign academic/industry organizations to develop medical technologies in order
to be in equal pace with the world market.
− Brand positioning and awareness creation: The policy envisages the creation of a dedicated Export Promotion
Council for the sector under the Department which will be an enabler to deal with various market access issues:
− Initiate studies and projects for learning from best global practices of manufacturing and skilling system so as to
explore the feasibility of adapting such successful models in India.
− Promote more forums to bring together various stakeholders for sharing knowledge and build strong networks
across the sector.
TREDS
Context: Reserve Bank of India (RBI) issued a directive to TReDS operators and participants to facilitate insurance
for transactions.
About Trade Receivables Discounting System (TReDS)

• It is an invoice discounting platform set up by the Reserve Bank of India (RBI) in 2018, for regulating the trade
receivables between Micro, Small & Medium Enterprises (MSMEs), large organisations and financiers.
• It allows MSME suppliers to discount their invoices, enabling them to receive payments before their due date.
• Objective of the TReDS:
− To facilitate the financing of invoices of MSME vendors drawn on big organisations and other corporates, including
Public Sector Undertakings (PSUs) and Government Departments, by discounting by the financiers.
− To help MSMEs manage their working capital requirements.
• Participants in this system work together to facilitate, accept, discount, and settle the invoices. TReDS’ primary purpose
Advantages of TReDS for MSME suppliers

• Minimal paperwork required
• MSME do not have the onus in case of default in payment by the buyer
• MSME sellers have the right to determine the best bid
• MSME sellers can get the payment on T+1 on a successful auction
• MSME sellers do not have to follow up with the buyer
Limitations of TReDS
• Privacy: Many organisations believe that their competitors would be able to find out where their organisation sources
its materials.
• Recovery: Businesses often prefer giving lengthier credit terms to their suppliers and may not be able to recover the
receivables within 45 days.
DECARBONIZING STEEL SECTOR

Context: Decarbonisation of steel sector is an integral part of the India’s ability to achieve its climate goal. A recent
study has tried to minimize use of carbon in steel making.
More about the news

• To produce one ton of steel, 1.8 ton of carbon dioxide is released. India being second largest producer of steel in the
world has one of the largest carbon footprints.
• Existing procedure: To separate iron from iron oxide, coke is heated with the ore. The resulting chemical reaction
separates carbon and produces strong steel.
− This process accounts for almost 90% of the carbon footprint of steelmaking.
• The solution:
− Using hydrogen: Scientists have thought of using hydrogen in place of carbon to separate iron from the ore.
However, this reaction is very slow.
− This is because, removal of oxygen results in small pores. When hydrogen is the reactant, water is formed while
hydrogen reacts with oxide, which becomes trapped inside the pores.
This process reoxidises the iron and considerably slows oxygen removal.
− Researchers have suggested creating narrow channels on the mineral for water to drain, ensuring that hydrogen
enters them and continue removing oxygen.
− However, this procedure has several challenges, such as reduction kinetics and the high cost of hydrogen reactants.
What is Decarbonization?
• Decarbonization is a process of sustainably reducing and compensating the emissions of carbon dioxide (CO₂). The
goal is to create a carbon-free economy.
• Importance of decarbonization of steel sector:
− Achieve climate goals: Experts have said that emissions from steel must be reduced by 50% by 2050 and then
continue to fall, to meet the world’s climate goals.
− Reduce dependency on fossil fuels: Decarbonisation will help reduce the dependency of steel industry on fossil
fuels. This will ensure the rise of alternative sources.
− Reduce import bill: Majority of coal used in iron smelting is imported into countries such as India and Japan.
Reducing use of coal will also reduce import bill.
− Sustainability: The existing process of steel production is too dependent on non-renewable energy sources.
Decarbonisation will make the process more sustainable and long-lasting.
Global Carbon footprint in Steel sector:
• Studies have shown that, steel sector contributes to 8% of global carbon emissions.
• Coal-fired furnaces: More than 75% of steel currently produced in the world is made in coal-fired furnaces, which emits large
amounts of carbon dioxide into the atmosphere.
• Heat energy: Furnaces must be heated above 1000 degree Celsius for manufacturing steel. The energy needed to heat the
furnaces is usually through electric current, which further increased energy demand
INDIA’S LITHIUM INDUSTRY

Context: India has discovered 5.9 million tonnes of lithium-inferred resources in the Salal-Haimana area of Reasi district
of Jammu and Kashmir.
What is Lithium?
• Lithium is a soft, shiny grey metal found in the earth’s crust. It is lightest of the solid elements, highly reactive and
alkaline metal.
− Due to its utility in diverse applications, it also referred as ‘White Gold’.
• Uses: Lithium-ion batteries are used in wind turbines, solar panels, and electric vehicles, all of which are crucial in
a green economy.
− Lithium is used in batteries to power smartphones, laptops and other gadgets.
− Lithium is an essential component in the rechargeable batteries that run electric vehicles (EVs).
− Lithium is a key element for new technologies and finds its use in ceramics, glass, telecommunication and
aerospace industries.
− Lithium is used in lubricating grease, high energy additive to rocket propellants, optical modulators for mobile
phones and as convertor to tritium used as a raw material for thermonuclear reactions.
− It is also used to make alloys with aluminium and magnesium, improving their strength and making them lighter.
Global Lithium Reserves

• South America has a particularly rich supply of the metal, the three nations of Bolivia, Chile, and Argentina are
collectively referred to as the ‘Lithium Triangle’.
• China currently controls 77% of the global lithium-ion battery manufacturing capacity and is home to six of the world’s
10 manufacturing companies.
• India’s recent find of 5.9 million tonnes of lithium could catapult it into the top three countries in the world with the
highest lithium reserves.
India’s Lithium Reserves

• The Geological Survey of India established 5.9 million tonnes of inferred lithium resources in the Salal-Haimana area
of Reasi District in Jammu and Kashmir.
− The term ‘inferred’ refers to the ‘preliminary exploration stage’.
• Preliminary surveys have shown presence of lithium resources of 1,600 tonnes in the pegmatites of Marlagalla-
Allapatna area, Mandya district in Karnataka.
Why is Lithium Important for India?

• Reduce imports: India currently imports all of its Lithium from Australia and Argentina and 70% of its Li-ion cell
requirement from China and Hong Kong.
− In 2021-22, India’s lithium imports were $22.15 million. Hong Kong, China and the US were the top three sources.
− The finding of lithium reserves in India will reduce dependence on imports.
• Self-reliance: If this discovered Lithium reserve can be extracted, these deposits will give a big push towards the
implementation of electric vehicle plans in India and lead India in a very strong position via becoming self-reliant
(Atmaanirbhar) in developing technology around it.
• Battery manufacturing: The lithium reserves in J&K could boost the domestic battery-manufacturing industry. India’s
electric-vehicle (EV) market was valued at $383.5 million in 2021, and is expected to expand to $152.21 billion in 2030.
• Clean energy targets: It will help India move towards clean energy technologies to meet its Paris Agreement climate
pledges as the transition to electric vehicles is key as vehicular pollution accounts for a significant proportion of
carbon emissions.
• Economic benefits for J&K: The discovery of these reserves could also bring significant economic benefits to Jammu
and Kashmir.
− The development of a lithium mining industry in the region could create jobs, stimulate economic growth and
uplift the local economy.
• Digital revolution: The ongoing global transition to low-carbon economies, the rapid expansion of artificial intelligence
(AI), and 5G networks will greatly reshape global and regional geopolitics.
− The access to and control over rare minerals, such as lithium and cobalt, will play a crucial role in these changes.
SEMICONDUCTOR INDUSTRY IN INDIA

Context: Qualcomm plans to outsource chip manufacturing to India once semiconductor fabrication (fab) and assembly
and testing (Osat) facilities are established in the country.
About Semi – Conductors

• Semiconductors are materials that have electrical conductivity between that of a conductor (e.g., Copper) and an
insulator (e.g., Rubber).
• Composition: Semiconductors are typically made from materials such as silicon, germanium, and gallium arsenide
• Characteristics: Their conductivity can be varied by changing conditions such as temperature, applied voltage, and
dopant concentration.
• Usage: Semiconductors are essential for modern electronics, used to fabricate devices such as transistors, diodes,
integrated circuits, solar cells, and LEDs.
• Global leaders: According to the Semiconductor Industry Association, China leads in semiconductor production with
24% of global output, followed by Taiwan (21%) and South Korea (19%).
Need for Semiconductor Manufacturing in India

• Reduce import dependency: India is currently importing around 90 percent of chips to meet domestic needs, primarily
from China and Hong Kong.
• Crucial for Industry 4.0: Semiconductors play a pivotal role in advancing Information and Communications Technology
(ICT), crucial for India to benefit from the 4th industrial revolution.
• National Security: Semiconductors are integral to critical infrastructure, including communication and power
transmission, with direct implications for national security.
− These are integral to the Defence and Aerospace Industry, thus amplifying their strategic importance.
• Strategic Independence: Domestic semiconductor manufacturing reduces India’s vulnerability to supply chain
disruptions (as seen during the COVID-19 pandemic).
• Economic Growth Potential: Semiconductor industry’s growth is projected to contribute 8.2% to India’s GDP, reaching
USD 400 billion by 2025.
• Boost Domestic manufacturing: Semiconductor industry is a major driver of economic growth and job creation.
o According to the Semicon Talent Building Committee, the semiconductor manufacturing industry will create demand
for 12 lakh jobs
• Global Supply Chain: India can leverage its strengths in specific areas like Chip design, fabrication etc. of the
semiconductor value chain to tap into global supply chain and opportunities.
Semiconductor Manufacturing – India’s potential & Opportunities

• Large Consumer Base: India’s growing middle class (580 million by 2025) presents a vast market for electronics, making
local semiconductor units crucial to meeting domestic demand and reducing imports.
o As per IDC, India shipped 144 million smartphones in 2022.
• Existing strengths & Capacities: India has certain strength and capabilities;
o Chip design: India has a significant number of chip designers, the largest outside the US.
o EDA tools: Indian professionals have robust skills in Electronic Design Automation (EDA) tools, laying a foundation
for manufacturing expansion.
• Special Economic Zones: India’s SEZs, rich with incentives, can drastically cut operational expenses, making the country
enticing for semiconductor enterprises.
o India is home to over 270 operational SEZs (PIB).
• Policy Support: Government initiatives like PLI are enhancing India’s appeal for semiconductor manufacturing,
potentially leading to cost reductions and increased profitability.
o E.g. Apple’s suppliers, such as Foxconn, are capitalizing on India’s PLI scheme.
• Competitive Labor Costs: India’s economically competitive labor can significantly drive down semiconductor production
expenses. Compared to China’s $8-$10/day, India’s minimum wage is around $2-$3/day.
• Government push for Self- Reliance: India’s ‘Atmanirbhar Bharat’ agenda signals support for strategic sectors like
semiconductors, evident from a 10% growth in domestic manufacturing in pivotal sectors in 2021.
Government Efforts – towards Semiconductor manufacturing

• SemiconIndia Programme: The Governemnt launched Semicon India programme with a financial outlay of INR 76,000
crore for the development of a sustainable semiconductor ecosystem in 2021.
− The programme aims to provide financial support to companies investing in semiconductors, display manufacturing
and design ecosystem. Following four schemes are introduced under the aforesaid programme:
Scheme for setting up of Semiconductor Fabs in India provides fiscal support to eligible applicants for setting
up of Semiconductor Fabs which is aimed at attracting large investments for setting up semiconductor wafer
fabrication facilities in the country.
Scheme for setting up of Display Fabs in India provides fiscal support to eligible applicants for setting up of
Display Fabs.
Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Fab and Semiconductor
Assembly, Testing, Marking and Packaging (ATMP) / OSAT facilities in India:The Scheme provides a fiscal
support of 30% of the Capital Expenditure to the eligible applicants for setting up of Compound Semiconductors
/ Silicon Photonics (SiPh) / Sensors (including MEMS) Fab and Semiconductor ATMP.
Design Linked Incentive (DLI) Scheme offers financial incentives, design infrastructure support across various
stages of development and deployment of semiconductor design for Integrated Circuits (ICs), Chipsets, System
on Chips (SoCs), Systems & IP Cores and semiconductor linked design.
• India Semiconductor Mission (ISM): India Semiconductor Mission (ISM) is a specialized and independent Business
Division within the Digital India Corporation. It aims to build a vibrant semiconductor and display ecosystem to enable
India’s emergence as a global hub for electronics manufacturing and design.
• SPECS Initiative: Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS): It
provides a financial incentive to boost domestic manufacturing and attract large investments in the electronics value
chain including electronic components and semiconductors.
• Modified Special Incentive Package Scheme (M-SIPS): M-SIPS provides financial incentives for setting up new
semiconductor manufacturing units in the country. Under the scheme, companies can get a subsidy of up to 25% of
their capital expenditure.
• SEWFAP: Semiconductor Wafer FAB Acquisition Program (SEWFAP) provides financial assistance to Indian companies
for acquiring semiconductor fabrication facilities (fabs) outside India.
• National Electronics Policy (NEP) 2019: The NEP promotes the growth of the electronics industry in the country,
including the semiconductor industry.
PETROLEUM COKE (PET COKE)

Context: Govt has permits import of pet coke as raw material for lithium-ion batteries.
More about news

• Government has permitted the import of pet coke for making graphite anode material for lithium- ion batteries as a
feedstock and not for any other purposes. Lithium-ion batteries are used in electric vehicles.
− Needle cokes are used as a primary material for electrodes used in an electric steel furnace that melts and refines
steel scrap. Graphite is commonly used to serve as the anode material in lithium-ion battery manufacturing.
• Import of pet coke for fuel purposes is completely banned.
• The import of low-sulphur pet coke is restricted, and its imports are subject to authorisation from the directorate
for use in integrated steel plants only for blending with the coking coal in recovery-type coke ovens equipped with
desulphurisation plants.
• As world’s largest consumer of petcoke, India imports over half its annual petcoke consumption, mainly from
USA.
− In 2018, Government banned import of pet coke for use as fuel, but allowed for cement, lime kiln, calcium carbide
and gasification industries.
Petroleum coke (Pet Coke)

• Petroleum coke is a carbonaceous product obtained in the oil refining process.
• It is a carbon-rich solid material derived from final cracking process — a thermo-based chemical engineering process
that splits long chain hydrocarbons of petroleum into shorter chains— that takes place in coker units.
• There are two distinctive grades of Petroleum Coke viz. Calcinable or Green Petcoke and Fuel Grade Petcoke.
− Calcinable grade coke or Green Petcoke, also referred as RPC is produced at Koyali, Barauni, Bongaigaon, Digboi
and Guwahati refineries of IndianOil.
− Fuel Grade Petcoke is produced at Panipat, Paradip, Koyali and Haldia refineries of IndianOil.
• Benefits of Fuel grade Petcoke over coal:
− Petcoke is a direct replacement of coal as a fuel but has higher calorific value
− Petcoke is hydrophobic as compared to coal which is hydrophilic, thereby having edge during rainy season.
− Being solid fuel, Petcoke has low volatile matter thus no evaporation losses.
− Low ash content.
OFFSHORE AREAS MINERAL (DEVELOPMENT AND REGULATION) AMENDMENT ACT,

2023
Context: Offshore Areas Mineral (Development and Regulation) Amendment Bill, 2023 received the assent of the
President on the 10th August, 2023.
More about the news

• The Act seeks to make amendments to the Offshore Areas Mineral (Development and Regulation) Act, 2002 (‘OAMDR
Act’).
• The 2002 Act regulated mining in maritime zones of India.
− It categorised offshore mining-related activities into: (i) reconnaissance, which involves a preliminary survey to
locate mineral resources, (ii) exploration, which includes exploring, proving, or locating mineral deposits, and (iii)
production, the commercial activity of the extraction of minerals.
Key Features of Act

• Composite licence: The Act introduces a composite licence for granting rights for exploration as well as production.
Under the composite license, the licensee will be required to complete exploration within three years. This may be
extended by two years upon application by the licensee.
• Validity of concessions: The Act provides that a production lease under a composite licence, will be valid for 50 years.
• Auction mandatory for certain concessions: The Act mandates competitive bidding for a production lease and a
composite license to private entities.
• Mining in reserved areas: The Act allows the administering authority to grant a composite licence or production lease
to the government or a government company. Joint ventures of government companies will also be eligible, subject
to certain conditions.
• Mining of atomic minerals: The Act adds that in case of atomic minerals, exploration, production and composite
licenses will be granted only to the government or government companies.
• Offshore Areas Mineral Trust: The Act sets up the Offshore Areas Mineral Trust. Concession holders will be required
to pay an amount to the Trust in addition to any royalty.
− The funds will be used for specified purposes including: (i) exploration in offshore areas, (ii) research and studies
about the mitigation of adverse effects of offshore mining on the ecology, and (iii) relief upon the occurrence of
a disaster.
• Increase in fine: The Act increases fines for various offences. For instance, under the Act, conducting any activity
without a permit or licence is punishable with imprisonment of up to five years.
Comparison of Acts
Parameters Offshore Areas Mineral (Development and Regulation) Offshore Areas Mineral (Development and Regulation)
Act, 2002 Amendment Act, 2023
Licence Different licences for reconnaissance, exploration, and Composite licence for granting rights for exploration as
production well as production.
Validity a production lease is granted for a period of up to 30 production lease under a composite licence, will be valid
years. for 50 years
Auction provides for the grant of concessions through competitive bidding for a production lease and a
administrative allocation composite license to private entities.
MEDICAL AND WELLNESS TOURISM

Context: Government introduced Ayush Visa category for foreign nationals seeking traditional medicine treatment.
More about news

• Government of India has notified the creation of a new category of Ayush (AY) visa for foreign nationals for treatment
under Ayush systems/Indian systems of medicine.
• The introduction of Ayush Visa fulfills the proposal for introduction of a special visa scheme for foreigners visiting
India for treatment under Ayush systems/Indian systems of medicine like therapeutic care, wellness and Yoga.
• This visa also caters to those interested in therapeutic care and wellness through traditional medicine.
• Introduction of Ayush Visa category is part of India’s roadmap for the Heal in India initiative of the government, which
is intended at promoting India as a medical value travel destination.
• Ministry of Ayush and the ministry of Health & Family Welfare are working together to develop a one stop Heal in
India portal to promote India as a Medical tourism destination of the world
Heal in India and Heal by India

• With a view to promoting value - based health care, Ministry of Health is working towards promotion of Medical
Value Travel (MVT) and Human Resources Mobility under the overarching theme of Heal in India and Heal by India.
− “Heal in India” initiative aims to promote Medical Value Travel in the country.
− Under its ‘Heal by India’ initiative, the government is working on modalities to train nurses and allied healthcare
professionals. It will provide a skilled workforce to meet the massive increase in demand projected for care givers
worldwide. The plan is to create a pool of nurses and care workers and help India to become the “care capital”
of the world.
• Gpvernment has developed the Medical Value Travel Digital Portal for ease of foreign patients coming to India for
treatment.
• Medical Value Travel may be defined as activities related to travel and hosting a foreign tourist who stays at least
one night at the destination region for the purpose of maintaining, improving or restoring health through medical
intervention.
Medical Value Travel (MVT) Portal

India’s MVT Portal aims to:
• Capture end-to-end patient journey duly providing all services online.
• Provide search functionality based on city, hospital, doctor, procedure, MVT Facilitator for identifying relevant service.
• Provide transparent online package pricing for Indian Traditional System of Medicine, Allopathy & Integrated Medicine.
• Allow Government to Government, Government to Hospital, Hospital to Hospital, Patient to MVT Facilitator and in
turn Hospital, Patient to Hospital interaction facilitating multiple channels to promote MVT.
• Capture patient testimonials, including mechanism for patient grievances and their redres
PRADHAN MANTRI VISHWAKARMA YOJANA (PMVY)

Context: Government inaugurated Vishwakarma Scheme, says government is committed to the uplift of the marginalised.
About the scheme

• PM Vishwakarma was launched on 17th September, 2023 by the Prime Minister to provide end-to-end support to
artisans and craftspeople who work with their hands and tools.
• It is a Central Sector Scheme.
• The Scheme envisages provisioning of the following benefits to the artisans and crafts persons:
− Recognition: Recognition of artisans and craftspeople through PM Vishwakarma certificate and ID card.
− Skill Upgradation: Basic Training of 5-7 days and Advanced Training of 15 days or more, with a stipend of Rs. 500
per day.
− Toolkit Incentive: A toolkit incentive of upto Rs. 15,000 in the form of e-vouchers at the beginning of Basic Skill
Training.
− Credit Support: Collateral free ‘Enterprise Development Loans’ of upto Rs. 3 lakh at a concessional rate of interest
fixed at 5%, with Government of India subvention to the extent of 8%.
− Incentive for Digital Transaction: An amount of Re. 1 per digital transaction, upto maximum 100 transactions
monthly will be credited to the beneficiary’s account for each digital pay-out or receipt.
− Marketing Support: Marketing support will be provided to the artisans and craftspeople in the form of quality
certification, branding, onboarding on e-commerce platforms such as GeM, advertising, publicity and other
marketing activities to improve linkage to value chain.
• The Scheme will onboard the beneficiaries on Udyam Assist Platform as ‘entrepreneurs’ in the formal MSME
ecosystem. Enrolment of beneficiaries shall be done through Common Service Centres with Aadhaar-based biometric
authentication on PM Vishwakarma portal.
• The enrolment of beneficiaries will be followed by a three-step verification which will include Verification at Gram
Panchayat/ ULB level, Vetting and Recommendation by the District Implementation Committee and Approval by the
Screening Committee.
• Eligibility of PM Vishwakarma Yojana: applicant should be an artisan or craftsperson engaged in any one of the 18
specified family-based traditional trades in the unorganized/informal sector, on a self-employment basis.
− The minimum age of an applicant should be 18 years on the date of registration.
− The applicant should not have availed loans under similar central/state credit-based schemes for self-employment
or business development, e.g. PM SVANidhi, PMEGP, MUDRA, in the past 5 years.
− The registration and benefits of this scheme are restricted to only one member of the family.
• Trades covered under Vishwakarma Yojana:
− Carpenter (Suthar/Badhai), Boat Maker, Armourer, Blacksmith (Lohar), Hammer and Tool Kit Maker, Locksmith,
Goldsmith (Sonar), Potter (Kumhaar), Sculptor (Moortikar, stone carver), Stone breaker, Cobbler (Charmkar)/
Shoesmith/Footwear artisan, Mason (Rajmistri), Basket/Mat/Broom Maker/Coir Weaver, Doll & Toy Maker
(Traditional), Barber (Naai), Garland maker (Malakaar), Washerman (Dhobi), Tailor (Darzi) and Fishing Net Maker.
NATIONAL LOGISTICS POLICY (NLP)

Context: India marked one year of launch of National Logistics Policy.
About National Logistics Policy

• The National Logistics Policy (NLP) was launched in September 2022 to complement PM GatiShakti National Master
Plan (NMP).
• The PM GatiShakti NMP addresses integrated development of the fixed infrastructure and network planning.
• The NLP addresses the soft infrastructure and logistics sector development aspect, inter alia, including process
reforms, improvement in logistics services, digitization, human resource development and skilling.
• Vision: To drive economic growth and business competitiveness of the country through an integrated, seamless,
efficient, reliable, green, sustainable and cost-effective logistics network by leveraging best in class technology,
processes and skilled manpower. This will reduce logistics cost and improve performance.
• Targets: The targets of the NLP are to: (i) Reduce cost of logistics in India; (ii) improve the Logistics Performance Index
ranking (iii) create data driven decision support mechanism for an efficient logistics ecosystem.
− To achieve these targets, a Comprehensive Logistics Action Plan (CLAP) as part of the NLP was launched covering
eight action areas including
Integrated Digital Logistics Systems;
Standardization of Physical Assets and Benchmarking of Service Quality Standards;
Logistics Human Resource Development and Capacity Building;
State engagement;
EXIM Logistics;
Services Improvement Framework;
Sectoral Plans for Efficient Logistics (SPEL); and
Facilitation of Development of Logistics Parks
Related Information
Progress on Implementation of NLP & CLAP:
• Unified Logistics Interface Platform (ULIP): For digital integration in logistics sector and to provide single sign to users who are
trading goods and using multiple modes of transport – the Unified Logistics Interface Platform (ULIP) was launched along with the
NLP.
− ULIP is an indigenous data-based platform which integrates 34 logistics-related digital systems / portals across Ministries /
Departments. It is worth noting that GST data is also being integrated with ULIP.
• EXIM Logistics: To promote trade facilitation and streamline EXIM logistics, following measures have been undertaken:
− Infrastructure gaps are being addressed and digital initiatives undertaken (under National Committee on Trade Facilitation);
− An EXIM Logistics Group has been constituted;
− A Comprehensive port connectivity plan developed by M/o port shipping and waterways, to address last and first mile infra
gaps and promote seamless movement of goods to ports. 60 projects of MORTH and 47 of Railways have been sanctioned to
improve last mile connectivity to ports.
LOGISTICS PERFORMANCE INDEX (LPI)

Context: Several Ministries recently held discussions on measures taken and action plans needed for improving India’s
ranking in the World Bank’s Logistics Performance Index (LPI).
About Logistics Performance Index (LPI)

• This instrument assists nations in recognizing their trade logistics challenges and opportunities, providing guidance
for enhancement.
• Released By: World Bank
− Duration: Published every two years since 2010, except for a 2020 pause due to the pandemic, with a revised
index unveiled in 2023.
• Parameters:
− Customs performance
− Infrastructure quality
− Ease of arranging shipments
− Logistics services quality
− Consignment tracking and tracing
− Timeliness of shipments
India’s Rank in LPI (Out of 135 Nations)

Year Rank
2016 35
2018 44
2023 38
NATIONAL COAL INDEX

Context: The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
About the Index

• The National Coal Index (NCI)had been rolled out on 4th June 2020 by the Ministry of Coal.
• It is a price index which reflects the change in price of coal on a particular month relative to the fixed base year.
• The NCI is used to determine the Premium (on a per tonne basis) or Revenue Share (on a percentage basis) based
on a market-based mechanism. The Index is meant to encompass all transactions of raw coal in the Indian market.
• This includes coking and non-coking of various grades transacted in the regulated (power and fertilizer) and non-
regulated sectors. The transactions include those at notified price, coal auctions and coal imports.
• The NCI’s upward movement indicates rising demand of coal because of upcoming festive season and winter in the
country, which will encourage coal producer to take maximum benefit by further scaling-up domestic coal production
to meet the growing energy demands.
AMPLIFI 2.0 PORTAL

Context: The Union Ministry of Housing and Urban Affairs has launched Amplifi 2.0 portal.
About the Portal

• Initiated by: Ministry of Housing and Urban Affairs
• Portal Name: Assessment and Monitoring Platform for Liveable, Inclusive and Future-Ready Urban India
• Purpose: The portal’s goal is to centralise raw data from various Indian cities in a single platform.
− The initiative, part of the Urban Outcomes Framework 2022, aims to streamline data across 14 sectors and shift
the focus from indices to comprehensive indicators for effective analysis.
• Key Features: The portal offers a range of city-specific data, including:
− Diesel usage totals
− Count of water quality tests conducted
− Average yearly healthcare spending
− Slum-dwelling population numbers
− Road accident death statistics
• Cities Integrated:
− Presently, data from 150 cities, represented by 258 urban local bodies, is available.
− The aim is to expand the database to include information from over 4,000 Urban Local Bodies across the country.
NAVRATNA STATUS
Context: Ircon International Limited (IRCON) and RITES Ltd (RITES), both Central Public Sector Enterprises (CPSE)
operating under the Ministry of Railways, have been declared the 15th and 16th Navratna companies among CPSEs,
respectively.
About the Status

Category Criteria
Maharatna • Must have Navratna status.
• Listed on the Indian stock exchange with specified public shareholding.
• Average annual turnover > Rs. 25,000 crores (last 3 years).
• Average annual net worth > Rs. 15,000 crores (last 3 years).
• Average annual net profit after tax > Rs. 5,000 crores (last 3 years).
• Significant global presence/international operations.
• Examples: Bharat Heavy Electricals Limited, Bharat Petroleum Corporation Limited, Coal India Limited, GAIL India
Limited, Hindustan Petroleum Corporation Limited, etc.
Navratna • Must be a Miniratna Category I or Schedule ‘A’ CPSE.
• ‘Excellent’ or ‘Very Good’ rating for 3 of the last 5 years.
• Composite score of 60+ from six performance indicators (e.g., Net Profit to Net Worth).
• Examples: Bharat Electronics Limited, Container Corporation of India Limited, Engineers India Limited, Hindustan
Aeronautics Limited 5. Mahanagar Telephone Nigam Limited, etc.
Miniratna • Profitable for the last 3 years.
Category-I • Pre-tax profit > Rs. 30 crores in at least one of the last 3 years.
• Positive net worth status.
• Examples: Airports Authority of India, Antrix Corporation Limited, Balmer Lawrie & Co. Limited, Bharat Coking
Coal Limited, Bharat Dynamics Limited , BEML Limited, Bharat Sanchar Nigam Limited, etc.
Miniratna • Profitable for the last 3 years consecutively.
Category-II • Positive net worth status.
• No default on loan/interest payments to the government.
• Independent of government guarantees or budgetary support.
• Examples: Artificial Limbs Manufacturing Corporation of India, Bharat Pumps & Compressors Limited, Broadcast
Engineering Consultants India Limited, Engineering Projects (India) Limited, FCI Aravali Gypsum & Minerals India
Limited, etc.
“SAMARTH” (SCHEME FOR CAPACITY BUILDING IN TEXTILES SECTOR)

Context: “Samarth” Scheme of Ministry of Textiles will be operational till March 2024.
About Samarth
• Samarth is a demand driven and placement-oriented umbrella skilling programme of Ministry of Textiles.
• The implementation period of the scheme is up to March 2024.
• The scheme was formulated under the broad skilling policy framework adopted by Ministry of Skill Development &
Entrepreneurship.
Aims & Objectives

• Samarth aims to incentivize and supplement the efforts of the industry in creating jobs in the organized textile and
related sectors, covering the entire value chain of textiles, excluding Spinning and Weaving.
• The training programme and course curriculum have been rationalized keeping in view the technological and market
demand of the domestic and international economies.
• In addition to the entry level skilling, a special provision for upskilling/ re-skilling programme has also been operationalized
under the scheme towards improving the productivity of the existing workers in Apparel & Garmenting segments.
− Samarth also caters to the upskilling/re-skilling requirement of traditional textile sector such as handloom,
handicraft, silk, and jute.
Implementation
• The scheme is implemented through Implementing Partners (IPs) comprising of Textile Industry/ Industry Associations,
State government agencies and Sectoral Organizations of Ministry of Textiles like DC/ Handloom, DC/Handicrafts and
Central Silk Board.
Advanced Features
• Samarth has been formulated with advanced features such as Aadhaar Enabled Biometric Attendance System (AEBAS),
Training of Trainers (ToT), CCTV recording of training programme, dedicated call centre with helpline number, mobile
app, Web based Management Information System (MIS), on-line monitoring of the training process etc.
• Furthermore, a total of 184 courses aligned with National Skill Qualification Framework (NSQF) have been adopted
under the scheme across various textile segments
Additional Information
• The Ministry has partnered with 116 Textile Industries / Industry Associations, 12 Central / State Government Agencies and 3
Sectoral Organizations of Ministry for undertaking training programmes under Samarth.
• The scheme has been penetrated across 28 States and 6 Union territories of the country and caters to all sections of the society
including SC, ST and other marginalized categories.
• More than 85% of the beneficiaries trained so far under the scheme are women.
• More than 70% of the beneficiaries trained in organized sector courses has been provided placement.
GATISHAKTI SANCHAR PORTAL

Context: The Union Minister for Communications, Electronics & IT and Railways has launched the “GatiShakti Sanchar”
Portal.
More about the news

• The Department of Telecommunication launched the GatiShakti Sanchar portal for centralized Right of Way (RoW)
approvals.
• In line with PM GatiShakti National Master Plan, Portal will facilitate smooth deployment of digital communications
infrastructure across the country.
• “GatiShakti Sanchar Portal” is a collaborative institutional mechanism between all stakeholders including Central and
State/UT Government(s), Local bodies, and Service Providers to facilitate the Right of Way (RoW) Application Process
through a single interface.
• The portal will enable applicants form various Telecom Service providers as well as Infrastructure providers to apply at
a common single portal for Right of Way permissions to lay down Optical Fibre Cable and for erecting mobile towers.
• The portal has been developed by MP state Electronics Development Corporation.
SOFTWARE AS A SERVICE (SAAS)

Context: A report titled “India: The Next Global SaaS Capital” recently released by Confederation of Indian Industry
(CII) and EY, highlighted Indian SaaS industry’s unique value and the enormous impact being created by Indian SaaS.
About Software as a service (SaaS)

• SaaS is a software distribution model in which a cloud provider hosts applications and makes them available to end
users over the internet.
• For examples, it includes services provided by Google Workspace, Adobe Creative Cloud, Github etc.
• Key features of SaaS:
− It is rented from a software vendor who also provides technical support.
− It is provided on a subscription basis.
− The software can be accessed on multiple devices.
• It is one of three main categories of cloud computing, alongside
− Infrastructure as a Service (IaaS) where company leases a whole digital infrastructure (servers, network resources,
etc.) for organizing business activities, creating applications, data storing, etc.
− Platform as a Service (PaaS) where cloud environment (hardware, software, development tools and infrastructure)
is provided for creating apps and their further support.
SaaS sector in India

• India is the 3rd largest SaaS ecosystem globally, after the USA and China.
− India is on the path to surpass China to become the 2nd largest SaaS nation in the world by 2026.
• India presently has 18 SaaS unicorns as compared to one in 2018.
• The number of SaaS companies in India have more than doubled in 2021 as compared to 2019.
CGTMSE SCHEME
Context: Union Minister for MSME launched the revamped CGTMSE Scheme.
About CGTMSE (Credit Guarantee fund Trust for Micro and Small Enterprises)
• CGTMSE, set up by the Government of India and SIDBI provide guarantee to enable MSEs access credit, reduction in
guarantee fee for loans up to Rs 1 crore to bring down the cost of credit and doubled the threshold limit for waiver
of legal action by lenders while invoking guarantee to Rs 10 lakh per claim.
• The credit guarantee scheme (CGS) assures a lender that if an MSE unit that has availed itself of collateral-free credit
facilities (fund-based and/or non-fund based) fails to discharge its liabilities, then the trust would make good the loss
to the tune of 75-85 per cent of the credit facility.
• CGTMSE has been provided with an additional corpus support of Rs 9,000 crore in the Union Budget for FY 2023-24
to revamp its Scheme to provide guarantee for additional Rs 2 lakh crore to Micro & Small Enterprises.
• Lending Institutions: It covers the whole gamut of scheduled commercial banks, specified Regional Rural Banks, SIDBI,
NSIC, NEDFi, SFB and NBFCs who lend to the specific sector and have entered into an agreement with CGTMSE or
the Trust for the purpose. These are designated as Member Lending Institutions (MLIs) and number 131 at present.
• Lending Borrowers: The CGTMSE coverage is conditional to all new and existing SMEs
• Exclusions: Some entities are excluded from the CGTMSE coverage:
− Retail Trade
− Educational Institutions
− Agriculture
− Self Help Groups (SHG)
− Training Institutes
Changes in CGTMSE Scheme

• 50% reduction in guarantee fees for loans up to Rs 1 crore, bringing the minimum guarantee fee to the level of
0.37% pa only.
• Raising of ceiling for guarantee from Rs 2 crore to Rs 5 crore and enhancing the threshold limit for claim settlement
without initiation of legal action to Rs 10 lakh.
• Impact: It is expected to encourage the public and private sector banks, Member Financial Institutions and foreign
banks to step up loans to MSEs.
PURCHASING MANAGERS’ INDEX (PMI)

Context: India’s manufacturing PMI (Purchasing Managers’ Index) has risen to a four-month in April 2023.
Recent Trend: Manufacturing activities in India have accelerated as Manufacturing PMI increased from 56.4 (March
2023) to 57.2 (April 2023). It has been boosted by robust new business growth, mild price pressures, better international
sales, and improving supply-chain conditions.
PMI Purchasing Managers’ Index

• It is an index of the prevailing direction of economic trends in the manufacturing and service sectors which is derived
after monthly surveys of different companies.
• There are two types of PMI -Manufacturing PMI and Services PMI. A combined index is also made using both
manufacturing PMI and services PMI.
• Purchasing Managers Index (PMI) is released and compiled by the Institute for Supply and Management (ISM) every
month based on the survey that is conducted monthly and is sent to the senior executives of over 400 companies
Working of PMI
• It includes 5 survey areas namely - Production levels, New orders, Supplier Deliveries, Inventories, and Employment
levels. All these 5 surveys are weighted equally by the ISM, The range of PMI lies between zero and a hundred, it is
analyzed by comparing its value to the previous month’s PMI value where-
PMI < 50, represents the expansion in the economy,
PMI > 50 represents contraction in the economy
PMI = 50 represents there has been no change.
Significance of Purchasing Managers Index:

• Offers a Reliable Expectation of the Economy
− The PMI is one of the most closely watched measures of business activity globally.
− It gives a trustworthy indication of how well a manufacturing sector in particular and the economy as a whole
is performing.
• Economic Activity Indicator
− When compared to competitive economies, an economy’s attractiveness is improved by a positive PMI reading.
Suppliers may set prices in response to changes in the PMI.
− Academics, investors, business people, traders, and financial experts regularly monitor it as a reliable indicator
of economic boom-and-bust cycles.
− Since it is released at the start of every month, PMI is also viewed as a leading indicator of economic activity.
• Helps in Decision Making
− Central banks set interest rates based on the PMI. Releases of the PMI have an effect on the bond and currency
markets in addition to the equities market.
FINANCIAL SERVICES INSTITUTION BUREAU

Context: The Cabinet Appointments Committee (ACC) has passed a government resolution to establish the Financial
Services Institutions Bureau (FSIB) in place of the Banks Board Bureau (BBB).
• The new framework was proposed by the Department of Financial Service, Ministry of Finance.
About Financial Services Institutions Bureau (FSIB)

• The Financial Services Institutions Bureau will select the chiefs of public sector banks and insurance companies.
• The FSIB will have the clear mandate to issue guidelines and select general managers and directors of state-run
non-life insurers, general insurers and Financial Institutions.
• FSIB will be the single entity for making recommendations for appointments of WTD (Whole-time Director) and
NEC (Non-executive Chairman) in Public Sector Banks, India Private Limited company and Financial Institutions.
• Chairman of FSIB: The ACC has approved the appointment of Bhanu Pratap Sharma as Initial chairperson of FSIB
for two years. He was the former Chairman of BBB.
DIGITAL ADVERTISEMENT POLICY, 2023

Context: The Ministry of Information and Broadcasting has approved the “Digital Advertisement Policy, 2023” with
the goal of extending the government’s digital media presence.
Digital Advertisement Policy

It aims to enable and empower the Central Bureau of Communication(CBC) to undertake campaigns in the Digital
Media Space. Key Highlights of the Policy are
• Digital Media Growth: In response to the rising number of internet and telecom users, the policy addresses the shift
towards digital media consumption.
• Government Communication: The policy empowers the Central Bureau of Communication (CBC) to utilise digital
advertising for government programs, effectively reaching citizens with important messages.
• Multi-Platform Expansion: CBC will utilise digital audio platforms, Over-the-Top (OTT) services, video on demand,
mobile apps, and social media for government advertising.
• Transparent Rate Discovery: Competitive bidding is introduced to determine rates, ensuring fairness and efficiency.
• Increased Digital Presence: Building upon the existing social media presence of government departments, this policy
expands the reach of government initiatives through extensive advertising by CBC.
• Adaptability and Engagement: The policy recognizes the evolving digital landscape and includes provisions to embrace
new technologies and platforms.
Central Bureau Of Communication (CBC)

• Nodal Ministry: Ministry of Information and Broadcasting
• Established in: 2017 through the merger of the former Directorate of Advertising and Visual Publicity (DAVP),
Directorate of Field Publicity (DFP), and Song & Drama Division (S&DD).
• Mission: To raise awareness and distribute information regarding diverse government programs, initiatives, and
policies in India.
• Headquarter: New Delhi.
SOFTWARE AS A SERVICE (SAAS)

Context: A report titled “India: The Next Global SaaS Capital” recently released by Confederation of Indian Industry
(CII) and EY, highlighted Indian SaaS industry’s unique value and the enormous impact being created by Indian SaaS.
About Software as a service (SaaS)

• SaaS is a software distribution model in which a cloud provider hosts applications and makes them available to end
users over the internet.
• For examples, it includes services provided by Google Workspace, Adobe Creative Cloud, Github etc.
• Key features of SaaS:
− It is rented from a software vendor who also provides technical support.
− It is provided on a subscription basis.
− The software can be accessed on multiple devices.
• It is one of three main categories of cloud computing, alongside
− Infrastructure as a Service (IaaS) where company leases a whole digital infrastructure (servers, network resources,
etc.) for organizing business activities, creating applications, data storing, etc.
− Platform as a Service (PaaS) where cloud environment (hardware, software, development tools and infrastructure)
is provided for creating apps and their further support.
SaaS sector in India

• India is the 3rd largest SaaS ecosystem globally, after the USA and China.
− India is on the path to surpass China to become the 2nd largest SaaS nation in the world by 2026.
• India presently has 18 SaaS unicorns as compared to one in 2018.
• The number of SaaS companies in India have more than doubled in 2021 as compared to 2019.
REGIONAL RAPID TRANSIT SYSTEM (RRTS)

Context: The government inaugurated the initial section of India’s innovative Regional Rapid Transit System (RRTS), a
high-speed rail network designed to improve regional connectivity.
About RRTS Project

• Integrated Mass Transit Network: The RRTS is an integrated mass transit network that enhances connectivity and
accessibility across the National Capital Region (NCR), promoting balanced and sustainable urban development.
• Origin of the Idea: The idea for RRTS emerged from a study initiated by Indian Railways in 1998-99, envisioning fast
commuter trains connecting various NCR locations.
• National Capital Region Planning: The National Capital Region Planning Board (NCRPB) adopted the RRTS concept
while developing the “Functional Plan on Transport for NCR-2032” and recommended eight RRTS corridors to connect
NCR towns.
• Development Agency: The project is overseen by the National Capital Region Transport Corporation (NCRTC), a joint
venture involving the Central government, Delhi, Haryana, Rajasthan, and Uttar Pradesh. It operates under the Ministry
of Housing and Urban Affairs.
• Scope of the Project: The RRTS project spans the extensive NCR, covering around 55,000 square kilometres and serving
a population of over 46 crore with a combined GDP of approximately $370 billion.
Corridors under the RRTS Project

• The RRTS project encompasses eight corridors, with three developed in Phase I:
− Delhi-Ghaziabad-Meerut (82 km)
− Delhi-Gurugram-SNB-Alwar (164 km)
− Delhi-Panipat (103 km)
• Future development includes corridors like
− Delhi – Faridabad – Ballabgarh – Palwal,
− Ghaziabad – Khurja,
− Delhi – Bahadurgarh – Rohtak,
− Ghaziabad-Hapur, and
− Delhi-Shahdara-Baraut.
• The Sarai Kale Khan Hub will serve as the central hub, connecting all three Phase I corridors, bridging the gap between
Delhi and Uttar Pradesh, Haryana, and Rajasthan.
VIZHINJAM PORT
Context: The Hong Kong-based ship, Zhen Hua 15, has the distinction of being the inaugural vessel to dock at Vizhinjam
International Seaport.
About The Port

• India’s first deepwater container transhipment port (a port facilitating the transfer of cargo between vessels).
• Situated close to Thiruvananthapuram, Vizhinjam Port
• Adani Ports and SEZ Private Ltd, the nation’s leading commercial port operator, is constructing this versatile seaport
based on a Design, Built, Finance, Operate & Transfer (DBFOT) model– (a Public-Private Partnership (PPP) framework ).
• Strategically located near international shipping lanes linking Europe, the Gulf, and East Asia.
• Capable of accommodating ultra-large vessels, symbolising India’s debut in the transhipment arena.
• Holds the promise to rival major global ports such as Colombo, Singapore, Port Klang, and Jebel Ali.
• In its initial phase, it has a capacity of 1 million TEU(twenty-foot equivalent units), with the potential to expand up
to 6.2 million TEU.
Context: The Supreme Court’s decision to change how telecom companies account for licence fees has major
consequences for the telecom industry.
An Overview
• The Supreme Court has ruled that telecom companies must treat the fees they pay to the government for the right
to operate their businesses (licence fee) as investments, rather than expenses.
− Currently, telecom companies treat licence fees as a revenue expenditure.Based on this, they claim deductions
for computing their tax liability.
Cash Flow and Business Environment Repercussions

• Short-term Effect: Telecom companies are poised to experience a steeper tax liability as the immediate expense
deduction of licence fees is revoked, possibly diminishing funds that could be allocated for investment or operational
purposes.
• Long-Range Financial Effects: Over the long term, amortising the licence fee will lessen the intensity of initial cash flow
impact. Nonetheless, this will limit the immediate recoupment of these costs for reinvestment, possibly restricting
financial agility to support new projects.
Corporate Operational Hurdles

• Augmented Operating Expenses: As a consequence of this judicial decision, the cost of conducting business for
telecom firms in India is expected to rise, which could erode profit margins and curtail the allocation of resources for
network improvements, technology upgrades, and service enhancements.
• Capital Investment Roadblocks: The ruling may curtail the telecom sector’s capacity to channel funds into essential
infrastructure and technological advancements, which is critical for maintaining competitive viability and addressing
escalating consumer demands.
Aggregate Sectoral Impact

The directive intensifies pre-existing pressures within the Indian telecom sector, such as substantial indebtedness
and rigorous market rivalry, by adding another layer of financial strain through altered licence fee accounting practices.
Amortization
Amortization typically refers to the process of writing down the value of either a loan or an intangible asset.
MV GANGA VILAS
Context: The government has flagged off World’s Longest River Cruise-MV Ganga Vilas and inaugurated the Tent City
at Varanasi.
About MV Ganga Vilas

• MV Ganga Vilas will begin its journey from Varanasi in Uttar Pradesh and travel around 3,200 km in 51 days to reach
Dibrugarh in Assam via Bangladesh, sailing across 27 river systems in India and Bangladesh.
• MV Ganga Vilas has three decks, 18 suites on board with a capacity of 36 tourists, with all the luxury amenities.
• The 51 days cruise is planned with visits to 50 tourist spots including World Heritage Sites, National Parks, River
Ghats, and major cities.
• The journey will give the tourists an opportunity to embark upon an experiential voyage and indulge in the art,
culture, history, and spirituality of India and Bangladesh.
LAB GROWN DIAMONDS

Context: In the Budget (2023-24) speech made by the Finance Minister, the government’s move to focus on lab-grown
diamonds was announced.
About the News

• It was announced that the Customs duty on the seeds used in lab-grown diamond manufacturing will be reduced.
• A grant to IITs to facilitate the growth of LGDs in India was announced.
About lab-grown diamonds

• Lab-grown diamonds are diamonds that are produced using specific technology which mimics the geological processes
that grow natural diamonds.
− The world’s first-ever LGD was created in 1954 by scientists working at a General Electric research laboratory in
New York.
• They are not the same as “diamond simulants” – LGDs are chemically, physically and optically diamond and thus are
difficult to identify as “lab-grown.”
− While materials such as Moissanite, Cubic Zirconia (CZ), White Sapphire, YAG, etc. are “diamond simulants” that
simply attempt to “look” like a diamond, they lack the sparkle and durability of a diamond and are thus easily
identifiable.
• However, differentiating between an LGD and an Earth Mined Diamond is hard, with advanced equipment required
for the purpose.
How are they produced?

There are multiple ways in which LGDs can be produced.
• The most common (and cheapest) is the “High pressure, high temperature” (HPHT) method.
− As the name suggests, this method requires extremely heavy presses that can produce up to 730,000 psi of pressure
under extremely high temperatures (at least 1500 Celsius).
− Usually, graphite is used as the “diamond seed” and when subjected to these extreme conditions, the relatively
inexpensive form of carbon turns into one of the most expensive carbon forms.
• Other processes include “Chemical Vapor Deposition” (CVD) and explosive formation that creates what is known as
“detonation nanodiamonds”.
− In the CVD method, the seed is heated to around 800 degrees Celsius inside a sealed chamber filled with a
carbon-rich gas. The gas sticks to the seed, gradually building the diamond.
Characteristics and Application

• LGDs have basic properties similar to natural diamonds, including their optical dispersion, which provides them
with the signature diamond sheen.
• However, since they are created in controlled environments, many of their properties can be enhanced for various
purposes.
• LGDs are most often used for industrial purposes, in machines and tools.
− Their hardness and extra strength make them ideal for use as cutters.
− Pure synthetic diamonds have high thermal conductivity, but negligible electrical conductivity. This combination
is invaluable for electronics where such diamonds can be used as a heat spreader for high-power laser diodes,
laser arrays and high-power transistors.
Significance
• Declining natural reserves: As the Earth’s reserves of natural diamonds are getting depleted, LGDs are slowly replacing
the prized gemstone in the jewellery industry.
• Low environmental footprint: The environmental footprint of a diamond grown in a laboratory is much lesser than
that of a naturally-occurring diamond.
• Lower energy consumption: It takes ten times more energy to extract a natural diamond (by open pit mining) from
the earth than it takes in creating one above the ground.
• Similar features: Just like natural diamonds, since LGDs also undergo similar processes of polishing and cutting, they
have a similar lustre.
DIGITAL PUBLIC INFRASTRUCTURE

Context: In the Union Budget 2023, the Finance Minister announced that, Digital public infrastructure for agriculture
will be set up as an open source, open standard and interoperable public group.
About Digital public infrastructure (DPI)

• DPI refers to digital solutions that enable basic functions essential for public and private service delivery, i.e.
collaboration, commerce, and governance.
− Examples include digital identification platforms such as Aadhaar, the one-stop Co-WIN portal, DigiLocker, and
Goods and Services Tax (GST) Sahay.
• Benefits from DPI

− DPIs can allow for real-time, accurate measurement of unified metrics to allow for a universal lingua franca in
particular domains.
− It provides for an inclusive digital future that harnesses the power of society, governments and businesses while
being innovative, contextually relevant and scalable to serve people.
− These platforms democratise digital payments, enable interoperability, and bring down transaction costs.
• According to the Economic Survey, Digital Public Infrastructure (DPI), aimed at improving financial literacy, innovation,
entrepreneurship, employment generation, and empowering beneficiaries has played a critical role in uplifting the
economy.
• In alignment with benefits, DPI in agriculture could enable inclusive farmer-centric solutions through relevant
information services of planning and health, improved access to farm inputs, credit and insurance help for crop
estimation, market intelligence and support for the growth of agri-tech industry, and startups.
Data Empowerment Protection Architecture (DEPA)
•
In 2020, Niti Aayog has released the draft of Data Empowerment and Protection Architecture (DEPA) that could allow third
parties access to information across sectors ranging from finance to healthcare, after seeking consent of the user.
•
DEPA is a joint public-private effort for an improved data governance approach.
•
It creates a digital framework that allows users to share their data on their own terms through a third-party entity, Consent
Mangers.
•
It went live in the financial sector in 2020 under the joint leadership of the Ministry of Finance, the Reserve Bank of India (RBI),
Pension Fund Regulatory and Development Authority (PFRDA), Insurance Regulatory and Development Authority (IRDAI), and
Securities and Exchange Board of India ( SEBI).
•
India’s Data Empowerment and Protection Architecture (DEPA) is predicated on the notion that individuals should have control
over how their personal data is used and shared. It is designed with the belief that agency over data could empower Indians with
opportunities to improve their own lives.
DELHI MUMBAI EXPRESSWAY

Context: The Government has dedicated the 246 km Delhi – Dausa – Lalsot section of the Delhi Mumbai Expressway
to India recently.
About the Expressway

• The Delhi-Mumbai Expressway is a proposed expressway in India that aims to connect the two cities of Delhi and
Mumbai.
• It is expected to reduce the travel time between the two cities to around 12 hours, compared to the current travel
time of more than 20 hours.
• The proposed expressway will pass through the states of Haryana, Rajasthan, Gujarat, and Maharashtra, and is
expected to have a total length of approximately 1,450 km.
Significance
• Reduced travel time: The expressway is expected to significantly reduce the travel time between Delhi and Mumbai.
• Improved Connectivity: The expressway would improve the connectivity between two of India’s largest cities,
promoting trade and commerce between the regions and fostering economic growth.
• Job creation: The construction of the expressway is expected to generate employment opportunities, both directly
and indirectly, in the construction and related industries.
• Improved road infrastructure: The expressway would provide a modern and well-maintained road infrastructure,
which would make it easier for goods to be transported between the two cities reducing the cost of transportation
and increasing efficiency.
• Boost to tourism: The reduced travel time and improved road infrastructure are expected to boost tourism in the
regions along the expressway, leading to economic growth and job creation in the hospitality and tourism sectors.
FASTER ADOPTION AND MANUFACTURING OF ELECTRIC VEHICLES - FAME II

Context: The government is looking at the option of increasing the utilization of resources earmarked under the FAME
II scheme for electrifying buses.
About FAME II
• FAME II is a scheme launched by the Government to give a boost to the development of Electric Vehicles. It is an
effort to combat climate change across the globe.
• Funding: Under the scheme, Rs 10,000 crore for a period of 3 years was allocated.
• Initiatives: Rs 1,000 crore has been set aside for setting up charging stations for electric vehicles. It has given a proposal
of providing 1 slow charging unit for every electric bus and 1 fast charging station for 10 electric buses.
− The Central Government incentivizes the purchase of approximately 5 lakh three-wheelers, 7000 electric buses,
and 35,000 four-wheelers.
• Authority: Department of Heavy Industries, the Ministry of Heavy Industries and Public Enterprises is the monitoring
authority.
OPEN NETWORK FOR DIGITAL COMMERCE (ONDC)

Context: US ecommerce giant Amazon said that it would integrate its logistics network and Smart Commerce services
with government-backed Open Network for Digital Commerce (ONDC).
About Open Network for Digital Commerce (ONDC)

• ONDC is an initiative by the Department for Promotion of Industry and Internal Trade (DPIIT) to create an open-
source platform that can enable a unified digital commerce ecosystem in the country.
• It was incorporated as a Section 8 (Non- Profit Organisation under Companies Act 2013) company in December 2021.
− The Quality Council of India and Protean eGov Technologies Limited are its initial promoters.
• Aim: It aims at promoting open networks for all aspects of exchange of goods and services over digital or electronic
networks.
Need of ONDC
• At present, there is duopoly of only two large e-commerce players Amazon & Flipkart. They both control more than
half of the country’s e-commerce trade.
• Problems of Monopolies: Limited access to the market, preferential treatment to some sellers, and large squeeze
on the supplier margins.
• To prevent such problems ONDC is envisaged. ONDC will democratize e-commerce & create new opportunities
especially for MSMEs and small traders.
• Key features of ONDC:
− Open-source platform: It is an open-source platform, which means that the source code is freely available to
developers, businesses, and other stakeholders. This allows for greater collaboration and innovation, and ensures
that the platform is adaptable to changing market needs.
− Interoperability: Under ONDC, it is envisaged that a buyer registered on one participating e-commerce site (for
example, Amazon) may purchase goods from a seller on another participating e-commerce site (for example,
Flipkart).
− Voluntary Adoption and Inclusivity: It is neither an aggregator application nor a hosting platform, and all existing
digital commerce applications and platforms can voluntarily choose to adopt and be a part of the ONDC network.
− Not-for-Profit: It is a not-for-profit organization that will offer a network to enable local digital commerce stores
across industries to be discovered and engaged by any network-enabled applications.
− On the lines of UPI: Implementation of ONDC, which is expected to be on the lines of Unified Payments Interface
(UPI) could bring various operational aspects put in place by e-commerce platforms to the same level.
− Logistics and supply chain management: The ONDC platform will support a range of logistics and supply chain
management services, including real-time tracking and tracing of shipments, inventory management, and order
fulfillment.
Significance of ONDC in India

• Ending monopolistic tendencies: ONDC will lower entry barriers for local businesses and create a level playing field
for the ecommerce landscape, currently dominated by players like Amazon and Flipkart.
• Enhancement of value for consumers: Consumers can potentially discover any seller, product or service by using any
compatible application or platform. This will increase freedom of choice for consumers.
• Moving away from an operator-driven platform-centric model: Consolidating most of the trade of digital commerce
in one platform creates concentration risk. It can also lead to exclusion and discretionary behaviour, limiting the choice
and freedom of the buyers and sellers.
• Formalizing local businesses: Around 1.2 crore hyperlocal merchants (Kirana) account for 80% of the retail sector in
India, with 90% of them being unorganized, or self-organized.
− ONDCs can help in their formalization by creating active digital history and enabling easier access to finance options.
• Encouraging widespread participation of MSMEs: ONDC can help lower entry barriers for Micro, Small and Medium
Enterprises (MSMEs) that have the potential to flourish with innovative sales and marketing efforts.
• Growth and Development: ONDC will enable economic development and livelihood creation opportunities across
the digital commerce value chain i.e., logistics, packaging, last-mile delivery, etc.
INLAND WATERWAYS IN INDIA

Context: Government unveiled inland waterways projects worth over Rs 1000 crore to increase transport, trade &
tourism in eastern India.
More about the news

• Haldia Multi-Modal Terminal in West Bengal was inaugurated under Jal Marg Vikas Project with cargo handling
capacity of around over 3 Million Metric Tonnes Per Annum (MMTPA).
• Maritime Skill Development Centre for the Northeast was inaugurated in Guwahati.
• Foundation stone for a ship repair facilityand an elevated road at Pandu Terminal in Guwahati was laid.
• More than 60 community jetties are being constructed along the river Ganga to boost economic activities and improve
the livelihoods of local communities in the region
About Jal Marg Vikas project (JMVP)

• It is an initiative to develop the National Waterway-1 (NW-1), which is a navigable stretch of the river Ganga between
Varanasi in Uttar Pradesh and Haldia in West Bengal.
• The project is being implemented by the Inland Waterways Authority of India with technical assistance and investment
support from the World Bank.
• The project aims to improve the navigability of this stretch and develop it as an efficient and eco-friendly mode of
transportation for cargo and passengers.
• The project includes infrastructure development such as the construction of multi-modal terminals, jetties, mechanised
handling equipment, and navigation aid.
• It will also include terminals for Roll-on-Roll-off (Ro-Ro) ferries, Digital dashboards, and portals for River Information
systems (RIS) and Vessel Traffic Management Systems (VTMS) and integrated vessel repair and maintenance facilities.
In November 2018, Modi inaugurated India’s first multi-modal terminal at Varanasi & welcomed the cargo ship ‘MV Rabindranath
Tagore’ coming from Kolkata.
Inland Waterways Authority of India (IWAI)

•
IWAI is an autonomous institution established on 27th October 1986 for development and regulation of inland waterways for
shipping and navigation.
•
It is a statutory body set up under the Inland Waterways Authority of India Act, 1985.
•
It primarily undertakes projects for development and maintenance of IWT infrastructure on national waterways through grants
received from the Ministry of Shipping.
•
It also carries out feasibility studies and prepares proposals for declaration of other waterways as National Waterways.
•
It also assists States in development of the IWT sector and provides subsidies to IWT operators for acquiring IWT fleet for
transportation of cargo and passengers.
SAGAR MALA PROJECT

Context: Recently, 7 Floating Jetties were sanctioned under Sagarmala Program in Karnataka.
About Floating Jetties
• Floating jetties aims to promote and develop a unique and innovative concept of floating jetties which is an alternate
solution to India’s over-crowded small harbours used for fishing and tourism related activities.
• The floating jetties have multiple applications including marinas, minor harbours, fishing harbours, fish landing centres
and waterdromes.
• These have several advantages over traditional jetties including being environment friendly, having a longer shelf
life and being easily re-configurable.
About Sagarmala Programme

• It is the flagship programme of the Ministry of Shipping to promote port-led development in the country through
harnessing India’s 7,500 km long coastline, 14,500 km of potentially navigable waterways and strategic location on
key international maritime trade routes.
• Vision: To reduce logistics cost for EXIM and domestic trade with minimal infrastructure investment.
• Sagarmala could boost India’s merchandise exports to USD 110 billion by 2025 and create an estimated 10 million
new jobs (four million in direct employment).
INSOLVENCY IN THE AVIATION SECTOR

Context: Air Carrier Go First recently filed for voluntary insolvency at the National Company Law Tribunal. It has also
suspended its flights.
What is Voluntary Insolvency?

• Voluntary insolvency means that the company has accepted its business is insolvent. It is a process in which the
company says it cannot pay debts and needs help from someone to sort it out.
• When the company goes insolvent, it can proceed to voluntary liquidation. It is a time-bound process which needs
to be completed in 270 days from the date of commencement of Voluntary Liquidation.
Why did Go First File for Voluntary Insolvency?

• Impact of COVID Pandemic: The Covid crisis has had a massive impact on the aviation industry and air traffic in India.
Indian airlines and airports incurred an estimated loss of Rs 19,564 crore and Rs 5,116 crore, respectively, in 2020-21
due to severe disruption caused by the pandemic.
• Import Dependency: India is among the top importers of crude oil, depending on foreign fuels to meet 85% of its
requirements. A higher price of crude oil in the international market will directly hike the ATF rates and consequently
lead to high ticket prices.
• Depreciation of Indian Rupee: Indian rupee emerged as Asia’s worst performing currency in 2022 depreciating around
11.5% against the US Dollar. Such depreciation puts considerable pressure on the already high import prices of crude
and raw materials, paving the path for higher imported inflation.
• Lack of Funds through IPO: The Go First wanted to raise Rs 3,600 crore since 2015 through an IPO to meet its debt
repayment and working capital requirements. But weak market sentiment and the cold response of owners on infusing
funds gave a blow to its prospects.
• Unavailability of Aircrafts: The Go First is facing financial crunch also due to non-supply of engines by US-based jet
engines manufacturer Pratt and Whitney (P&W) that has forced grounding of more than 50 planes.
• Dip in Market Share: Go First had 6.9% market share in March 2023, slipping from 8.9% in 2022.
What will National Company Law Tribunal Do (NCLT)?
•
NCLT within 14 days of receipt of an application passes an order to accept or in case reject the application of insolvency.
•
Under the Insolvency and Bankruptcy Code 2016 (IBC), if the corporate entity (debtor) becomes insolvent and commits a default,
a financial creditor, an operational creditor or the corporate debtor itself may approach the NCLT - the Adjudicating Authority for
insolvency resolution.
DRONES
Context: In February 2022, India put a ban on importing drones with some exemptions.
About Drones
• Drones are the unmanned aerial vehicle (UAV). These are the aircrafts without a human pilot on broad.
• These are remotely operated.
• The entire system that allows a drone to function is a UAS (Unmanned Aerial System.)
• Applications: Although they originated principally in military applications, their use is speedily increasing to industrial,
scientific, recreational, and agricultural, as well as other applications, such as policing, peacekeeping and police
investigation, product deliveries, aerial photography, agriculture, and smuggling etc.
Classification of unmanned aircraft systems

The unmanned aircraft system shall, based on the maximum all-up weight including payload, be classified as follows
• Nano unmanned aircraft system: weighing less than or equal to 250 grams;
• Micro unmanned aircraft system: weighing more than 250 grams, but less than or equal to Two kilograms;
• Small unmanned aircraft system: weighing more than Two kilograms, but less than or equal to 25 kilograms;
• Medium unmanned aircraft system: weighing more than 25 kilograms, butless than or equal to 150 kilograms
• Large unmanned aircraft system: weighing more than 150 kilograms
Usage of Drones
• Drone based surveillance system introduced for Railway Security
• Survey of India to use drones for mapping of inhabited areas of villages under “SVAMITVA” scheme
• India deployed drones to deliver COVID-19 vaccines. The ICMR-led pilot project is being rolled out in Manipur, Nagaland
and Andamans and Nicobar Islands.
• Drone is used for surveillance of COVID-19 hotspots and containment zones to ensure strict compliance of lockdown
guidelines. The system has been demonstrated to the Chandigarh Police in a containment zone.
• Ministry of Civil Aviation (MoCA) and Directorate General of Civil Aviation (DGCA) have granted conditional exemption
to the Board of Control for Cricket in India (BCCI) for the deployment of drones for live aerial cinematography of
the India Cricket Season in 2021.
Category of Zones
The Drone Rules 2021 associated airspace maps classifies Indian airspace into three zones as follows:
• Red Zone- Flying not permitted
• Yellow zone- Controlled airspace and;
• Green zone- Automatic permission.
• For flying in yellow zone, filing of flight plan and obtaining Air Defence Clearance Number (ADC) shall be necessary.
• “No drone” zones are airports, International borders and strategic locations.
• Any drone without a digital permit will not be able to take off. Thus, it has a “No permission, No take off” (NPNT)
mechanism.
Government Government notified the Production-Linked Incentive (PLI) Scheme for drones and drone components on 30th
Support September 2021. The scheme aims at incentivizing the manufacturing of drones and drone components . This
will help to make India a global hub for research & development, testing, manufacturing and operation of drones
Regulation of Drones
• In India, drone regulations are governed by the Drone Rules 2021 and its subsequent amendments notified by the
Ministry of Civil Aviation which have been in effect from August 25, 2023.
• These rules apply to all individuals who own, possess, lease, operate, transfer, or maintain drones in India and cover
all drones registered in India and those currently being operated within the country’s airspace.
Salient Features of UAS Rules
License Licensing regime to regulate the owning, possessing, leasing, operating, transferring, or maintaining an UAS in India.
Application Apply to UAS registered in, operated in or over India, with an all-up-weight of not more than 500 kilograms.
Exemption UAS belonging to, or used by, the naval, military or air forces of India.
Category of • Nano UAS: weighing less than or equal to 250 grams.
UAS • Micro UAS: weighing more than 250 grams, but less than or equal to 2 kilograms.
• Small UAS: weighing more than 2 kilograms, but less than or equal to 25 kilograms.
• Medium UAS: weighing more than 25 kilograms, but less than or equal to 150 kilograms.
• Large UAS: weighing more than 150 kilograms, upto 500 kilograms.
Digital Sky To operate a UAS, person must register on the digital sky platform and obtain unique identification number.
Platform
SMART CITIES MISSION

Context: The Centre has informed that 86 per cent of funds have been utilised and 69 per cent of projects completed
under Smart City Mission.
About Smart Cities Mission

• Smart Cities Mission was launched in June, 2015. The Mission is operated as a Centrally Sponsored Scheme.
− During the launch, Central Government pledged to give financial support to the extent of Rs. 48,000 crores over
5 years i.e. on an average Rs.100 crore per city per year. An equal amount on a matching basis is to be provided
by the State/ULB.
− Additional resources are to be raised through convergence, from ULBs’ own funds, grants under Finance Commission,
innovative finance mechanisms such as Municipal Bonds, other government programs and borrowings.
− Emphasis has been given on the participation of private sector through Public Private Partnerships (PPP).
• The main objective of the Mission is to promote cities that provide core infrastructure, clean and sustainable
environment and give a decent quality of life to their citizens through the application of ‘smart solutions’.
− The core infrastructure elements in a Smart City include:

adequate water supply,
assured electricity supply,
sanitation, including solid waste management
efficient urban mobility and public transport,
affordable housing, especially for the poor,
robust IT connectivity and digitalization,
good governance, especially e-Governance and citizen participation,
sustainable environment,
safety and security of citizens, particularly women, children and the elderly, and
health and education
Smart Solutions includes:
E-Governance and Citizen Services Waste Management
•
Public Information, Grievance Redressa • Smart Solutions
•
Electronic Service Delivery • Waste to Energy & fuel
•
Citizen Engagement • Waste to Compost
•
Citizens - City’s Eyes and Ears • Waste Water to be Treated
•
Video Crime Monitoring • Recycling and Reduction of C&D Waste
Water Management Energy Management

•
Smart Meters & Management •
Smart Meters & Management
•
Leakage Identification, Preventive Maint. •
Renewable Sources of Energy
•
Water Quality Monitoring •
Energy Efficient & Green Buildings
Urban Mobility Others

•
Smart Parking •
Tele-Medicine & Tele Education
•
Intelligent Traffic Management •
Incubation/Trade Facilitation Centers
•
Integrated Multi-Modal Transport •
Skill Development Centers
• The Mission aims to drive economic growth and improve quality of life through comprehensive work on social,
economic, physical and institutional pillars of the city.
• The focus is on sustainable and inclusive development by creation of replicable models which act as lighthouses to
other aspiring cities.
• 100 cities have been selected to be developed as Smart Cities through a two-stage competition.
• The mission comprises 3 models:
− Retrofitting : planning in an existing built-up area
− Redevelopment: replacement of the existing built-up environment
− Greenfield development: introduce most of the Smart Solutions in a previously vacant area.
• The implementation of the Mission at the City level will be done by a Special Purpose Vehicle (SPV) created for the
purpose.
− The SPV will plan, appraise, approve, release funds, implement, manage, operate, monitor and evaluate the Smart
City development projects.
− The SPV will be a limited company incorporated under the Companies Act, 2013 at the city-level, in which the
State/UT and the ULB will be the promoters having 50:50 equity shareholding.
INFRASTRUCTURE FINANCE COMPANY

Context: The Reserve Bank of India (RBI) has granted an ‘Infrastructure Finance Company (IFC)’ status to Indian
Renewable Energy Development Agency (IREDA).
More about the news

• Granting the IFC status is recognition of IREDA’s 36 years of infrastructure financing and development with focused
development of Renewable Energy.
• Significance of status:
− IREDA will be able to take higher exposure in RE financing with IFC status.
− The IFC status will help the company to access wider base of investors for mobilizing fund, resulting in competitive
rates for fund raising.
− The recognition will boost the investors’ confidence, enhance the brand value, and generate positive response
in the market.
− The status will help reach GoI’s target of 500 GW installed capacity of non-fossil fuels by 2030.
IREDA
• IREDA is a Mini Ratna (Category – I) Public Sector Enterprise under the administrative control of the Ministry of New
and Renewable Energy (MNRE). IREDA was notified under the Companies Act, 1956.
• It is responsible for promoting, developing and financing new and renewable sources of energy since 1987. Its motto
is: “Energy for Ever”.
• Activities undertaken: It finances all RE technologies and value chain such as solar, hydro, wind, bio-energy, waste-
to-energy, energy efficiency, e-mobility, battery storage, biofuel and new and emerging technologies.
Infrastructure Finance Company (IFC)

• IFC is a non-deposit accepting loan company (NBFC). It can indulge in sectors such as transport, energy, water and
sanitation, communication and Social and Commercial Infrastructure.
• It must be compliant with following conditions:
− A minimum of 75 per cent of the IFCs total assets should be deployed in infrastructure loans;
− The minimum net worth of the company must be Rs 300 crore,
− The CRAR (Capital to Risk (Weighted) Assets Ratio) of the company should be at 15% with Tier I capital at 10%
− The minimum credit rating of the company should be at ‘A’ or equivalent of accrediting rating agencies.
SAGAR SAMRIDDHI
About SAGAR SAMRIDDHI
• It is an online dredging monitoring system, to accelerate ‘Waste to Wealth’ initiative of the Government.
• It has been developed by National Technology Centre for Ports, Waterways and Coasts (NTCPWC) the technological
arm of MoPSW.
• Capabilities of ‘Sagar Samriddhi’ include:
− Real time dredging progress report.
− Daily and monthly progress visualization.
− Dredger performance and downtime monitoring.
− Easy location track data with snapshot of loading, unloading and idle time.
• Significance of SAGAR SAMRIDDHI
− It brings in marked improvement against the old system of Draft & Loading Monitor (DLM) system.
− It will bring in synergy among multiple input reports like daily dredging report, the pre and post dredging survey
data before processing and producing real time dredging report.
− It will allow Daily and monthly progress Visualization, dredger performance and downtime monitoring, easy
location track data with snapshot of loading, unloading and idle time .T
Dredging Guidelines for Major Ports, 2021

• It outlined the procedure for planning and preparation, technical investigations, dredged material management,
estimating the cost of dredging etc., to enable the Major Ports to formulate the dredging projects in order to
complete in time.
Maritime India Vision 2030

• It enables preparation of roadmap for taking up projects including dredging projects.
• It envisages developing Major Ports as trans-shipment hubs wherever possible and increasing their capacity by way
of deepening their channels and near berths.
National Technology Centre for Ports, Waterways and Coasts (NTCPWC)

• NTCPWC was established under the Sagarmala Programme of MoPSW with the total investment of Rs 77 Crore, at
IIT Madras.
• Aim: To enable research & development for the marine sector, enabling solutions towards achieving the ultimate goal
of building a robust marine industry in the country.
NATIONAL ELECTRICITY PLAN 2022-27

Context: The Central Electricity Authority has prepared a draft National Electricity Plan (NEP) for 2022-27.
About National Electricity Plan

• The NEP is a crucial document that guides the development of the power sector in India. It is formulated by the Central
Electricity Authority (CEA) every five years under the Electricity Act, 2003.
• As per Section 3 of the Electricity Act 2003, Central Electricity Authority (CEA) has been entrusted with the responsibility
of preparing the National Electricity Plan (NEP) in accordance with the National Electricity Policy and to notify such
plan once in five years.
• The NEP includes a review of the period 2017-22, detailed capacity addition requirements during the years 2022-27
and Perspective Plan projections for the years 2027-32.
Key highlights of the plan

• The Plan cites the need for fresh coal-based capacity ranging from 17 GW to nearly 28 GW till 2031-32, over and
above an under-construction coal based capacity of 25GW (1 giga watt or GW is equal to 1000 mega watts or MW.
• The Plan also projected the need of investment in battery storage with an estimated requirement of between 51 GW
to 84 GW by 2031-32.
• It states that efficient technologies, like super-critical technology, Integrated Gasification
• Combined Cycle (IGCC) etc. and large-size units would be gradually introduced for the generation of electricity.
NATIONAL ELECTRICITY PLAN FOR THE PERIOD OF 2022-32

Context: Central Electricity Authority has notified the National Electricity Plan for the period of 2022-32
About the Plan

• The plan document includes the review of the last five years (2017-22), a detailed plan for the next five years (2022-
27) and the prospective plan for the next five years (2027-32).
• According to the NEP document, the projected All India peak electricity demand and electrical energy requirement is
277.2 GW and 1907.8 BU for the year 2026-27 and 366.4 GW and 2473.8 BU for the year 2031-32 as per 20th Electric
Power Survey (EPS) Demand projections.
• The Energy Requirement & Peak Demand are inclusive of the impact due to increased adoption of Electric Vehicles,
Installation of Solar roof tops, Production of Green hydrogen, Saubhagya scheme etc.
• The likely Installed Capacity for the year 2031-32 is estimated to be 900,422 MW comprising of 304,147 MW of
Conventional capacity (Coal, Gas, Nuclear) and 596,275MW of Renewable based Capacity.
• The projection of total capacity addition is in line with the target of the country to achieve a non-fossil based installed
capacity of around 500 GW by the year 2029-30.
• NEP envisages that the share of non-fossil based capacity is likely to increase to 57.4% by the end of 2026-27 and
may likely to further increase to 68.4% by the end of 2031-32 from around 42.5% as on April’2023.
• The domestic coal requirement has been estimated to be 866.4 Million Tonnes for the year 2026-27 and 1025.8
Million Tonnes for the year 2031-32 and estimated requirement of 28.9 MT of coal imports for the plants designed
to run on imported coal.
• The average emission factor is expected to reduce to 0.548 kg CO2/kWhnet in the year 2026-27 and to 0.430 kg CO2/
kWhnet by the end of 2031-32.
NATIONAL GAS GRID

Context: The Bihar portion of the Barauni - Guwahati pipeline which connects Bihar to National Gas Grid was completed
in April 2023.
About the National Gas Grid

• National Gas Grid is 33,764 km Natural gas pipeline network. Out of which, 21,715 km Natural gas pipelines are
operational and a total of 13, 605 km length of pipelines is under various stages of construction (As of July, 2022).
• Petroleum and Natural Gas Regulatory Board (PNGRB) is authorised to approve the development of pipelines in
the country.
• Background: Gas Pipeline infrastructure is an economical and safe mode of transporting the natural gas by connecting
gas sources to gas consuming markets.
− Gas pipeline grid determines the structure of the gas market and its development. Therefore, an interconnected
National Gas Grid has been envisaged to ensure the adequate availability and equitable distribution of natural
gas in all parts of the country.
− In order to make available natural gas across the country, it has been envisaged to develop additional about 15,500
km pipelines to complete the National Gas Grid and same are at various stages of development.
− This would ensure easy availability of natural gas across all regions and also potentially help to achieve uniform
economic and social progress.
Other Measures to develop National Gas Grid

• PM Urja Ganga Pipeline: It is a 2540 kms long pipeline which originates at Jagdishpur (UP) and ends at Haldia (West
Bengal) and Dhamra (Odisha). It passes through states of UP, Bihar, Jharkhand, West Bengal and Odisha. It is being
implemented by Gas Authority of India Ltd (GAIL).
• City Gas Distribution (CGD) Project: Under the Petroleum and Natural Gas Regulatory Board (PNGRB) Act 2006, PNGRB
grants the authorization to the entities for developing a City Gas Distribution (CGD) network (including PNG network)
in a specified Geographical Area (GA) of the country. The CGD sector has four distinct segments “ Compressed Natural
Gas (CNG) predominantly used as auto-fuel, and Piped Natural Gas (PNG) used in domestic, commercial and Industrial
segments”. The project has been granted a “public utility” status.
PNGRB
•
It is constituted under PNGRB Act, 2006 to
− protect the interests of consumers and entities engaged in specified activities relating to petroleum, petroleum products and
natural gas and
− promote competitive markets
− regulate the refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products
and natural gas
NOTE: Production of crude oil and natural gas is OUTSIDE the purview of PNGRB.
HIGH PRICE DAY AHEAD MARKET (HP-DAM) AND SURPLUS POWER PORTAL (PUSHP)
Context: The government has launches ‘High Price Day Ahead Market and Surplus Power’ portal PUShP
About HP-DAM and PUShP

• High Price Day Ahead Market (HP-DAM) segment on power exchanges will offer costly electricity produced by gas-
based and imported coal-based (ICB) power plants in the country.
− It is a part of the overall strategy to ensure that all available power capacity is utilised for supplying power to
consumers.
− HP-DAM will enable high-cost generators, such as gas-based power plants using imported RLNG and naphtha,
ICB plants using imported coal, and Battery Energy Storage Systems (BESS), to participate in the market. These
generators will now be able to sell electricity on IEX with a price range of ₹0 per unit to ₹50.
• The Surplus Power Portal (PUShP) will help in flexibilisation of PPAs (Power Purchase Agreement) for optimal resource
utilisation and reducing power costs. The portal will help states get a better view of the country’s generating capacity.
− Discoms usually have long-term PPAs for power supply and have to pay fixed charges even when they do not
schedule power. Now they will be able to indicate their surplus power in block times, days, and months on the
portal.
− The discoms that need power will be able to requisition the surplus power, and the new buyer will pay both variable
charge (VC) and fixed cost (FC) as determined by regulators. Once power is reassigned, the original beneficiary
shall have no right to recall as the entire FC liability is also shifted to the new beneficiary.
− The financial liability of the new buyer shall be limited to the quantum of temporarily allocated or transferred
power. This will reduce the fixed cost burden on Discoms and also enable all the available generation capacity to
be utilised.
− Note: A Power Purchase Agreement (PPA), also known as an electricity power agreement, is a contract between
two parties: discoms, who are looking to buy electricity, and power generating companies, which produce electricity.
ROAD SAFETY
Context: The National Highways Authority of India (NHAI) has introduced guidelines for rectifying accident-prone spots
on the national highways by implementing short-term measures.
About the guidelines

• Under these guidelines, NHAI Project Directors are now delegated with the power to undertake rectification of
accident-prone spots identified and recommended by the respective State Police Chief or by the District Road Safety
Committee to the tune of upto Rs. 10 lakh per spot.
• For short-term measures costing more than Rs. 10 lakh and up to Rs. 25 lakh, the responsibility has been assigned
to the relevant Regional Office.
− Short Term Measures include installation of pedestrian facilities like zebra crossings with advance warning signs,
Crash barriers & railings, solar lights/ blinkers, etc
ELECTRONICS REPAIR SERVICES OUTSOURCING (ERSO)

Context: MeitY launches pilot project on Electronics Repair Services Outsourcing (ERSO)
About ERSO
• The Government launched the ERSO Pilot initiative to validate certain transformational policy and process changes
to make India the Repair Capital of the World.
• MeitY, along with several other ministries/departments, converged with industry to launch ERSO Pilot initiative to
make India the Repair Capital of the World.
− Over the next 5 years, ERSO industry is likely to fetch India around $20 billion in revenue and also generate
millions of jobs.
− Global electronic equipment repair service market is forecast to reach USD 188 billion by 2026.
• The project has been identified as a gamechanger for India and has been supported by the Government to make India
a world leader in a hitherto untapped domain.
• The policy and process changes required for ERSO have been introduced over the last few months by different
departments of the Government after in-depth discussions with the Repair Industry and are being validated for their
efficacy and efficiency through a limited pilot that has been launched.
• The pilot is being held in Bengaluru and will be run for a period of three months commencing today.
NATIONAL ENERGY DATA: SURVEY AND ANALYSIS 2021-22

Context: First-ever Comprehensive Energy Sector Report of BEE’s Energy Data Management Unit released
About the report

• It is the maiden report of Energy Data Management Unit, set up under Bureau of Energy Efficiency, Ministry of Power,
Government of India.
• The report contains extensive data compiled for the last six years, i.e., from FY 2016-17 to FY 2021-22, along with
trends and analysis of fuel-wise energy consumption in major end-use sectors.
The highlights of the report

• This report provides granular fuel-wise energy consumption data for various sectors. This detailing will enable a better
understanding of the energy profile of various sectors, sub-sectors and consumer groups.
• The use of distinct conversion factors (of domestic coal and imported coal) for different years based on different
calorific values of coal gives a realistic picture of coal-based energy supply and consumption in the country.
• In the latest edition of 2023 Report of Ministry of Statistics & Programme Implementation, the conversion factors of
coal have been derived using a weighted average methodology rather than using a single representative GCV for all
grades of coal.
• This report also provides an overview of the impact of various policies on energy savings and CO2 emission reduction
with corresponding monetary savings.
New Insights
• Energy supply to economy during last six years is actually less by 18%; this has been found out by using Indian coal
conversion factors, rather than IEA conversion factors which has been used before
• Lower energy consumption value by 8% in 2021-22.
• Increased share of electrification on consumption side to 20.9%.
Usefulness of the report

• The information provided in this report will help in assessing the status of data availability of various energy products
in the country.
• It can also help in analysing energy intensity of the country thereby enabling policy makers to formulate robust policies
and carry out course corrections.
PRADHAN MANTRI GRAM SADAK YOJANA (PMGSY)

Context: The Standing Committee on Rural Development and Panchayati Raj (Chair: Mrs. Kanimozhi Karunanidhi)
submitted its report on ‘Pradhan Mantri Gram Sadak Yojana,’ on July 27, 2023.
Key observations and recommendations include:

• Progress on PMGSY I and II: PMGSY I, launched in 2000 and PMGSY II, launched in 2013 was scheduled to be completed
by September 2022. As of January 2023, 96% of the target was achieved for PMGSY I and 97% for PMGSY II.
− The Committee noticed that the delays have adversely affected the livelihood and developmental prospects of
the rural population. These delays have also led to an escalation of costs.
− The committee recommended that the remaining pendency of the two phases should be completed on priority.
• Emphasis on RCPLWEA: RCPLWEA, ensures socio-economic development in areas affected by left-wing extremism. It
was launched in 2016 and was targeted to be completed by 2020. It has been extended till March 2023.
− As of January 2023, only 56% of the work has been completed. The Ministry noted that the delay in progress is
due to, (i) law-and-order issues, (ii) forest clearance, (iii) difficult terrain, and (iv) non-availability of contractors.
− The Committee recommended the Ministry of Rural Development (DoRD) to think of innovative solutions and
guide states for timely completion.
• Quality of Roads: The Committee recommended DoRD to ensure strong measures regarding the quality of roads,
and raw material used. There is a mandatory provision of quality control labs at the ground level. However, there are
instances of alleged non-existence or non-functioning of them at many locations.
− The Committee recommended a thorough evaluation of sites. This would ensure stricter compliance with the
presence of the labs, and maintain road quality.
• Inclusion of 2011 census figures: Habitations under PMGSY are based on the 2001 Census. This has led to many
eligible habitations being left out. The Committee recommends DoRD to introduce a new vertical in their domain for
the inclusion of habitations as per the 2011 Census.
About Pradhan Mantri Gram Sadak Yojana (PMGSY)

• Pradhan Mantri Gram Sadak Yojana (PMGSY) is a centrally sponsored scheme to provide road connectivity to eligible
rural habitations. The scheme has four verticals, (i) PMGSY I, (ii) PMGSY II, (iii) Road Connectivity Project for Left Wing
Extremism Areas (RCPLWEA), and (iv) PMGSY III.
• It was Launched in 2000
• The spirit and the objective of the Pradhan Mantri Gram Sadak Yojana (PMGSY) is to provide good all-weather road
connectivity to unconnected Habitations. A habitation which was earlier provided all-weather connectivity would
not be eligible even if the present condition of the road is bad.
PM KUSUM
Context: According to the Union Minister of New Renewable Energy, nearly 21 lakh farmers have benefitted from
PM-KUSUM.
About PM-KUSUM
• The Ministry of New and Renewable Energy (MNRE) launched the Pradhan Mantri Kisan Urja Suraksha evem Utthan
Mahabhiyan (PM KUSUM) Scheme for farmers, in 2019, for installation of solar pumps and grid connected solar and
other renewable power plants in the country.
• Objectives of PM-KUSUM
− De-dieselisation of the farm sector.
− Providing water and energy security to farmers
− Increasing the income of farmers and curbing environmental pollution.
• Components under PM KUSUM
− 10,000 MW of Decentralized Ground Mounted Grid Connected Renewable Power Plants of individual plant size
up to 2 MW.
− Installation of 17.50 lakh standalone Solar Powered Agriculture Pumps of individual pump capacity up to 7.5 HP.
− Solarisation of 10 Lakh Grid-connected Agriculture Pumps of individual pump capacity up to 7.5 HP.
• Implementing Agency
− State Nodal Agencies (SNAs) of MNRE will coordinate with States/UTs, Discoms and farmers for implementation
of the scheme.
• Scheme Benefits
− It will provide a stable and continuous source of income to rural land owners, by utilising their dry land.
− In case cultivated fields are chosen for setting up solar power projects, the farmers could continue to grow crops
as the solar panels are to be set up above a minimum height.
− Scheme ensures sufficient local solar/ other renewable energy based power availability, for feeding rural load
centers and agriculture pump-set loads.
− Decentralized sub-stations, will result in reduced Transmission losses for STUs and Discoms.
− Solar pumps save the expenditure incurred on diesel and provide the farmers a reliable source of irrigation, while
also preventing harmful pollution from running diesel pumps.
• Challenges associated with PM-KUSUM
− Access to finance for Farmers to install Solar Pumps/Grids.
− Depleting Water Table concerns need to be accounted for from cheaper supply of power through Solar Energy.
− Regulatory Barriers related to Solar Projects.
PRADHAN MANTRI UJJWALA YOJANA (PMUY)

Context: The Cabinet Committee on Economic Affairs has approved a subsidy to the beneficiaries of Pradhan Mantri
Ujjwala Yojana (PMUY).
About Pradhan Mantri Ujjwala Yojana (PMUY) 2016

• Aim: To provide deposit-free LPG connections to women in poor households.
• To shift to LPG from conventional fuels like firewood and cow dung cakes, which are considered hazardous.
About PMUY-1.0
• Target under the scheme was to release 8 Crore LPG Connections to the deprived households by March 2020.
• The release of 8 Crore LPG connections under the scheme has also helped in increasing the LPG coverage from 62%
on 1st May 2016 to 99.8% as on 1st April 2021.
About PMUY 2.0

• The Union budget for FY 21-22, provided for an additional one crore LPG connection under the PMUY scheme. The
target was achieved in January 2022.
• One crore additional PMUY connections (under Ujjwala 2.0) aim to provide deposit-free LPG connections to those
low-income families who could not be covered under the earlier phase of PMUY.
• Migrants will not be required to submit ration cards or address proof.
Significance of PMUY
• As of March 1, 2023, there were 9.59 crore PMUY beneficiaries.
• The average LPG consumption of PMUY consumers has increased by 20 per cent from 3.01 refills in 2019-20 to 3.68
in 2021-22.
• Subsidy is credited directly to the bank accounts of the eligible beneficiaries.
WORLD’S HIGHEST RAIL BRIDGE – CHENAB BRIDGE

Context: A railway bridge, which is taller than the Eiffel Tower, and happens to be the highest in the world, is set to
open soon in Jammu and Kashmir.
About Chenab Bridge

• It is the world’s highest railway bridge and is part of the Udhampur-Srinagar-Baramulla rail link project (USBRL). The
Project was declared as a Project of National Importance in March 2002.
• This bridge is 1,315-metre long and is the highest railway bridge in the world being 359 metres above the riverbed
level. Chenab railway bridge soars above the Eiffel Tower in Paris by at least 35 metres.
• It is arguably the biggest civil-engineering challenge faced by any railway project in India in recent history.
• Chenab railway bridge connects Katra and Banihal and has cleared all the necessary tests.
Features of the Chenab Bridge
•
It is designed to withstand high wind speed up to 266 Km/Hour.
•
It designed for blast load in consultation with DRDO for the first time in India.
•
It is also designed to bear earthquake forces of highest intensity zone-V in India.
•
Phased Array Ultrasonic Testing machine first time used in Indian Railway for testing of welds.
•
First time on Indian Railways, National Accreditation Board for Testing and Calibration Laboratories (NABL) accredited lab
established at site for weld testing.
•
Extensive health monitoring and warning systems planned through state of art instrumentation.
About Chenab River

• Chenab River rises in the upper Himalayas in the Lahaul and Spiti district of Himachal Pradesh state.
• The river is formed by the confluence of two rivers, Chandra and Bhaga, at Tandi, 8 km southwest of Keylong, in
the Lahaul and Spiti district.
• It flows through the Jammu region of Jammu and Kashmir into the plains of Punjab, Pakistan, before flowing into
the Indus River.
• Tributaries of Chenab River are Jhelum, Tawi, Ravi, Beas, and Sutlej rivers.
About Udhampur Baramulla Link project

• It is a National project undertaken by the Indian Railways for construction of broad-gauge railway line through the
Himalayas, with the aim of connecting the Kashmir region with rest of the country.
• Construction of the first three phases of the project has been completed and the line is in operational use for running
of trains between Baramulla-Banihal in Kashmir valley and Jammu-Udhampur-Katra in Jammu region.
• Work on the intervening 111 Km section Katra-Banihal, the most arduous and treacherous portion due to its geology
and extensive riverine system replete with deep gorges, is also completed.
• There are several iconic bridges and tunnels coming up in this section. Most of the rail track is slated to be in tunnels
or bridges in this section.
STAR RATING POLICY FOR COAL AND LIGNITE MINES

Context: The Ministry of Coal has announced the commencement of Star Rating Registration process of Coal and
Lignite Mines for the financial year 2022-23.
About Star Rating Programme

• Definition: The Government’s Star Rating policy aims to evaluate mines based on various factors across seven key
parameters namely:
− Mining operations
− Environment-related parameters
− Adoption of technologies
− Best mining practices
− Economic performance
− Rehabilitation & resettlement
− Worker-related compliance
− Safety & security.
• Aim: The policy has been introduced to foster competitiveness among mines and recognize their outstanding
performance based on compliance of statutory provisions, adoption of advanced mining technology and economic
achievements.
• Ministry: Ministry of Coal
• Process: The ratings awarded range from Five Star to NO Star, comprehensively evaluating each mine’s achievements.
− Participating mines are encouraged to undertake a comprehensive self-evaluation process, which should be
completed by July 31, 2023.
− Upon completion, the top 10% of the highest-scoring mines will be selected for further validation through an
inspection conducted by a committee.
− While the remaining 90% of the mines will undergo an online review process, all participants can contribute to
the evaluation by reviewing other mines.
− The comprehensive review will be finalized by October 31, 2023.
− Subsequently, a Coal Controller review will be conducted, leading to the publication of the results by January
31, 2024.
− The evaluation will be conducted by the Coal Controller’s Organization, ensuring transparency and impartiality
in the assessment.
CHAPTER 7
Agriculture
DRAFT INTEGRATED PLANT NUTRITION MANAGEMENT BILL, 2022
Context: In February 2022, the Department of Fertilisers proposed the draft bill and put it in public domain to seek
comments from all the relevant stakeholders.
Rationale behind the proposed Bill

• To promote the development and sustainable use of balanced fertilisers, including bio-fertilisers, bio-stimulates,
nano-fertilisers and organic fertilisers.
• To simplify the process for the manufacture, production, distribution and price management of fertilisers in India
Provisions of the Bill

• It seeks to establish an ‘Integrated Plant Nutrition Management Authority of India’ for
− Regulation and registration of fertiliser manufacturers
− Set technical standards with respect to quality of fertilisers etc.
− No person would be able to manufacture, sell, import for sale, or market fertilisers without obtaining the appropriate
registration from the proposed authority.
• It empowers the central government to fix the maximum price of fertilisers and control its quality and distribution.
− Central government may prescribe the manner in which fertilizer may be moved from one state to another.
• It empowers States to appoint State Controllers of Fertilisers and Fertiliser Inspectors, who can conduct impromptu
inspections on industry with overarching powers to search, seize and confiscate.
PRADHAN MANTRI BHARATIYA JAN URVARAK PARIYOJANA- ONE NATION, ONE

FERTILISER SCHEME
Context: The government has launched Pradhan Mantri Bhartiya Jan Urvarak Pariyojana - One Nation One Fertiliser
during the PM Kisan Samman Sammelan 2022 at Indian Agricultural Research Institute in New Delhi.
About the scheme

• The Government of India has introduced single brand for fertilisers i.e. “Bharat” brand.
− Under this, a single brand name for Urea, DAP, MOP and NPK etc. would be Bharat Urea, Bharat DAP, Bharat MOP
and Bharat NPK respectively for all fertiliser companies (both public and private limited companies).
• The fertiliser companies are allowed to display their brand, name, logo and other relevant product information only on
one-third of their bags whereas on the remaining two-third space, the “Bharat” brand and Pradhan Mantri Bharatiya
Jan Urvarak Pariyojana will be shown.
Significance of the scheme

• Now, Urea will be only available under brand name ‘Bharat’ in the entire country. It will help in reducing the cost of
fertilisers and will increase their availability in the market.
• It takes care of the dilemma among farmers in choosing from a plethora of brands available in the markets, reduces
the crisscross movement and further ensures timely supply of fertilisers.
• It would also reduce the freight subsidy burden on the government which is about 5% of the total government’s subsidy.
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Pradhan Mantri Kisan Samriddhi Kendras (PMKSK)

•
PM Narendra Modi also inaugurated 600 PMKSKs during the PM Kisan Sammelan organised in October, 2022 as part of the
Special Campaign 2.0 initiatives of the Department of Fertilisers.
•
The government aims to establish 3.25 lakh PMKSKs across the country by converting existing village/sub district/block/taluk and
district level fertiliser shops into Model Fertilizer Retail Shops.
•
These shops will act as “one stop shop” for all agriculture related inputs and services.
•
From these centres, farmers will be able to buy agri-inputs (fertilisers, seeds, implements) and avail soil, seed and fertiliser
testing and useful information about farming techniques.
•
These shops will also be used to create awareness among farmers, provide information regarding various government schemes
and ensure regular capacity building of retailers at block/district level outlets.
SAFFRON BOWL PROJECT

Context: NorthEast Center for Technology Application and Reach (NECTAR) under the saffron bowl project has identified
a few locations in Arunachal Pradesh and Meghalaya for saffron cultivation
About the News
• The total cost of the whole project is Rs. 17.68 lakhs for Arunachal Pradesh and Meghalaya.
• In Arunachal Pradesh, there is a good growth of organic saffron with flowers. In Meghalaya, sample plantations were
grown at Cherrapunji, Mawsmai and Lalingtop sites.
• The following sites have been identified in Meghalaya under the said project:
− Barapani;
− Cherrapunji;
− Mawsmai;
− Shillong and;
− Lallingtop.
About NECTAR
• NECTAR is an autonomous body established in 2012 under the Department of Science and Technology with its
headquarters at Shillong, Meghalaya.
• It helps the eight states of the North-Eastern Region in harnessing and leveraging niche technologies available with
central scientific departments and institutions in the areas of biodiversity, telemedicine, watershed management,
horticulture, infrastructure planning and development, employment generation etc.
Saffron producing regions in India
• Saffron production in India was introduced in Kashmir by Central Asian immigrants in the 1st century BCE.
• Since then, its cultivation has been confined to a few specific regions of Kashmir like Pampore, Budgam, Srinagar and
Kishtwar only due to the presence of well drained Karewa soil in Kashmir.
− Pampore region also known as Saffron Bowl is one of the Globally Important Agricultural Heritage Systems
(GIAHS) recognised sites by the FAO in India.
− Recently, the Kashmir saffron got Geographical Indication (GI) tag also.
About Saffron
• It is a plant whose dried stigmas (thread-like parts of the flower) are used to make saffron spice.
• It is a very precious and costly agricultural product which is used for flavouring, colouring and in medicinal and
pharmaceutical industries.
• Altitude: It grows well at an altitude of 2000 metres above sea level and needs sunlight of 12 hours per day.
• Soil: It thrives best in calcareous soil (having calcium carbonate in abundance), humus-rich and well-drained soil
with a pH between 6 and 8.
• Rainfall: 100-150 cm of annual rainfall is required.
Why is saffron cultivation now being diversified to the North-East Region?

• India cultivates about 6 to 7 tonnes of saffron while the demand is about 100 tonnes.
• There is a huge similarity in climatic and geographical conditions between saffron growing regions of Kashmir and
few regions of the northeast.
• It will also diversify agriculture and will provide new opportunities to the farmers in the North East.
Issues and challenges with regard to saffron cultivation

• Decline in area under cultivation and difficulty in extending area under saffron cultivation in Jammu and Kashmir due
to urbanisation
• Lower yields in comparison to other countries due to which imports are growing from other countries
• Huge supply-demand mismatch
About National Saffron Mission

• It was launched in 2010-11 for four years by the Ministry of Science and Technology to increase the cultivation of
saffron in Jammu and Kashmir.
• However, due to a heavy loss in production during 2014, the mission was given an extension by the Government of India.
• In 2020, the Government revised its objective and aimed to start the cultivation of saffron in North East India with
the help of NECTAR.
The objective of the Mission

• Enhancing Soil Quality: The main focus was on obtaining high-quality soil, as the cultivation process was time-
consuming and the cultivation area was limited.
• Adoption of Scientific Techniques: To increase production yield per annum, traditional methods needed to be
revitalized, and scientific techniques needed to be embraced.
• Effective Irrigation System: Since a considerable amount of water was required, upgrading the irrigation system of
the area was crucial.
• Familiarization with Technology: As farmers involved in saffron production were unfamiliar with modern farming
technologies, NSM representatives provided them with machinery and educated them on their usage and importance.
• Quality Testing of Saffron: NSM appointed personnel to oversee and test the quality of saffron produced.
• Adapting to Weather Variations: As Kashmir experiences extreme cold weather, and the weather conditions are
unpredictable, all necessary measures were taken, keeping in mind the climatic conditions of the region.
PURPLE REVOLUTION
Context: As per the government of India, the ‘Purple Revolution’ from Jammu and Kashmir offers attractive start-up
avenues.
About Purple Revolution

• Also known as ‘Lavender Revolution’, it was launched by the Union Ministry of Science & Technology through the
Council of Scientific & Industrial Research (CSIR) Aroma Mission.
• The mission aims to increase the income of the farmers and promote lavender cultivation on a commercial scale.
• Under the mission, first-time farmers are given free lavender saplings, while those who had cultivated lavender before
were charged Rs. 5-6 per sapling.
• Lavender has been designated by the central government as a “Doda brand product” to promote the rare aromatic
plant.
About Lavender
• Lavender is a flowering plant in the mint family that’s easily identified by its sweet floral scent.
• The cultivation of lavender is very cost-effective as it yields a revenue immediately.
• It is a low maintenance crop, which can be used from its second year of plantation and blossoms for fifteen years. In
its entirety, lavender production gives better returns when compared to other traditional crops.
Agriculture 109
• Jammu and Kashmir climatic conditions are conducive to lavender cultivation, since the aromatic plant can withstand
both chilly winters and pleasant summers.
• Under the One District One Product-Districts as Export Hubs (ODOP-DEH) initiative, lavender cultivation in Jammu
and Kashmir has experienced a significant boom.
Applications of the Lavender

• Lavender oil is the main commodity which sells, for, at least, Rs 10,000 per litre.
• Other popular products include medicines, incense sticks, soaps, and air fresheners.
INTERNATIONAL YEAR OF MILLETS (IYOM 2023)

Context: A MoU has been signed between Department of Agriculture and Farmers Welfare and the National
Agricultural Cooperative Marketing Federation of India Limited (NAFED) for promoting millets under the International
Year of Millets 2023.
About International Year of Millets

• The United Nations General Assembly at its 75th session in March 2021 declared 2023 the IYOM on the proposal of
India.
• Food and Agricultural Organisation (FAO) is the lead agency for celebrating the year in collaboration with other
relevant stakeholders.
About Millets
• Millets are small-seeded grasses that are often called Nutri-cereals.
• These are grown primarily on marginal lands in dry areas in temperate, subtropical and tropical regions.
• Millets which are commonly available in India are- Sorghum (jowar), pearl millet (Bajra), finger millet (Ragi), Little
millet (kutki), Proso millet (cheena) and other millets.
• Millets are the staple crops adapted to dry land agro-ecologies of the arid and semi-arid tropics.
• In India, millets are produced in most of the states characterized by low to moderate precipitation (200–800 mm
rainfall).
Millets as Smart-Foods: Significance and Benefits

• Nutritionally Rich
− Millets are nutritionally superior to wheat and rice owing to their higher levels of protein.
− The dietary fibre content of millet is also higher compared to some of the staple cereals.
− Millets also exhibit anti-inflammatory and antioxidant properties.
• Climate Resilient
− Millets are the backbone for dry land agriculture. They are hardy, resilient crops that have a low carbon and
water footprint, can withstand high temperatures, grow on poor soils with little or no external inputs and are thus
termed as the ‘miracle grains’ or ‘crops of the future’.
− In times of climate change, they are the most secure crops to small farmers as they are the hardiest, most resilient
and climate adaptable crops in harsh, hot (up to 50 degrees Celsius) and drought environments.
• Health Benefits
− Millet grains are rich sources of nutrients like carbohydrates, protein, dietary fibre, and good-quality fat
− Millets have substantially higher amounts of minerals like calcium, potassium, magnesium, iron, manganese, zinc
and B complex vitamins, making them a preferable choice over the cereal grains.
− Millets can also help tackle health challenges such as obesity, diabetes and lifestyle problems as they are gluten-
free, have a low glycemic index and are high in dietary fibre and antioxidants.
• Ecologically Sustainable
− Millet production is not dependent on the use of chemical fertilisers. These crops do not attract pests. Thus, the
use of pesticides is also not mandated.
Major Government initiatives to promote millet production in India

• The Government has notified millets as Nutri-cereals in April 2018.
• There has been a significant rise in the Minimum Support Price of Millets by the government to enhance its cultivation
by the farmers.
• The Government, under the Sub Mission on National Food Security Mission (NFSM) -Nutri-cereals, is creating
awareness among farmers for Nutri Cereals (Millets) such as ragi, sorghum, bajra and small millets through
demonstration and training.
• Measures to enhance Export promotion
− Agricultural and Processed Food Products Export Development Authority (APEDA) has prepared a comprehensive
strategy to promote Indian millet exports across the globe commencing December 2022.
− To give impetus to the export of potential products as well as to remove the bottlenecks in the supply chain of
nutria-cereals, APEDA has created the Nutri Cereals Export Promotion Forum which also included millet exports.
It has also organised a sensitization programme for millet start-ups to familiarise them about export opportunities.
− 16 programmes are being planned by APEDA for promotion of Millets and Value Added Products of Millets in
UAE, Indonesia, USA, Japan, UK, Germany, Australia, Republic of Korea, South Africa and Saudi Arabia. During the
promotion programme, Buyer Seller Meets, Road Shows and participation in major international events will be
organised to promote Millets and Value Added Products of Millets.
• Technological initiatives
− The government is also supporting Research and Development in millets. Support is also given to start-ups and
entrepreneurs for developing recipes & value-added products that promote the consumption of millet.
− India has more than 500 Start-ups working in the millet value-added chain, while Indian Institute of Millets
Research has incubated 250 Start-ups under Rashtriya Krishi Vikas Yojana - Raftar.
• In Budget 2022-23, the Finance Minister announced assistance for post-harvest value addition and branding of millet
products in the domestic as well as global markets.
• In Budget 2023-24, the Finance Minister has announced that the Indian Institute of Millets Research, Hyderabad
will be supported as a Centre of Excellence for sharing best practices, research and technologies at the International
level. Also, Finance Minister named Millets as Shree Anna.
Millet Map of India
Agriculture 111
Millet International Initiative for Research and Awareness (MIIRA)

•
It is a global initiative proposed by India to encourage the production and consumption of millet.
•
The draft of the proposed initiative-MIIRA was placed during the first Agriculture Deputies meeting under the Agriculture Working
Group of G20 at Indore, Madhya Pradesh.
•
It will be aimed at coordinating millet research programmes at the International level.
− It will connect millet research organisations across the world while also supporting research on these crops.
REWARD PROJECT
Context: Central Government, State Governments of Karnataka and Odisha and the World Bank have signed a
$115 million loan agreement for REWARD (Rejuvenating Watersheds for Agricultural Resilience through Innovative
Development) Programme.
About REWARD project

• It is an initiative of the Department of Land Resources under the Ministry of Rural Development, Government of India.
• It will be implemented in 3-4 states of the country.
• It is proposed as a 6 years Project. The total allocation for the Project is approximately USD 250 million of which USD
178.5 million is International Bank for Reconstruction and Development (IBRD) loan from the World Bank and the
balance is funded by the Government of India/ State Governments.
• The project is in line with the Government of India’s target to restore 26 million hectares of degraded land by 2030.
Project Components
• Improved National Watershed Governance and Institutional Capacity Building
• Improved State Watershed Governance and Institutional Capacity Building
• High Impact demonstration Watersheds in Rainfed Agricultural Areas
• Project Management and Coordination
Significance of the Project

• It will help national and state institutions to adopt improved watershed management practices to help increase
farmers’ resilience to climate change, promote higher productivity and better incomes.
• It will help the participating state governments in their efforts to transform watershed planning and execution and
adopt science-based planning that could be replicated across the country.
• Effective watershed management can help enhance livelihoods in rainfed areas, while building a more resilient food
system.
VERTICAL FARMING
Context: Vertical farming is slowly catching up in India.
About Vertical farming

• It is the practice of growing crops indoors on vertically stacked layers under artificial conditions of light and temperature.
• By using vertically stacked layers, farmers can produce much more food on the same amount of land (or even less).
• It requires a delicate balance of artificial temperature, light, water and humidity control. If a delicate balance is not
maintained, it’s possible to lose an entire crop the way a traditional farm might in the event of a drought or flood.
• In 1915, Gilbert Ellis Bailey coined the term vertical farming and wrote a book on it but the modern concept was
proposed by Professor Dickson Despommier.
Techniques of Vertical farming

• Hydroponics
− Hydroponics is a method of growing plants in a water-based, nutrient-rich solution.
−The basic advantages of this method is that it reduces soil-related cultivation problems like soil borne insects,
pests and diseases.
• Aeroponics
− The invention of aeroponics was motivated by NASA to find an efficient way to grow plants in space in the 1990s.
− In this, plants are tied to a support and remain suspended in the air and roots are sprayed with a nutrient solution
or mist.
− It requires very less space, very less water and no soil.
• Aquaponics
− The term aquaponics is coined by combining two words: aquaculture, which refers to fish farming, and hydroponics—
the technique of growing plants without soil, to create symbiotic relationships between the plants and the fish.
− The symbiosis is achieved as nutrient-rich waste from fish tanks serves as “fertigate” to hydroponic production beds.
Advantages of Vertical farming

• Utilises less water and space
• vertical farms can produce all sorts of crops year-round with little dependence on weather or climate.
• Indoor farming does not allow access to wildlife, eliminating the conflict between farmers and native species.
• It doesn’t expose farmers to hazards and diseases such as malaria, poisonous chemicals, and other life-threatening
challenges.
• It prevents hazardous chemical runoff which helps in preventing environmental pollution and related human-health
hazards.
• It allows farming in the desert areas, solving the problem of food shortages there.
• It eliminates the need for chemical pesticides as farming is done in a controlled environment which keeps out pests
naturally.
SEAWEED FARMING
Context: India’s first Seaweed park to be set up in Tamil Nadu.
About seaweed
• “Seaweed” is the common name for countless species of marine plants and algae that grow in oceans as well as in
rivers, lakes and other water bodies.
• Some seaweeds are microscopic, such as the phytoplankton that live suspended in the water column and provide
the base for most marine food chains.
• Some are enormous, like the giant kelp that grow in abundant “forests” and tower-like underwater redwoods from
their roots at the bottom of the sea.
• Most are medium-sized, come in colours of red, green, brown, and black, and randomly wash up on beaches and
shorelines just about everywhere.
• The vernacular “seaweed” is a bona-fide misnomer, because a weed is a plant that spreads so profusely it can harm
the habitat where it takes hold. Seaweed, however, provides multiple benefits.
Benefits of Seaweeds
• In Food Industry
− Seaweed is tasteless hence, it does not interfere with the taste of food.
− It is used as a stabiliser to thicken, emulsify and preserve foods and drinks.
− Example- Alginate acts as an emulsifier and binder and helps in retaining freshness of meat.
• As a fertiliser
− Seaweeds help in faster germination of seeds.
− It acts as a bioenhancer and stimulates internal growth of plants.
− With increasing focus on organic farming, seaweed is the fertiliser of the future.
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• Medicinal benefits
− These are used in the preparation of anti-obesity tablets, anti-diabetic pills and anti-arthritic pills.
• These are also used in cosmetic goods.
AGRICULTURE INFRASTRUCTURE FUND (AIF)

Context: Within two-and-a-half years of the implementation of the AIF, the scheme has mobilized more than Rs.30,000
crore for projects in the agriculture infrastructure sector.
About the AIF

• It is a pan India Central Sector Scheme launched in the year 2020.
• Duration: Extended to 13 years (FY2020 to FY2032).
• It aims to provide a medium - long-term debt financing facility for investment in viable projects for post-harvest
management Infrastructure and community farming assets through interest subvention and financial support.
• For APMCs, interest subvention for a loan up to Rs. 2 crores will be provided for each project of different infrastructure
types.
• NABARD will steer this initiative in association with the Ministry of Agriculture and Farmers’ Welfare.
• Intended beneficiaries: Primary Agricultural Credit Societies (PACS), Marketing Cooperative Societies, Farmer
Producers Organizations (FPOs), Self Help Group (SHG), Farmers, Multipurpose Cooperative Societies, Agri-
entrepreneurs, Startups etc.
INTEGRATED RICE-FISH CULTIVATION BY APTANIS: ARUNACHAL PRADESH

Context: The Apatanis (one of the major ethnic groups of the eastern Himalayas) practice a distinctive form of
agriculture where rice and fish are grown together.
About Integrated rice-fish cultivation

• The Apatani farmers have been practicing integrated rice-fish farming in their mountain terraces of Arunachal Pradesh
since the 1960s.
• The climate ranging from humid subtropical to temperate, plateau receiving adequate rainfall during the summer
season, along with permeability and water-retaining capacity of the clayey, loamy soil favour the Integrated rice-fish
cultivation farming technique in the region.
• The process involves:
− Bamboo pipes to distribute water from the networks of earthen irrigation channels.
− Ancient and old-fashioned agricultural technologies are utilized for cultivation, as modern ways are not affordable
to tribes.
− Bamboo fencing avoids the escape of fish through the pipes.
• Benefits of Integrated cultivation include:
− It is a low-input and eco-friendly practice, as farmers use household and agricultural wastes and excreta of
domestic animals to make farming more sustainable and organic.
− The stocked fish feeds on natural food sources of rice fields and thus, farmers need not use any supplementary
fish feeds.
− Fish enhances rice productivity by controlling the growth of algae, weeds and insects, providing nutrient input
through fish excreta and promoting tillering of the rice through the movement of fish inside the field.
• Despite the remoteness and lack of resources, this eco-friendly and economically beneficial practice has made the
system unique in terms of aquatic resource utilisation.
• Hence the need of adequate attention to such practices, for better productivity and profitability to the small-scale
rural farmers in Assam and other north-eastern hill states.
COOPERATIVE MOVEMENT IN THE COUNTRY

Context: The Union Cabinet has approved strengthening cooperative movement in the country and deepening its
reach up to the grassroots.
More about the news

• The Union Cabinet has approved:
− Establishing viable Primary Agricultural Credit Societies (PACS) in each uncovered Panchayat, viable dairy
cooperatives in each uncovered Panchayat/village and viable fishery cooperatives in each coastal Panchayat/
village as well as Panchayat/village having large water bodies, and strengthening the existing PACS/dairy/fishery
cooperative societies.
− Initial target to establish 2 lakh multipurpose PACS/ Dairy/ Fishery Cooperatives in next five years.
− Plan to be implemented with the support of NABARD, National Dairy Development Board (NDDB) and National
Fisheries Development Board (NFDB) through convergence of various schemes of Ministry of Fisheries, Animal
Husbandry & Dairying by leveraging the ‘whole-of-Government’ approach.
− to enable PACS/dairy/fishery cooperative societies to setup and modernize necessary infrastructure to diversify
their business activities.
− to provide farmer members with requisite forward and backward linkages to market their produce, enhance their
income, obtain credit facilities and other services at village level.
• The Cabinet also approved the constitution of a “high level Inter-Ministerial Committee (IMC)” headed by Minister
of Home and Cooperation to take necessary steps like:
− suitable modifications in the guidelines of the schemes identified for convergence, for smooth implementation
of the plan.
• Committees at National, State and District levels have also been constituted to ensure focused and effective execution
of the action plan.
• In order to increase the viability of PACS and diversify their business activities to make them vibrant economic entities
at Panchayat level, model byelaws of PACS have been prepared.
− These Model byelaws of PACS will enable them to undertake more than 25 business activities which, inter alia,
include dairy, fishery, setting up of godowns, procurement of foodgrains, fertilizers, seeds, LPG/CNG/Petrol/Diesel
distributorship, etc.
− A national cooperative database is also being prepared by Ministry of Cooperation where country-wide mapping
of cooperatives at Panchayat and village level is being carried out with the support of Registrar of Cooperative
Societies of States/ Union Territories.
• PACS / dairy / fishery cooperative societies would be linked with their respective District and State level Federations.
Basmati Rice
Context: Retaining the minimum export price of basmati rice at $1,200 per tonne has led a section of exporters to
decide to stop buying rice from several mandis.
About Basmati Rice

• Basmati rice is an extra-long slender grain that elongates at least twice their original size with a characteristic soft
and fluffy texture upon cooking, delicious taste, superior aroma and distinct flavour.
• It is cultivated in the Himalayan foothills of the Indian subcontinent.
• The specific agro-climatic conditions, processing techniques such as harvesting and ageing are said to make this rice
unique.
• In India, rice grown in specific parts of Punjab, Haryana, Himachal Pradesh, Delhi, Uttarakhand, Uttar Pradesh and
Jammu & Kashmir can be labelled as basmati.
• 34 varieties of Basmati rice (notified under the seeds Act, 1966):
− Basmati 217, Basmati 370, Type 3 (Dehraduni Basmati), Punjab Basmati 1 (Bauni Basmati), Pusa Basmati 1, Kasturi,
Haryana Basmati 1, Mahi Sugandha, Taraori Basmati (HBC 19 / Karnal Local), Ranbir Basmati, Basmati 386, Improved
Pusa Basmati 1 (Pusa 1460), Pusa Basmati 1121 (After amendment), Vallabh Basmati 22, Pusa Basmati 6 (Pusa
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1401), Punjab Basmati 2, Basmati CSR 30 (After amendment), Malviya Basmati Dhan 10-9 (IET 21669), Vallabh
Basmati 21 (IET 19493), Pusa Basmati 1509 (IET 21960), Basmati 564, Vallabh Basmati 23, Vallabh Basmati 24, Pusa
Basmati 1609, Pant Basmati 1 (IET 21665), Pant Basmati 2 (IET 21953), Punjab Basmati 3, Pusa Basmati 1637, Pusa
Basmati 1728, Pusa Basmati 1718, Punjab Basmati 4, Punjab Basmati 5, Haryana Basmati 2 and Pusa Basmati 1692.
• Export (2022-23): 4558972.23 MT for the worth of Rs. 38524.11 Crores/ 4787.50 US$ Mill.)
• In 2020, India’s application for a geographical indication tag recognised in the European Union market was put on
hold after Pakistan opposed the move.
• A patent contested in 2000 by Centre for Scientific and Industrial Research (CSIR), (India’s premier science and industry
organisation) said the term ‘basmati’ could be used only for rice grown in India and Pakistan.
− In 2001, a final decision ensured that the US company could no longer use basmati in their name.
NATIONAL TURMERIC BOARD

Context: The Central Government has recently notified the constitution of the National Turmeric Board.
National Turmeric Board

• Definition: The Central Government has notified the constitution of the National Turmeric Board.
• Aim:
− Focus on the development and growth of turmeric and turmeric products in India.
− To increase turmeric exports to USD 1 Billion by 2030.
• Composition: The Board shall have:
− A Chairperson to be appointed by the Central Government,
− Members from the Ministry of AYUSH, Departments of Pharmaceuticals, Agriculture & Farmers Welfare, Commerce
& Industry of the Union Government,
− Senior State Government representatives from three states (on rotation basis),
− Selected national/state institutions involved in research,
− Representatives of turmeric farmers and exporters,
− Secretary to be appointed by the Department of Commerce.
• Functions:
− Provide leadership on turmeric related matters,
− Facilitate greater coordination with Spices Board in development and growth of the turmeric sector,
− Increase awareness and consumption of turmeric,
− Develop new markets internationally to increase its exports,
− Promote research and development of new products,
− Develop on India’s traditional knowledge for value-added turmeric products,
− Focus on capacity building and skill development of turmeric growers for harnessing greater benefits out of
value addition,
− Promote quality and food safety standards.
Turmeric in India
• India is the largest producer, consumer and exporter of turmeric in the world.
• Turmeric can be grown in diverse tropical conditions from sea level to 1500 m above sea level, at a temperature
range of 20-35 degree C with an annual rainfall of 1500 mm or more, under rainfed or irrigated conditions.
• The largest producing states of Turmeric are Maharashtra, Telangana, Karnataka and Tamil Nadu.
• Famous Varieties:
− Curcumin is the compound responsible for the bright yellow color of turmeric.
− Lakadong turmeric is grown in Jaintia Hills of Meghalaya is a high-quality, flavorful variety of turmeric.
− Alleppey turmeric grown in Kerala is used to make several homemade remedies and Ayurvedic medicines.
− Erode turmeric grown in Tamil Nadu has received the GI tag.
− Sangli turmeric grown in Sangli, Maharashtra has also received the GI Tag.
• India has more than 62% share of world trade in turmeric.

• The leading export markets for Indian Turmeric are Bangladesh, UAE, USA and Malaysia.
DHARA MUSTARD HYBRID (DMH-11)

Context: India’s first genetically modified mustard crop Dhara Mustard Hybrid (DMH-11) has failed to meet the minimum
weight criteria required for the commercial release as seed.
Dhara Mustard Hybrid (DMH-11)

• A transgenic mustard developed indigenously by Delhi University for its seed production and testing.
• It is a Herbicide Tolerant (HT) mustard variety that has undergone genetic modification.
• It has two alien genes “barnase” and “barstar”, isolated from a soil bacterium called Bacillus, amyloliquefaciens.
• It has been developed by crossing a popular Indian mustard variety ‘Varuna’ (the barnase line) with an East European
‘Early Heera-2’ mutant (barstar).
• At present, Cotton is the only GM crop allowed for cultivation in India.
Significance of DHARA Mustard Hybrid

• DMH-11 is claimed to have shown an average 28% yield increase over Varuna.
• India produces only 8.5-9 million tonnes (mt) of edible oil annually while it imports 14-14.5 mt which entailed a record
foreign exchange outgo of USD 18.99 billion in the fiscal year ended March 31, 2022.
• Further, GM mustard would make India self-reliant in oil production and help in saving forex.
Problems with Dhara Mustard Hybrid (DMH-11)

• GM mustard is a herbicide-tolerant crop and toxic chemicals sprayed on the plant would impact the health of the
people consuming it.
• It is also environmentally unsustainable and does not suit Indian agricultural conditions.
• GM mustard did not get tested as a herbicide-tolerant (HT) crop because there are no regulatory guidelines and
protocols for HT crops.
What are Transgenic Crops?

• Transgenic crops, also known as genetically modified (GM) crops are plants that have been modified through the
introduction of genetic material from a different organism.
• The process of creating transgenic crops involves isolating a desirable gene from one organism and inserting it into
the genetic material of the target crop plant.
• This gene is selected because it imparts a specific desirable trait, such as resistance to pests, tolerance to herbicides,
improved nutritional content, or enhanced productivity.
Benefits of Transgenic Crops (or GM crops)

• Increased crop yield and productivity: GM crops are often engineered to possess traits that enhance their yield
potential. This includes traits like improved resistance to pests, diseases, and environmental stresses, as well as
increased tolerance to herbicides.
• Nutritional security: Genetic engineering can be used to improve the nutritional composition of crops. For example,
biofortified GM crops can be developed to have higher levels of essential vitamins, minerals, and other nutrients.
• Economic benefits: GM crops can provide economic benefits to farmers, such as increased yields, reduced input costs
(e.g., pesticides, herbicides), and improved marketability of their produce.
Concerns with Transgenic Crops

• Environmental impact: There is a possibility of gene flow from GM crops to wild relatives, leading to unintended
effects on biodiversity and ecosystem balance.
• Development of superweeds: There is a risk that genes from GM crops could transfer to related weed species, leading
to the development of herbicide-resistant “superweeds.”
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• Emergence of insect resistance: The continuous cultivation of GM crops expressing insecticidal traits, such as Bt crops,
can lead to the evolution of insect populations that are resistant to the specific toxins produced by the GM crops.
• Human health concerns: Health risks associated with GM foods are concerned with toxins, allergens, or genetic hazards.
• Socio-economic impacts: The adoption of GM crops can have differential impacts on wealthier and poorer farmers,
with wealthier farmers more likely to benefit due to their greater financial resources, access to information, and
market connections.
SATHI (SEED TRACEABILITY, AUTHENTICATION AND HOLISTIC INVENTORY) PORTAL

Context: The government has launched the SATHI (Seed Traceability, Authentication and Holistic Inventory) Portal
and Mobile App.
About the Portal

• It is a Centralized Online System for seed traceability, authentication and inventory designed to deal with the challenges
of seed production, quality seed identification and seed certification.
• It has been developed by the NIC in collaboration with the Union Ministry of Agriculture and Farmers Welfare on the
theme of ‘Uttam Beej – Samriddh Kisan’.
• SATHI provides a holistic approach to encompass the complete seed life cycle over multiple seed generations.
− This measure is achieved through automation of the entire seed supply chain, starting from seed production to
certification, licensing, seed Inventory, and seed sale by certified dealers to seed growers and includes traceability
of seeds.
Salient features of the Sathi Portal

• GIS reports based on Bharat Map Interface
• Provision of wallet service
• Offline-friendly and device-agnostic mobile application
• Quality inspection module for the quality check of the inspection process
• System-generated sample slip on processed verification data
• Online forwarding of the samples to the seed testing laboratory
• Issuing of tag certificate based on digital tag register
COASTAL AQUACULTURE AUTHORITY (AMENDMENT) BILL, 2023

Context: The Coastal Aquaculture Authority (Amendment) Bill, 2023 was introduced in Lok Sabha in April 2023. It
amends the Coastal Aquaculture Authority Act, 2005. The Act established the Coastal Aquaculture Authority for regulating
coastal aquaculture, which refers to rearing and cultivation of fish under controlled conditions.
Key features of the Bill include

• Regulation of allied coastal aquaculture activities: The Bill adds that any facility that is engaged in coastal aquaculture
or any allied activity will be regulated as a coastal aquaculture unit. Allied activities include nucleus breeding centres,
hatcheries, brood stock multiplication centres and farms. The Bill provides for the registration and regulation of such
units.
• Some allied activities to be allowed in certain protected areas: The bill prohibits coastal aquaculture activities in:
(i) ecologically sensitive areas or in geo-morphological features such as mountains, valleys, or volcanoes, (ii) no-
development zones in seas and buffer zones in creeks, rivers, and backwaters, and (iii) creeks, rivers, and backwaters
within Coastal Regulation Zones.
• Coastal Aquaculture Authority: Functions of the Authority include: (i) regulating the construction and operation of
aquaculture farms in coastal areas, (ii) registering coastal aquaculture farms, and (iii) removing/demolishing farms
that cause pollution.
− The Bill adds that the Authority shall: (i) fix standards or prohibit coastal aquaculture inputs, such as probiotics,
in order to prevent harm to coastal aquaculture/environment, (ii) fix standards, monitor, and regulate such units
to prevent diseases, and (iii) fix standards for emission/discharge of effluents from coastal aquaculture units.
• Composition of the Authority: The Authority comprises 11 members including: (i) a High Court judge (Chair), (ii)
experts in the fields of coastal aquaculture and coastal ecology, (iii) representatives from the ministries of agriculture
and commerce, and (iv) four members from coastal states.
− The Bill adds a representative from the Ministry of Fisheries, Animal Husbandry and Dairying as a member.
INTERNATIONAL SUGAR ORGANISATION (ISO)

Context: India has been designated as the Chair of the International Sugar Organisation (ISO) for 2024, following the
announcement made during the 63rd council meeting held in London.
About International Sugar Organisation

Attribute Detail
Name International Sugar Organization (ISO)
Establishment 1968
Headquarters London, United Kingdom
Type Intergovernmental Organization
Purpose Administering the International Sugar Agreement of 1968, aiming to establish an orderly relationship between
supply and demand for sugar in the world market.
Member Countries 88 (including Saudi Arabia, which joined in 2022)
Sugar Production
• Temperature: Between 21-27°C.
• Climate: Hot and humid climate.
• Rainfall: Around 75-100 cm of rainfall.
• Soil: Deep rich loamy soil.
In India
• India is the world’s largest producer and consumer of sugar and the second-largest exporter (2022).
• Major sugarcane producing states: Maharashtra, Uttar Pradesh, and Karnataka.
• Sugar industry distribution:
− North: Uttar Pradesh, Bihar, Haryana, and Punjab
− South: Maharashtra, Karnataka, Tamil Nadu, and Andhra Pradesh.
South India’s tropical climate is suitable for higher sucrose content, which leads to a higher yield per unit area
compared to North India.
UNIQUE PACKAGE FOR FARMERS

Context: The Cabinet Committee on Economic Affairs (CCEA) has approved a unique package of innovative schemes
for farmers with a total outlay of Rs.3,70,128.7 crore.
More about the news

• The schemes aim to enhance the overall welfare and economic prosperity of farmers by encouraging sustainable
agriculture practices.
• The package includes measures to increase farmers’ income, promote natural and organic farming, revitalize soil
productivity, and ensure food security.
Key highlights of approved schemes

• Nano Urea eco-system strengthened: By 2025-26, eight Nano urea plants will be commissioned. Nano fertilizer
releases nutrients in a controlled manner contributing to higher nutrient use efficiency and while costing less to the
farmers. Application of Nano Urea has demonstrated increase in crop yield.
• Atmanirbhar in Urea by 2025-26
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• PM Programme for Restoration, Awareness Generation, Nourishment and Amelioration of Mother – Earth
(PMPRANAM): Promoting natural / organic farming, alternate fertilizers, innovations like Nano Fertilizers and bio-
Fertilizers can help in restoring fertility of Earth. PMPRANAM was announced in Budget 2023-24, to incentivize States/
UTs to promote alternate fertilizers and balanced use of chemical fertilizers.
• Rs. 1452 crore has been approved for Market Development Assistance (MDA) for promoting Organic Fertilizers from
GOBAR-Dhan (Galvanizing Organic Bio-Agro Resources- Dhan) Plants.
• Introduction of Sulphur coated Urea (Urea Gold); to address sulphur deficiency of soil and save input costs for the
farmers.
− It is more economical and efficient than the currently used Neem coated urea. It will address Sulphur deficiency
for the soil in the country. It will also save input costs for the farmers and also raise incomes for farmers with
enhanced production & productivity.
Benefits of the approved schemes

• Improved soil health leads to increased nutrient efficiency and safe environment due to reduction in soil and water
pollution. Safe and clean environment helps in improvement in human health.
• Better utilization of crop residue like parali will help resolve the issue of air pollution and improve the cleanliness and
betterment of living environment and also help to convert waste into wealth.
• Farmers will reap more benefits – they need not pay anything extra for urea as it continues to be available at the
same affordable statutory price.
• Organic fertilizers (FOM/ PROM) will also be available at cheaper prices. With low-cost Nano urea and reduced use of
chemical fertilizers and increased use of organic fertilizers, the input cost for the farmers will come down. Low input
cost coupled with healthy soil and water will enhance the production and productivity of the crops. Farmers will get
good returns for their produce.
LIVESTOCK INSURANCE
Context: Central Government is considering a comprehensive livestock insurance scheme on the line of Prime Minister’s
Fasal Bima Yojana.
About Livestock Insurance Scheme

• It was implemented on a pilot basis during 2005-06 and 2006-07 of the 10th Five Year Plan and 2007-08 of the 11th
Five Year Plan in 100 selected districts.
• The scheme was later implemented on a regular basis from 2008-09 in 100 newly selected districts of the country.
• It is a Centrally sponsored scheme and is being managed by the respective State Livestock Development Boards.
• Funding: 50% premium is borne by GoI whereas remaining 50% is shared 50:50 by the State Government and the
beneficiaries.
• It was later subsumed under the Sub-mission on Innovation and Extension on livestock development of National
Livestock Mission.
• Need for new scheme: At present, less than 1% of the country’s cattle population is insured.
− Not even a single animal was insured during 2022-23, whereas during 2021-22, 1,74,061 were insured.
• It will replace the present Livestock Insurance Scheme.
Status of Livestock in India: Highlight of 20th Livestock Census

• Total population: The total Livestock population is 536.76 million in the country showing an increase of 4.8% over
Livestock Census-2012.
• Urban and rural: The total Livestock population in rural and urban area is 514.11 million and 22.65 million respectively
with percentage share of 95.78% for rural and 4.22% for urban area.
• Bovine population: Total Bovine population (Cattle, Buffalo, Mithun and Yak) is 303.76 million in 2019 which shows
an increase of 1.3% over the previous census.
− The total number of Cattle in the country is 193.46 million in 2019 showing an increase of 1.3 % over previous
Census.
• Exotic and indigenous breed: The Exotic/Crossbred and Indigenous/Non-descript Cattle population in the country is
51.36 million and 142.11 million respectively.
− The Indigenous/Non-descript Female Cattle population has increased by 10% in 2019 as compared to previous
census.
LIVESTOCK AND LIVESTOCK PRODUCTS BILL

Context: The Centre has withdrawn the proposed draft of the Live-stock and Live-stock Product (Importation and
Exportation) Bill, 2023.
More about the news

• As a result the existing Live-stock importation Act, 1898, and Live-stock Importation (Amendment) Act of 2001 will
continue to regulate the livestock.
• The Bill had drawn strong objections from animal rights activists, right-wing groups and Jain religious leaders who
demanded it be withdrawn for various reasons.
• The bill allowing the live export of animals from India, is a blanket free pass for the abuse of millions of animals
farmed for food and other uses.
• Facing criticism, the Centre has withdrawn the draft Live-stock and Live-stock Products [Importation and Exportation]
Bill, 2023.
About the Draft livestock and livestock products Bill

• The bill frames guidelines for the import and export of live animals. This had raised concerns among animal lovers.
• The bill was different from the existing law in three key aspects — it allows export of live animals, it widens the
scope of animal import-export (including cats and dogs among ‘live-stock’), and takes away some powers of state
governments to regulate this area.
• The proposed bill has 10 Sections, and has expanded the definition of live-stock to include feline and canines also.
According to the definition given in the existing law (The Live-stock Importation Act, 1898), “live-stock” includes
horses, kine, camels, sheep and any other animal which may be specified by the Central Government by notification
in the Official Gazette.”
• The proposed draft Bill defines the live-stock as all equines (all live equine irrespective of purpose including donkey,
horses, mule, assess, hinnies), bovines (all bovine animals including cattle, buffaloes, bullocks or any animals falling
in the category of bovidae), caprines, ovines, swines, canines, felines, avian, laboratory animals, aquatic animals and
any other animal which may be specified by the Central Government by notification in the Official Gazette from time
to time, except those prohibited in any other act.”
• The Centre has also defined the live-stocks and live-stock products as commodity in the proposed draft Bill.
““Commodity” means live-stock, products of live-stock origin, live-stock genetic material, biological products and
pathological material of live-stock origin,”.
About Livestock Importation Act 1898

• The Central Government has the right to regulate, restrict or prohibit the import of any livestock which may be liable
to be infected.
• The Customs officers shall have the powers to implement the Govt’s order.
• The State Government may also make rules for the imported live-stock within its jurisdiction.
COCONUT FARMING
Context: Hello Nariyal FoCT call centre was launched for coconut farming aid.
More about news

• Coconut Development Board has officially launched “Hello Naariyal,” FoCT (Friends of Coconut Tree)call centre.
• The call centre caters to the needs of farmers in coconut harvesting and other plant management practices.
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• A total of 1,924 FoCTs (Friends of Coconut Tree) have registered in the call centre and its services will be available at
Block Grama Panchayat level in respective districts for carrying out activities related to coconut cultivation, including
tree climbing, plant protection, harvesting, seed nut procurement, nursery management, etc. Coconut farmers can
avail the services of FoCTs through the call centre.
• The objective of the call centre is to improvise the activities of coconut sector by linking together the FoCT palm
climbers with coconut farmers, farmer producer organisations, coconut entrepreneurs, and officials of various
agriculture departments and institutions.
Related information about Coconut
The coconut palm is found to grow under varying climatic and soil conditions. It is essentially a tropical plant.
Conditions for cultivation:
• Climatic conditions: The coconut palm is found to grow under varying climatic conditions.
− Temperature: Ideal temperature for coconut growth and yield is 22-32 degrees celsius. The long spells of hot and dry weather,
severe winters and extremes of temperatures are not favourable for coconut growing.
− Rainfall: A well distributed rainfall of about 200 cm. per year is best for proper growth and higher yield. In areas of inadequate
rainfall with uneven distribution, irrigation is required.
• Soil: The coconut palm can grow in a wide range of soil conditions ranging from laterite, alluvial, red, sandy loam having pH range
from 5.5 to 8.0. Soil should be fertile and have good drainage without any hard substratum within one of the surfaces.
• The coconut palm grows well up to an elevation of 600 metres above Mean Sea Level. However, near the equator, productive
coconut plantations can be established up to an elevation of about 1000 m above Mean Sea Level.
Areas of cultivation: Four Southern states- Kerala, Karnataka, Tamil Nadu and Andhra Pradesh accounts for more than 90% of the
total area and domestic production. Karnataka is the largest coconut producing state accounting for over 30% of the total domestic
production. It is followed by Tamil Nadu (27.5%), Kerala (24%) and Andhra Pradesh (8%) and West Bengal (8%). Other coconut
producing states like Odisha, Maharashtra, Gujarat, Assam and Bihar have a very low share.
Coconut Development Board:
• It is a statutory body set up through Coconut Development Board Act, 1979 for the integrated development of coconut
cultivation and industry in the country with focus on productivity increase and product diversification.
• The Board came into existence on 12th January, 1981 and functions under the administrative control of the Ministry of Agriculture
and Farmers’ Welfare.
• It consists of 24 members including chairman.
• The Board’s headquarters is situated at Kochi in Kerala and regional offices at Bengaluru, Chennai, Guwahati and Patna.
• Functions
− Adopting measures for the development of coconut industry
− Providing technical assistance to those engaged in coconut cultivation and industry
− Providing financial and other assistance for the expansion of area under coconut cultivation.
− Encouraging adoption of modern technologies for processing of coconut and its products.
− Recommending measures for improving marketing of coconut and its products.
− Recommending measures for regulating imports and exports of coconut and its products
− Adopting measures to get incentive prices for coconut and its products.
− Fixing grades, specifications and standards for coconut and its products.
− Collecting statistics on coconut and its products and publishing them.
HIMACHAL’S KANGRA TEA

Context: Kangra Tea from Himachal Pradesh was recently granted the protected geographical indication (PGI) by
European Commission (EC).
About Kangra Tea

• Kangra tea is known for its unique flavour and taste. It is available as black and green teas.
• Kangra tea is grown at an elevation ranging from 900 to 1,400 metres above sea level with the annual rainfall being
270-350 cm.
• The climate, the characteristic terrain and soil conditions, and the coolness of the snow-clad mountains in the Kangra
region play a role in crafting a delightfully distinct cup of quality tea.
• According to the Tea Board, Kangra tea is a little milder than Darjeeling tea in terms of flavour and has more body
and liquor.
• In India, Kangra tea received the Geographical Indication (GI) designation in 2005.
• Kangra tea also possesses medicinal values due to antioxidants, phenolic compounds, tryptophan, amino acids,
theanine glutamine, and catechin.
European Commission’s Protected Geographical Indication

• The European Commission’s Protected Geographical Indication (PGI) is a system of geographical indications used
throughout the European Union (EU) to protect the names of quality agricultural products and foodstuffs.
• PGI is one of three main categories of geographical indications recognized by the European Union, alongside Protected
Designation of Origin (PDO) and Traditional Specialities Guaranteed (TSG).
• The main difference between PGI and PDO is that PGI requires that only one of the stages of production, processing
or preparation takes place in the defined geographic area, while PDO requires all stages of production to take place
in the defined geographic area.
• The PGI system was established to protect and promote the reputation of specific regional products, and to support
the economic development of rural areas by encouraging the production of high-quality, distinctive products.
GI Tag
• Geographical Indications of Goods are defined as that aspect of industrial property which refer to the geographical indication
referring to a country or to a place situated as being the country or place of origin of that product.
− Typically, such a name conveys an assurance of quality and distinctiveness which is essentially attributable to the fact of its
origin in that defined geographical locality, region or country.
• GI Tag in India: The Geographical Indications of Goods (Registration and Protection) Act seeks to provide for the registration and
protection of Geographical Indications relating to goods in India.
• Governed By: Under Articles 1 (2) and 10 of the Paris Convention for the Protection of Industrial Property, geographical indications
are covered as an element of IPRs.
− It is also covered under the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement of WTO.
• Validity: This tag is valid for a period of 10 years following which it can be renewed.
• Significance: The Geographical Indication registration confers the following benefits:
− Legal protection to the products.
− Prevents unauthorized use of GI tag products by others.
− It helps consumers to get quality products of desired traits and is assured of authenticity.
− Promotes the economic prosperity of producers of GI tag goods by enhancing their demand in national and international
markets.
RUBBER PLANTATIONS
Context: Rubber plantations in Tripura has been affecting monkeys, vegetation.
About the news

• According to recent report, turning the forests into natural rubber plantations in Tripura is negatively impacting non-
human primate species and vegetation in the region.
• The conversion of tropical forests into monoculture plantations has a major effect on non-human primates and plant
species.
• States like Kerala and Tamil Nadu are traditionally rubber-growing regions in India.
• However, Tripura, Assam, Manipur, Meghalaya, Karnataka, Andaman and Nicobars Islands, Goa, Maharashtra, Orissa,
West Bengal and Andhra Pradesh have non-traditional rubber plantation areas as well, according to Indian Council of
Agricultural Research’s Biosafety Portal, 2016.
• Due to the reduction in forest cover, monkeys occasionally enter rubber plantations for food, but they find little in
monoculture plantation areas. As a result, monkeys are suffering, their behaviour is changing and species diversity
is decreasing.
Agriculture 123
• Due to the growing rubber plantations, Monkey’s do not get enough food, which makes their survival difficult. This
threatens the species and the primates can go extinct, disrupting the environment’s natural state.
Related Information
Natural Rubber: India’s first commercial rubber plantation was set up in Kerala in 1902 by John Joseph Murphy. Rubber is used for a
variety of purposes in our daily life. Rubber has more than 36000 applications across various industries, from erasing pencil marks
to manufacturing tyres. It is an equatorial crop, but under special conditions, it is also grown in tropical and sub-tropical areas.
Conditions for cultivation
• Climatic Conditions: It requires a hot and humid climate. Dry spells and lower temperatures are harmful to the plant.
− Temperature: It requires a temperature between 25-35 degrees celsius.
− Rainfall: It requires annual rainfall above 200 cms.
• Soil: It grows well in well drained loamy soil.
• It is best grown along the hill slopes. It can not grow beyond 700 metres above sea level.
• It grows very quickly to acquire a height of 20-30 metres and starts to yield latex after 5-7 years of planting.
Areas of cultivation: Traditionally, Natural Rubber is cultivated in the states of Kerala and Tamil Nadu. Kerala is the largest producer
state of Natural Rubber in the country accounting for over 75% of the total domestic production. Now, Natural Rubber cultivation
has also extended to non-traditional areas like North Eastern states (Tripura (2nd largest producer state in India), Assam, Meghalaya,
Nagaland, Manipur, Mizoram and Arunachal Pradesh), Karnataka, Goa, Maharashtra, Odisha, West Bengal, Andhra Pradesh and
Andaman and Nicobar islands. North Eastern states together account for 15% of the total domestic production of the Natural
Rubber.
About Rubber Board
• It is a statutory organisation constituted under section 4 of the Rubber Act, 1947 and functions under the administrative control
of the Ministry of Commerce and Industry.
• The Board is headed by a Chairman appointed by the Central Government and has 28 members representing various interests of
the natural rubber industry.
• The Board’s headquarters is located at Kottayam in Kerala.
• The Board is responsible for the development of the rubber industry in the country by assisting and encouraging research,
development, extension and training activities related to rubber.
• It also maintains statistical data of rubber, takes steps to promote marketing of rubber and undertake labour welfare activities
KASTURI COTTON
Context: Union Textiles Minister has Launched Website of “Kasturi Cotton Bharat”.
More about news

• This website provide a digital platform for necessary information and updates on this initiatives.
• It also highlights the registration process for ginners to produce Kasturi Cotton Bharat Brand and its processes that
make the branded Indian cotton unique.
About Kasturi Cotton

• In order to attain the objective of building image of Indian cotton at Global level, making India Aatmanirbhar and vocal
for local in the field of cotton, Ministry of Textiles had announced the “Kasturi Cotton India” Brand of cotton in 2020.
• Through this, Indian cotton was endowed with a brand and a logo that represents Whiteness, Softness, Purity, Lusture
and Indianness.
• To encourage Trade and Industry to work on the principle of self-regulation by owning complete responsibility, The
Cotton Textiles Export Promotion Council (TEXPROCIL) has been designated as the implementing agency for Traceability,
Certification and Branding of “KASTURI Cotton India”.
6TH CENSUS REPORT ON MINOR IRRIGATION (MI) SCHEMES

Context: Ministry of Jal Shakti has released the 6th Census Report On Minor Irrigation (MI) Schemes.
About the report

• As per the report, 23.14 million minor irrigation (MI) schemes have been reported in the country, out of which 21.93
million (94.8%) are Ground Water (GW) and 1.21 million (5.2%) are Surface Water (SW) schemes.
• Uttar Pradesh possesses the largest number of MI schemes in the country followed by Maharashtra, Madhya Pradesh
and Tamil Nadu.
• In SW schemes Maharashtra, Karnataka, Telangana, Odisha and Jharkhand have the highest share. GW schemes
comprise dugwells, shallow tube wells, medium tube wells and deep tube wells. The SW schemes comprise surface
flow and surface lift schemes.
• At the national level, both GW and SW schemes have increased by 6.9% and 1.2%, respectively. Dug-wells have
highest share in MI schemes followed by shallow tube-wells, medium tube-wells and deep tube-wells.
− Maharashtra is the leading State in dug-wells, surface flow and surface lift schemes. Uttar Pradesh, Karnataka
and Punjab are the leading States in shallow tube-wells, medium tube-wells and deep tube-wells, respectively.
• For the first time, the information about gender of the owner of MI scheme was also collected in case of individual
ownership. Out of all the individually owned schemes, 18.1% are owned by women.
− Around 60.2% schemes have single source of finance whereas 39.8% schemes have more than one source of
finance. In single source of finance, majority of schemes (79.5%) are being financed by own savings of individual
farmer.
About Minor Irrigation

• An irrigation scheme having culturable command area (CCA) upto 2000 hectare isclassified as minor irrigation scheme
in India
• Types of minor irrigation scheme include dug well, shallow tube well, deep tube well, surface flow irrigation scheme
and surface lift irrigation scheme.
• Minor irrigation projects have both surface and groundwater as their source, while Major and Medium projects mostly
exploit surface water resources.
− MI sector as a whole is implemented by State Governments, and states have state-specific schemes.
− The Centrally Sponsored Plan Scheme “Rationalisation of Minor Irrigation Statistics (RMIS)”, was launched in 1987-
88. Later, it has become part of the Central Sector Plan Scheme “Development of Water Resources Information
System (DWRIS)”.
• So far, five censuses have been conducted with reference year 1986-87, 1993-94, 2000-01, 2006-07 and 2013-14
respectively.
Miscellaneous 125
CHAPTER 8
Miscellaneous
FIRST ADVANCE ESTIMATES
Context: The Indian economy is seen growing at a rate of 7% in the current financial year, according to the first advanced
estimates of the National Statistical Office (NSO).
About the report

• The FAE, first introduced in 2016-17, are typically published at the end of the first week of January.
• They are the “first” official estimates of how GDP is expected to grow in that financial year.
• Apart from it, they are also the “advance” estimates because they are published long before the financial year (April
to March) is over.
• The FAE is published soon after the end of the third quarter or Q3 (October, November, December).
• However, they do not include the formal Q3 GDP data, which is published at the end of February as part of the Second
Advance Estimates (SAE).
GLOBAL ECONOMIC PROSPECTS

Context: World Bank released its Global Economic Prospects report in January 2023.
Highlight of Report
• Growth Rate: Global economy is projected to grow by 1.7 per cent in 2023 and 2.7 per cent in 2024.
− It would be the third-weakest annual expansion in three decades, behind only the deep recessions that resulted
from the 2008 global financial crisis and the coronavirus pandemic in 2020.
− IMF had previously said that global growth is forecast to slow from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023.
− Unexpectedly rapid and synchronous global monetary policy tightening contributed to a significant worsening
of global financial conditions, which is exerting a substantial drag on activity.
• Recession Expectation: Global economy will come “perilously close” to a recession this year, led by weaker growth
in all the world’s top economies - the United States, Europe and China.
− Factor Pushing Recession: New development such as higher-than-expected inflation, abrupt rises in interest
rates to contain it, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions—could push the
global economy into recession.
− Slowdown in the global economy and rising uncertainty will weigh on export and investment growth.
• Challenges for emerging market and developing economies: They might struggle with heavy debt burdens, weak
currencies and income growth, and slowing business investment.
− Report noted that rising interest rates in developed economies like the United States and Europe will attract
investment capital from poorer countries, thereby depriving them of crucial domestic investment.
• Impact on Human Development: Weakness in growth and business investment will compound the already devastating
reversals in education, health, poverty and infrastructure and the increasing demands from climate change.
• High Commodity Prices: War-induced energy price shock could prove enduring, with oil prices expected to remain
well above their pre-pandemic level throughout the next three years.
− Steep rises in food prices brought on by war-related disruptions to grain, energy, and fertilizer markets have
squeezed living standards.
India Specific Highlight

• Indian economic growth is projected to slow from 8.7% in FY2021/22 to 6.9% in FY2022/23.
− RBI’s projection of India’s GDP growth in FY23 is 6.8%.
• Further Slowdown: Indian economy is expected to grow at 6.6% in the fiscal year 2023-24.
• Silver Lining: India is expected to be the fastest-growing economy of the seven largest developing economies (EMDEs).
− Resilient in the South Asia region: India accounts for three-fourths of the (South Asia) region’s output.
− India’s growth expanded by 9.7 per cent on an annual basis in the first half of the fiscal year 2022-23, reflecting
strong private consumption and fixed investment growth.
• India’s Efforts: The government has increased infrastructure spending and various business facilitation measures,
− It will crowd in private investment and support the expansion of manufacturing capacity.
GDP DATA AND SURROUNDING CONTROVERSIES

Context: Experts have raised concerns about the recently released GDP data from the National Statistical Office (NSO).
More on the news

• Overstating GDP: The concern is that the Q1 GDP data released by the NSO was overstating the GDP growth rate by
a full percentage point. Critics have claimed that this overstatement was due to the use of specific price deflators
in the GDP calculation.
• Use of “Discrepancy” in GDP Calculation: Some experts raised concerns about the two primary methods used to
calculate India’s GDP: the income method and the expenditure method. They argued that these methods did not
consistently produce the same results, and there were suspicions that the government favored the higher estimate
of GDP by using a statistical tool called “discrepancy.”
Background Information to Understand the Article

• GDP Definition: GDP (Gross Domestic Product) is a fundamental measure of an economy’s performance, assessing
its size and growth. It represents the total market value of all final goods and services produced within an economy.
• Real GDP vs. Nominal GDP: Real GDP is adjusted for inflation, while nominal GDP is not. Real GDP measures actual
changes in the quantity of goods and services produced, while nominal GDP reflects changes in both quantity and price.
• GDP Deflator: Real GDP is calculated by removing the effects of price inflation from nominal GDP using a GDP deflator,
which is a combination of retail and wholesale inflation rates. It represents the ratio of nominal GDP to real GDP.
• Two Ways to Calculate GDP: India calculates GDP using both the income method (looking at all the money earned
by everyone) and the expenditure method (looking at all the money spent by everyone). In theory, the results should
be the same, but in practice, there can be differences due to data availability and reliability.
Is India overstating its real GDP growth rate?

• India’s nominal GDP in Q1 of FY24 was 8%. On the face of it, a real GDP growth rate of 7.8% implies that inflation
was just 0.2% in the three months — April, May and June.
• From the perspective of a consumer, a real GDP growth rate of 7.8% may appear clearly overstated, primarily due to
the fact that during these three months, retail inflation rates stood at 4.7%, 4.3%, and 4.9% respectively.
• If one were to adjust nominal GDP for consumer price inflation, the resulting real GDP figure would be less than 4%.
• Conversely, if we consider wholesale inflation, the real GDP could actually be significantly higher than the reported
8%, given that wholesale inflation was consistently negative during these three months, registering at -0.8%, -3.6%,
and -4.2% respectively.
• In summary, the truth regarding India’s GDP growth rate likely lies somewhere between the contrasting figures
indicated by retail and wholesale inflation rates.
• However, the controversy highlights the need for updates to India’s inflation indices, with arguments for replacing the
Wholesale Price Index (WPI) with a more relevant Producer Price Index to enhance data accuracy.
Miscellaneous 127
Why India needs to rethink the use of WPI inflation?

• Lack of Integration: This means that changes in wholesale market prices are not transmitting to retail markets as
they used to, and one of the indices is not reflecting the real price.
• WPI does not cover services, which are a large and growing share of the economy. This makes it a less representative
measure of price inflation in the economy as a whole.
• WPI data is collected and processed by the Department of Commerce and Industry, largely following the Index of
Industrial Production (IIP) frame. The IIP itself has faced criticism, raising concerns about the quality and accuracy
of WPI data.
• WPI does not offer information on rural and urban price variations or state-level estimates, which are vital for effective
public policy formulation and decision-making.
What about the issue of “discrepancy”? Do they overstate the GDP?

• The discrepancy is the difference between GDP estimated using the income method and GDP estimated using the
expenditure method.
• Under normal circumstances, there will be some difference between the GDP estimated using income and expenditure
methods.
• However, if this difference is large, that would reflect poorly on the quality of data and the estimation methodology.
• Also, the discrepancy level (as a percentage of the total GDP) would be higher in quarterly GDP estimates and lower
in annual GDP estimates because with time, more reliable data is available and estimates can be expected to come
close to each other.
K SHAPED RECOVERY
Context: The GDP growth for India in its third quarter came down drastically compared to its previous quarter, which
economists are describing as a ‘K-shaped recovery’.
About K-Shaped Recovery

• A K-shaped recovery occurs when, following a recession, different parts of the economy recover at different rates,
times, or magnitudes.
• This contrasts with an even, uniform recovery across sectors, industries, or groups of people.
• It causes such changes in the structure of the economy or the broader society as economic outcomes and relations
are fundamentally changed before and after the recession.
• It is called K-shaped, because the path of different parts of the economy when charted together may diverge,
resembling the two arms of the Roman letter “K.”
Other forms of economic recovery:

• V-Shaped: It is a rapid and sudden improvement in an economy that follows a rapid and severe fall. This usually
happens following a one-time shock to the economy.
• U-Shaped: The economic damage in this type lasts for a longer amount of time before returning to the baseline level
of growth.
• L-shaped: In this form, the economy rebounds to some extent from a sharp dip, but growth fails to return to pre-crisis
levels, if at all. It is followed by a period of economic stagnation.
• W-shaped: In this type, the economy experiences a rapid collapse, followed by a small and temporary recovery, and
then another decline. It is also known as a double-dip recession.
GOLDILOCKS SCENARIO
Context: The term was in news related to Indian economy.
About Goldilocks scenario

• A Goldilocks scenario for an economy refers to a point where it is running just perfectly — neither too hot (implying
high inflation) nor too cold (referring to faltering GDP growth).
• A steady-growing economy with moderate inflation and low unemployment rate can be optimal for long-term growth
and represents a Goldilocks economy.
Background
• In its policy review that was unveiled in June 2023, the MPC neither changed the repo rate nor its policy stance.
• The policy stance tells everyone what the MPC is trying to achieve by its actions. A policy stance tells us whether the
MPC is trying to contain inflation or boost growth while containing inflation or simply being neutral.
• There are two more things that observers watch out for in MPC statements: the outlooks on GDP growth and inflation.
Here, too, barely anything changed.
− At 6.5%, the GDP growth forecast for the financial year (2023-24 or FY24) stayed the same as it was in the April
policy.
− Further, at 5.1%, the inflation forecast for FY24 too stayed pretty similar to what it was in April.

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Indian Economy

Chapter 1 : MONEY, BANKING AND MONETARY POLICY ���������������������������������������������������������������������������������1

Chapter 4 : EXTERNAL SECTOR: TRADE, BALANCE OF PAYMENT�������������������������������������������������������������������39

Chapter 6 : INFRASTRUCTURE: INDUSTRIES, SERVICE, MINING��������������������������������������������������������������������69

Money, Banking and Monetary Policy

Key Points about the revised norms

NIDHI RULES, 2014

About Nidhi Company

FINANCIAL SERVICES INSTITUTIONS BUREAU

About Financial Services Institutions Bureau

Why has it replaced Banks Board Bureau (BBB)?

About the report

Challenges for MFIs

India’s Microfinance Sector

Features of Micro Finance in India

Regulatory Framework for Microfinance Loans

INSOLVENCY AND BANKRUPTCY CODE (IBC)

Key Changes Proposed in the IBC Framework

LOAN LOSS PROVISIONING

About Loan Loss provisions (LLPs)

Approaches for LLPs

Expected loss-based approach

SECURITISATION OF STRESSED ASSETS FRAMEWORK (SSAF)

About Securitization and SSAF

CLIMATE RISK AND SUSTAINABLE FINANCE

RBI’S DIGITAL PAYMENTS INDEX

About the RBI’s Digital Payments Index

Key highlights of the latest RBI-DPI Index

Key Stats IQ on India’s Digital Payment Ecosystem

About Utkarsh 2.0

MARKETS IN CRYPTO ASSETS (MICA) LEGISLATION

About Markets in Crypto Assets (MiCA)

E-BG (ELECTRONIC BANK GUARANTEE) SERVICES

Project Wave (World of Advance Virtual Experience)

BASEL-III CAPITAL FRAMEWORK

About the news

About BASEL-III Norms

SMALL SAVINGS SCHEMES

About Small Savings Schemes

PILOT ON COIN VENDING MACHINE: RBI

About the project

About Zombie Banks

History Of Zombie Banks

Impact of Zombie Banks

About the dashboard

MAHILA SAMMAN SAVINGS CERTIFICATE

About the saving Certificate

PUBLIC TECH PLATFORM FOR FRICTIONLESS CREDIT

About the Public Tech Platform for Frictionless Credit (PTPFC)

How RBI’s PTPFC works?

RESERVE BANK – INTEGRATED OMBUDSMAN SCHEME (RB-IOS)

• Need for an ombudsman in an organisation:

The Integrated Ombudsman Scheme of the RBI

About the Project

PROMPT CORRECTIVE ACTION (PCA) FRAMEWORK

Meaning of the Framework

Parameters of PCA Framework

Objectives of PCA Framework

Significance of PCA Framework

PREPAID PAYMENT INSTRUMENTS (PPIS)

About Prepaid Payment Instruments (PPIs)

More on the News

Unified Payments Interface (UPI) and PayNow

Advantages of this Linkage

Chapter 1 : MONEY, BANKING AND MONETARY POLICY ��1

Chapter 4 : EXTERNAL SECTOR: TRADE, BALANCE OF PAYMENT��39

Chapter 6 : INFRASTRUCTURE: INDUSTRIES, SERVICE, MINING��69