International Affairs

1. The India-European Union Free Trade Agreement

Context

India and the EU plan to conclude the long standing Free Trade Agreement (FTA) negotiations by the end of 2025. Simultaneously, discussions about a new strategic security and defense partnership to succeed the existing Strategic Roadmap (2020-2025) continue.
Next Summit: The subsequent EU India Summit is anticipated in 2025 to formalize key agreements.

Key Areas Under Discussion

• Trade and Investment
• Technology and Innovation
• Green Growth
• Security and Mobility

EU’s Demand for Lower Tariffs on Key Sectors

• The EU needs import lower duty on cars, wines, and spirits or otherwise they term them as non negotiable.
• Agriculture market access involves processed European products, especially from France & Italy.

India's Concerns Regarding EU Sustainability Norms

• Both Carbon Border Adjustment Mechanism (CBAM) and other deforestation rules will become non tariff barrier dealing in limiting India’s export gains.
• India welcomed the lenient CBAM compliance norms; however, concerns remain.

Government Procurement & Trade Barriers

• India has to deal with sensitive issue demands for greater access to public procurement sector possessed by the EU in India.

Trade Dynamics Between India-EU

• EU is India’s largest trading partner (12.2% share in total trade) followed by the US (10.8%) and China (10.5%).
• India is the 9th largest trading partner to the EU, accounting for 2.2% of the total trade in the EU 2023.
• Trade Volume in 2023-24
  • India’s Exports to EU: $75.9 billion (contributes to 17.4% of total exports).
  • India’s Imports from EU: $61.5 billion (9% of total imports).

Challenges and the History of Negotiations

• Long standing Negotiations
  • Negotiations were first started in 2007 and later were re launched in 2022. Rather than any progress, the negotiations have faced delays due to differences on tariffs, intellectual property, and labor standards.
• Political Pushes
  • The newer deadline is supposed to kick start the negotiations, which will now see the next round of talks in Brussels between March 10 and 14.

A successful FTA could ensure increased trade, investment flow, and economic cooperation between India and the EU. Challenges still remain on significant issues concerning market access, sustainability standards, and regulatory alignment.

Source: The Hindu

2. Trump, Zelenskyy and Vance’s Heated Argument in the Oval Office

Context

An access found heated Oval Office exchange of U.S. President Donald Trump with Ukraine President Volodymyr Zelenskyy spoke about how deeply divided conditions remain regarding U.S. support for Ukraine.

Key Highlights:

• U.S. Conditions for Support
  • Trump would ask for a deal granting America preferential access to Ukraine's mineral resources as the quid pro quo for the continued American backing.
• Ramping Pressure on Kyiv
  • Increasing acceptance of diplomacy with Russia by the U.S. has met resistance from Ukraine against their signatures on pre mature peace agreements.
• European Intervention
  • France and Britain leaders had to negotiate with the U.S. to convince them to not pull back support from Kyiv.
• Uncertain Security
  • The ambiguity remains with Trump not providing security guarantees for Ukraine regarding future commitments by the U.S.

Geopolitical Significance

• Is U.S. Strategy Changing?
  • Trump essentially sealing a quid pro quo would mean a leaving of the U.S. with earthly irregularities in their diplomacy toward Ukraine.
  • There will be less unconditional military and financial assistance in future.
• Concern for Ukraine's War Efforts
  • Increased uncertainty about U.S. support emboldened Russia.
  • More pressure for Kyiv to negotiate with Moscow on less favorable terms may follow.
• Europe in Response
  • An increasing pressure of sorts from France and Britain for even stronger European military and financial support to fill the gap that any potential U.S. disengagement would leave.
• Global Markets & Energy Security
  • Implicit in U.S. attention to Ukraine's mineral wealth will be the strategic targeting of rare earth sources and their supply chains into and from the global economy.

The Oval Office face off is the landmark moment marking the evolution in U.S. Ukraine relations. Trump's insistence on resource based concessions to cover support and wavering on security commitments could well change the equation in the ongoing tussle. Kyiv now has to negotiate a fine diplomatic line as it weaves its dependence on Western support while still not giving in to pressure to settle with Moscow.

Source: Business Standard

3. China's Retaliation After Trump Imposes New Tariffs on Chinese Imports

Context

President Donald Trump announced a 10% tariff on Chinese imports due to take effect on March 4.
The linkage justified the move as being to do with drug flows from the North American neighbors into the territory of China.

Key Highlights:

• Response from China
  • "All necessary measures" will be taken by the Ministry of Commerce against the legitimate rights and interests.
  • It would take a tougher posture in responding, which means a greater risk of full-scale trade war.
  • There was no advance discussion before the US announcement by the two countries.

Market Impact

• Chinese Stocks Tumble
  • Hong Kong-listed Chinese shares plummeted to as low as 3.9% today, marking the biggest and most recent biggest single-day fall reaching this month as analysts blamed it on the trade dispute.
  • The stocks on the onshore CSI 300 Index keep slides down 1.9%, the first weekly loss that has been recorded in a month.

Political & Economic Implications

• Timing & Strategic Considerations
  • Tariffs are timed just prior to China's National People's Congress, at which time President Xi Jinping's team would announce the details of the 2025 economic blueprint.
  • Xi's Politburo pledged to support domestic consumption and stabilize the housing and stock markets.
  • There are tensions but both sides apparently do not agree a complete break in diplomatic relations.

High Level Diplomatic Engagements

• Chinese Vice Premier He Lifeng had met US Treasury Secretary Scott Bessent on the second occasion since Trump took office.
• The Defense Ministry of China confirmed it will hold consultation with the military of the United States.

With the US-China trade war hovering near rebound, market volatility is at its highest, and the channels of diplomatic engagement are at their narrowest. If at all Beijing were to shift its hitherto constraining approach to adroitness in counteraction, it would have deep ramifications, both at a global supply chain and perception economic levels.

Source: Business Standard

National Affairs

1. Aditya L1 Captures Photo of first Solar Flare Kernel

Context

A solar flare "kernel" has been photographed by Aditya L1's SUIT (Solar Ultraviolet Imaging Telescope) for the first time in photosphere and chromosphere. Flare Class is X6.3 class solar flare (among the most intense classes).

Scientific Importance

• Unprecedented Resolution
  • The first ever observation of solar flare brightening in the Near Ultraviolet (NUV) range (200-400 nm).
• Energy Distribution
  • Confirms how flare energy spreads through different layers of the Sun’s atmosphere.
• Temperature Linkage
  • Directly related to an increase in plasma temperature in the solar corona with regard to the localized brightening in the lower solar atmosphere.

Implications for Solar Physics

• Validates existing theories on solar flare energy deposition and temperature evolution.
• Anew Data for Refined Understanding of Solar Eruptions and Space Weather.
• Enhancement in the forecasting of solar storms that affect Earth satellites and communications.

Mission Overview

• Launch Date: September 2, 2023
• Positioning Orbital: Aditya L1 was really placed in a halo orbit around the Earth Sun Lagrange Point L1 on January 6, 2024.

Source: The Hindu

2. Wetlands Conservation in India

What Are Wetlands?

• Wetlands are areas of land that are saturated with water either permanently or seasonally.
• Wetland areas include both fresh water and marine and coastal ecosystems, they support various plant and animal species and render quite a few benefits to humans.

Types of Wetlands

• Coastal Wetlands
  • Occur between land and the open sea, excluded from influences like rivers.
  • Incorporate shorelines, beaches, mangroves, and coral reefs.
  • For example, mangrove swamps in sheltered tropical coastal environments.
• Shallow Lakes and Ponds
  • Areas of permanent or semi-permanent water with little flow.
  • Include vernal ponds, spring pools, salt lakes, and volcanic crater lakes.
• Marshes
  • Soaked, flooded, or pooled by water periodically.
  • Dominated by herbaceous (non woody) vegetation.
  • Types
    • Tidal Marshes – Affected by ocean tides.
    • Non Tidal Marshes – Occupy inland areas.
• Swamps
  • Grounded surfaces water inputs; a forest of trees and shrubs covers them.
  • Freshwater floodplains or saltwater floodplains.
• Bogs
  • Waterlogged peatlands in old lake basins or depressions in the landscape.
  • Water here is derived mainly from rain.
• Estuaries
  • The mixing point of rivers and the ocean, thus fresh and salt waters mixed.
  • Deltas, tidal mudflats, and salt marshes are included.
  • It is rich in nutrients and hence possesses immense biodiversity.

Benefits of Wetlands

• Water Quality: They function as natural filters, improving water quality.
• Flood Control: They reduce flooding and erosion.
• Wildlife Habitat: They are home to diverse animals, including fish, birds, and mammals.
• Combating Climate Change: They sequester carbon and thus help in curbing greenhouse gases.
• Tourism & Education: They serve as a facility for tourism, research, and environmental education.

Threats to Wetlands

• Loss of Natural Water Filtration
  • Results in bigger bucks for the cities on water treatment.
• Increased Flood Risks
  • Wetlands siphon off the water, and it's their absence that makes the floods more extreme.
• Climate Change Threats
  • Rising sea levels and storm surges are especially detrimental to wetland ecosystems.
• Global Decline
  • 50% of wetlands lost since 1900.
  • 35% loss of wetland surface area (1970 2015).
  • 81% decline of inland wetland species and 36% of coastal/marine species.
• Major Causes
  • Urbanization & Industrialization
  • Conversions of land use to facilitate agriculture & infrastructures

High Court Intervention in Meghalaya

• Suo Motu PIL
  • Meghalaya High Court to take initiative in monitoring wetland conservation.
• Focus on Wetlands
  • Attention is drawn back to the importance of wetland ecosystems.

Much of the World is Wetlands

• World Wetlands Day: Observed annually on February 2 since 1971, when the Ramsar Convention was opened for signature.
• Global Coverage: Wetlands cover 12.1 million km² (~6% of Earth’s surface).
• Ecosystem Services: Contributes among the total 40.6% of global ecosystem services to water filtration, carbon sequestration, biodiversity conservation, and many others.

Conservation Efforts

• Ramsar COP14 (2022)
  • Integrated wetland conservation into Sustainable Development Goals (SDGs), Global Biodiversity Targets and Climate Change frameworks.
  • Stress the requirement for wetland protection beyond stand alone initiatives.

Wetlands in India

• Ramsar Sites
  • 75 designated wetlands (~1.33 million ha, 8% of India total wetland area).
• National Wetland Trends
  • 66.6% natural wetlands (43.9% inland, 22.7% coastal).
• Loss of wetlands in urban regions
  • Mumbai: 71% loss (1970 2014).
  • Kolkata East: 36% loss (1991 2021).
  • Chennai: 85% lost.
• Total natural wetland loss in last four decades: 30%.

Economic & Environmental Impact

• Ecosystem Services Lost
  • Cali, Colombia: $76,827/ha per year in urban areas and $30,354/ha in peri urban areas.
• Climate Change Role
  • Wetlands are sinks and sources of carbon, requiring very good monitoring.

Way Forward

• Beyond Ecological Focus: Managing wetlands requires physical, social and economic considerations.
• Ecosystem Based Approach: Aligns wetland conservation in planning for development.
• Strengthening Governance: Integration of wetland protection is into climate policies, urban planning, and sustainable water management.

UPSC Civil Services Examination Previous Year Question (PYQ)

Prelims

Q. If a wetland of international importance is brought under the ‘Montreux Record’, what does it imply? (2014)

(a) Changes in ecological character have occurred, are occurring or are likely to occur in the wetland as a result of human interference.

(b) The country in which the wetland is located should enact a law to prohibit any human activity within five kilometers from the edge of the wetland.

(c) The survival of the wetland depends on the cultural practices and traditions of certain communities living in its vicinity and therefore the cultural diversity therein should not be destroyed.

(d) It is given the status of ‘World Heritage Site.’

Ans: (a)

Mains

Q. What is wetland? Explain the Ramsar concept of ‘wise use’ in the context of wetland conservation. Cite two examples of Ramsar sites from India. (2018)

3. India's Warmer March Prediction

Context

India will have above-average temperatures in March 2025 across most regions following a warmer February, the weather office forecast, conditions that could threaten winter-sown crops such as wheat, chickpea and rapeseed.

Warmer March

• Above be predicted from usual to high temperatures in March following February warmest period.
• Severe heatwaves are showing distress in central India, northern regions of southern India, and a few parts of the northeast and east.
• In fact, winter sown crops are included: wheat, chickpea, and rapeseed are at risk.

Implications for Wheat Production and Policy

• Indicate that wheat harvest in India would be of great importance by 2025 after three consecutive years of poor harvests.
• Rising temperatures would be likely to produce conditions that lead to lower yields for the fourth consecutive year, raising concerns regarding supply.
• Possible policy shift
  • Reduce import duty or remove the 40 percent import tax and thus allow private traders to import wheat as domestic production does not suffice.
  • Banning wheat exports since 2022 may continue into the next fiscal year.

Wheat prices soared to record heights in February as a result of tight supplies and sell exports have mixed performance over the past three months.

Reservoir Storage and Water Crisis

• Total storage across 155 reservoirs (CWC monitored)
  • 180.85 BCM (70.15 percent of total capacity).
• Storage levels improved
  • 119 percent of last year and 115 percent of normal levels.
• But regional disparities
  • water in most of the northern states (Himachal Pradesh, Punjab, and Rajasthan).

Harsh weather threats will jeopardize food security and may affect inflation and trade policies.
Wheat import changes in policy will also be expected, as heat waves could potentially reduce domestic production.

Source: BS

Banking/Finance

1. SEBI Launches Bond Central

Context

SEBI has launched 'Bond Central', a centralized database for corporate bonds. Developed by the Online Bond Platform Providers Association with Market Infrastructure Institutions.

Objectives

• To provide a single and authentic source of information on corporate bonds.
• To increase transparency in the bond market.
• To assist investors and market participants to make informed decisions.

Expected Impact

• Better Access: Investors can have access to all bond-related data together.
• Market Efficiency: Thus the information flow from here might improve liquidity and pricing.
• Regulation: It also helps in the monitoring and compliance of the corporate bond world.

Source: The Hindu

2. Tuhin Kanta Pandey Takes Charge as the SEBI Chief

Context

Tuhin Kanta Pandey appointed as the SEBI Chairman for three years, taking the reins from Madhabi Puri Buch.
Previously:
DIPAM Secretary (2019 2024), responsible for India's overall disinvestment strategy. Revenue Secretary in the Ministry of Finance prior to SEBI. Holds a Master's in Economics from Panjab University and an MBA from the University of Birmingham.

The Big Challenges for SEBI's 11th Chief

• Continuity in Regulation vs. Moderation
  • Choose between either continuing aggressive reforms that the previous incumbent had set in motion or adopting a more measured approach.
  • Striking a balance between investor protection and ensuring stability in the market.
• Revival of the Market and IPOs
  • Confidence boosters will be key as sell offs increase in the markets.
  • Support IPO's and near capital market fundraising.
• Rise in Motivation of SEBI Employees
  • Dealing with internal grievances for career growth, remuneration, and a touted "toxic work culture."
• Stakeholder Management
  • SEBI has been targeting a lot for overregulation ship demands for the right policy balance.
    Formulating coordination with RBI, IRDAI, and market participants.
• Regulatory Consistency
  • Conducting impact study of the past policy changes to ensure long term effectiveness.
• Handling Corporate Rivalries & Conflicts
  • Mediate between National Stock Exchange and Bombay Stock Exchange.
  • Track corporate governance feuds and regulatory arbitral.
• Transparency & Conflict of Interest Management
  • Disclosing personal investments to avoid any chance of perceived bias.
• Closure on the Adani Debate
  • A situation where the credibility of SEBI is ensured through an investigation that is transparent and restores market trust.
• Innovation Balance & Market Growth
  • Encourage new financial vehicles such as small REITs, corporate bonds, and alternative assets.
• Market Manipulation Crackdown
  • Stringent regulation of Finfluencers and unauthorized stock advisory services.
• Industry Friendly Regulations
  • Implement pro business policies, that would not interfere with existing market framework.

According to Pandey, a more pragmatic and rule driven approach could lead to handing SEBI more stability and predictability in its regulatory approach. His experience in finance, disinvestment, and economic policy makes him very well suited to balancing investor protection with market growth.

3. RBI’s Auction on Dollar Rupee Swap of $10 Billion

Context

RBI conducted a buy sell swap auction of $10 billion USD/INR with a three year tenure.
Strong demand: Received bids amounting to $16.23 billion, accepted bids amounting to $10.06 billion from 161 out of 244 bids.
Cutoff premium: Not fixed with ₹6.55 as compared to lower than market expectations (₹6.62).
Average premium: ₹6.73.

Market Reaction and Liquidity Deficit

• Patterned on Banking system liquidity deficit: ₹1.81 trillion (now 11th consecutive week).
• Rupee depreciation: Closed at ₹87.51/$ compared with ₹87.20 at the previous session.
• Intervention by RBI: Selling dollars through PSU banks to try and curb the volatility.
• Dollar Index: Surged to 107.37 from 106.62, making a mark on the currencies across the globe.
• Forex Reserves: Increased by $4.7 billion to $640 billion, mainly due by foreign currency asset gains ($4.2 billion).

Market Participants’ Learnings

• Corporate sector demand was strong, banks however wanted much higher premiums.
• Banks viewed RBI as a safer counterparty, therefore they did not take into consideration capital charge considerations.
• Forward premiums declined after the auction results.
• Key resistance levels: Downward supports for rupee are at ₹86.6 and resistance is at ₹87.5.

In efforts to moderate rupee volatility while continuing to address liquidity constraints, RBI now resorts to swap auctions. As global trade tensions continue to escalate and U.S. tariff policies change, it is suspected that in the future RBI's interventions will continue to be closely watched.

4. IRDAI Permits Insurers to Use Derivatives in Equities for Hedging Purposes.

Context

In order to hedge against market volatility, the IRDAI has allowed insurers to use equity derivatives. The predominant aim of this is to hedge against the erosion of the market value of equity investments, as well as mitigating the portfolio risks primarily emerging from greater participation of insurers in equity markets.

Regulatory Guidelines and Conditions Prescribed

• Instruments allowed
  • Regulatory stock and index futures and options on shares will be specifically for hedging any currently existing equity exposures.
• Prohibited
  • All OTC (Over the Counter) exposures to equity derivatives are prohibited.
• Corporate Governance
  • A Hedging Policy is thus mandated for approval by the Board. Risk Management Policy Framework, IT Infrastructure, and Conduct of Periodic Audits among the foremost. Contracts will protect the interest of policyholders.
• Reporting Requirements
  • Details regarding any derivative contracts will have to be in the ULIP sales brochures. They are to submit quarterly reports regarding turnover, unwinding of contracts, or profit loss.

Impacts on the Insurers

• Increased advantage for life insurers because the larger exposure to equity markets (ULIPs primarily).
• A process to be put in place but which may take months due to the need for board approval and upgrading of internal systems.
• Already dealing with fixed income derivatives (FRAs, Interest Rate Swaps, Credit Default Swaps as Protection Buyers).

A Look at Strengthening Risk Management in Insurance Investments

• This step allows insurers to wield heavier instruments to modulate high volatility, hitherto increased holding stability in insurance investments with sanity on governance. This is a very big leap forward towards risk management for the Indian insurance business.

Source: BS

Facts To Remember

1. Starmer to host Ukraine summit tomorrow; NATO leaders to attend

U.K. Prime Minister Keir Starmer will host a Sunday summit with over 45 European leaders to bolster support for Ukraine and discuss security. Ukrainian President Volodymyr Zelenskyy will attend, alongside NATO and EU leaders.

2. F1 Academy signs the 10-year-old Atiqa for its driver programme

Atiqa Mir, the 10-year-old karting sensation, became the first Indian and Asian to be signed by Formula 1 Academy for its driver programme, a testament to her rapid growth in the world of motorsports.

3. Apple launches ´ age assurance´ tech

Apple said it will introducea way for parents to share the age ofa child with app developers without revealing sensitive information such as birthdays or government identificationn numbers.

4. Fiscal deficit hits ₹11.7 tn in April-Jan period of FY25

India’s fiscal deficit for the April-January (FY25) period stood at₹11.70 trillion, 74.5% of the estimate for 2024-25, according to the data released by the Controller General of Accounts (CGA).

5. PM Modi says India is becoming new factory of the world by transforming itself from Work force to World force

Prime Minister Narendra Modi has said that the world is keenly looking towards 21st-century India. Addressing the NXT conclave 2025 at Bharat Mandapam in New Delhi today, Mr Modi said that people from across the world want to come to India to know this country.

6. Union Ministers J P Nadda, Anupriya Patel flag off chariot, 10 other vehicles of Pradhan Mantri Bhartiya Janaushadhi Pariyojana

Union Minister for Health, Family Welfare, Chemical and Fertilizers Jagat Prakash Nadda along with Minister of State for Health, Family Welfare, Chemical and Fertilizers Anupriya Patel today flagged off the chariot and ten other vehicles of Pradhan Mantri Bhartiya Janaushadhi Pariyojana in New Delhi.

7. IMF approves and completes 3rd review of Sri Lanka’s 48-month Extended Fund Facility

The International Monetary Fund (IMF) has approved and completed the third review of Sri Lanka’s 48-month Extended Fund Facility (EFF), enabling an immediate disbursement of approximately 334 million US dollars.

8. Centre amends Passport Rules, making birth certificates only proof of date of birth for applicants born on or after 1st of October, 2023

The Centre has amended the Passport Rules, making birth certificates issued by appropriate authorities the only proof of date of birth for passport applicants born on or after 1st October 2023. An official notification has been issued in this regard effecting the amendment to the Passport Rules of 1980.

International Affairs

1. Trump-Zelensky Clash at White House

Context

European leaders have rallied behind Volodymyr Zelensky after Donald Trump's furious exchange with the Ukrainian president in the White House. The leaders of Germany, France, Spain, Poland and the Netherlands were among those who posted social media messages backing Ukraine - with Zelensky responding directly to each one to thank them for their support.

Culminations

• Cruel meeting with Trump and Vance
  • An abrupt aborting of his visit to the Oval Office by Ukrainian President Volodymyr Zelenskyy without signing a vital minerals deal. From reports, the indication is that he either left willingly or was asked to leave.
• European Solidarity
  • Ursula von der Leyen (EU Commission President): "You are never alone, dear President Zelenskyy."
• Donald Tusk (Polish PM)
  • Addressed Ukrainians and Zelenskyy, affirming, "…You are not alone."
• Other Leaders (Macron, Scholz)
  • Reiterated their support for Ukraine's sovereignty.
• U.S. Europe
  • Recent verbal attacks and tariff threats of Trump against Europe have made relations strained.
  • The U.S. did not invite Ukraine or European nations to its February 18 talks with Russia, raising concerns in Europe.
• Frontiers of Future Alliances
  • Increasing uncertainty over military aid from the U.S. to Ukraine.
  • Europe is looking for other ways to increase support to Ukraine during its war with Russia.

The Meteoric Rise: A President Forged in War

• The famous TV actor Volodymyr Zelenskyy, running on the platform of fighting corruption and achieving peace for Ukraine in its conflict with Russia, became the President of Ukraine in the 2019 presidential election.
• On the Russian Invasion of 2022
  • Rather than flee, he stayed in Kyiv whilst giving hope to the Ukrainians and galvanizing the Western powers. His audacity displayed leadership reminiscent of that of Churchill.
• Western Parameters
  • Billions of dollars' worth of military aid were sent from the U.S. and Europe for the defense of Ukraine.

Turning Points: A War That Has Stalled

• Military Stalemate & Failed Counteroffensive
  • Returning hopes for Ukrainian counteroffensive operations were dashed in 2023 with no recovery of land lost. After February, Russia assured the continued occupation of territory gained against Ukraine.
  • The war strategy for Moscow was hence turned into an unwise long attrition war plan that wears down Ukrainian resources and morale.
• Political Earthquake: Trump to Power(2025)
  • Trump will take place of Biden and will signal a sea change in U.S. priorities.
  • No more open ended support Trump pushes for a deal with Russia instead.
• Confronting at the White House(28 FEB 2025)
  • Zelensky was in Washington under the hope of continual display of solidarity.
  • Instead, Trump bundled him back to reality
    • “You are not in a very good position. You are not winning this…”
    • There was no ambiguity here: Should Ukraine not actually come on the negotiating table, it is by itself.

Where To From There?

• Ukraine's Battlefield Position Weakens
  • Losing ground, short on weapons, politically side lined.
• NATO Membership Out of the Window
  • All the once zealously held commitments of the West have been sacrificed for the sake of pragmatism.
• Trump's New Ukraine Policy
  • Wants peace talks over prolonged war, with a cut of Ukraine's resources in return.
• Zelenskyy's Dilemma
  • Enter negotiations and face a backlash at home?
  • Refuse negotiations and risk further international support?
• Final Judgement
  • The face of resistance, Zelenskyy now encounters a war he cannot win and allies unwilling to fight it for him. The hero of 2022 is now a leader running out of options.

Zelensky Tries to Fix Things After the Showdown at the White House

Fallout: When U.S. Ukraine Tensions Burst

• The Outrage
  • Rare public diplomacy when Trump shouted out at Zelenskyy for rejecting peace from Russia in their Oval Office conversation.
• It was an unfinished Meeting
  • The early departure of the Ukrainian leader from streams was without a minerals sharing agreement, which was considered a significant component in negotiation for settlement towards the United States.
• Europe's Response
  • After the conflict, European leaders swooped in to reassure Kyiv of continued support.

Zelenskyy's Response: Damage Controlling Starts

• He's addressed on Fox News that is Trump's preferred television for downplaying the quarrel bringing the evidence to bear that relations between the U.S. and Ukraine transcended personal differences.
• He acknowledged Ukraine's dependence on Washington, stating:
  • "It will be difficult without help on your part."
  • His tone signified an attempt to patch things up rather than encourage argument.

What's Next?

• American Aid in Peril: The rift raises uncertainty on future U.S. military and financial support.
• Trump's Push for Peace: The White House now prioritizes ending the war possibly on Russia's terms.
• Balancing Act for Zelenskyy
  • Be stubborn? Runs risk of being deprived of U.S. support.
  • Think about a settlement? May stir backlash at home and with European allies.

2. Firefly Aerospace Blue Ghost Lunar Mission

Context

On Sunday, March 3, 2024, Firefly Aerospace, a U.S. based company, successfully landed its Blue Ghost Mission 1 spacecraft on the moon. It made the second private mission to reach this goal. Unlike their first private mission in February, which crashed on its side, Blue Ghost made an upright landing. It is a huge technical achievement.

Details About the Landing

• Time
  • The spacecraft landed at 3:34 AM Eastern Time (02:04 IST).
• Location
  • The landing site was Mons Latreille, a volcanic formation located in Mare Crisium, a basin on the northeastern near side of the moon.
• Mission Control
  • The team was gathered in Austin, Texas, where they celebrated after confirmation that everything is fine with the spacecraft. Firefly CEO Jason Kim and NASA's Nicky Fox confirmed the lander was in healthy condition.

Technical Aspects of the Mission

• Autonomous Landing
  • The spacecraft had to independently travel across the rocky, uneven terrain, slowing down from thousands of miles per hour to just 2 mph before touchdown.
• Size and Design
  • Blue Ghost is golden and is about the size of a hippopotamus.
• Launch Date
  • The lander was launched on January 15, 2024, with a SpaceX Falcon 9 rocket and travelled 2.8 million miles to arrive at the touchdown point.
• Launch
  • Rideshare Mission: It was carrying a Japanese lunar lander, set on attempting its own moon land in May 2024.

Scientific Objectives and Payloads

• Blue Ghost carries 10 scientific instruments, like
  • Lunar soil analyzer – Composition of the moon surface will be analyzed.
  • Radiation tolerant computer – Testing of how well a computer system can function in space radiation.
  • GPS like Navigation Experiment – To examine whether Earth's global satellite navigation system is usable for positioning on the Moon.

Major Future Observations

• March 14, 2024 Blue Ghost will capture high definition imagery of a total eclipse, when the Earth blocks the Sun from the Moon's horizon.
• As of March 16, 2024 The lander will record a lunar sunset, providing insights into how dust levitates above the moon's surface due to solar radiation. This phenomenon was first observed by Apollo astronaut Eugene Cernan.

Mission Significance

• Part of NASA Artemis Programme
  • The mission falls under NASA's strategic plans to partner with private businesses aimed at cutting costs and aiding the future human exploration of the moon under the Artemis program.
• Increased Private Space Exploration
  • Set to be the latest in growing trends of commercial missions to the moon, following other private and international efforts.

National Affairs

1. UGC Draft Regulations, 2025

Introduction of "Caste-Based Discrimination"

• This has reference to the discrimination that is exclusively targeted towards members of Scheduled Castes (SCs) and Scheduled Tribes (STs).
• A more general definition of "discrimination" would include unfair treatment, differential treatment or bias against one religion rather than another, on grounds of race, caste, sex or place of birth.

Broader Scope Than Under 2012 Regulations

• Definition of discrimination in 2012 was 'distinction, exclusion, limitation or preference' affecting equality of treatment, while this draft extends the extended protection to all "stakeholders" and not just students.

Regulatory framework & compliance

• Equity Committee
  • Complaints of discrimination would be addressed by the equal opportunity centres.
  • It would comprise civil society representatives, students, faculty and head of institution.
  • Also, UGC shall be empowered to derecognise institutions.
• Issues and Missing Links
  • "False Complaints" Clause: It would impose penalties and disciplinary action for false complaints but without defining the term false complaint.
• No Mention of Anti-Reservation Bias:
  • Activists and student groups talk of discrimination relating to exam ranks and reservation status, but that's not an issue in the draft.

Next Steps

• Public consultation
  • The draft has been open for public feedback until March 28, 2025, by the UGC.
• Supreme Court oversight
  • Drafting of these regulations was an outcome of petitions challenging caste discrimination cases, and the said draft has been presented to the SC for review.

The draft regulations of 2025 broaden the meaning of discrimination and provide for stricter enforcement. They would still require clarity and coverage about anti-reservation bias in universities.

UGC Regulations, 2025

Source: The Hindu

2. Maple Syrup Urine Disease (MSUD)

Context

Maple syrup urine disease (MSUD) is a rare genetic disorder that prevents the body from processing certain amino acids. This leads to a characteristic odor of maple syrup in the urine. Hope has been renewed for Maple Syrup Urine Disease (MSUD) with the introduction of a new gene therapy.

Key Findings

• Successful Gene Replacement Therapy for MSUD
  • Scientists developed gene therapy using an adeno associated viral vector to deliver functional copies of the BCKDHA and BCKDHB genes.
  • This prevented the recurrence of fatal neurological signs in animals that had received the therapy.
• Breakthroughs in the Animal Trials
  • Mice Trials: Therapy had action in knockout cells, was safe in wild type mice, and prevented death in genetically deficient mice.
• Cow Calf Experiment
  • A newborn calf with MSUD received the therapy and grew normally for two years. The animal was able to transition to a high protein diet, unlike untreated MSUD cases.

Meaning for the Human Patient

• Current Problems
  • Patients with MSUD either need strict low protein diets or liver transplantation to avoid life-threatening complications.
• Application for Humans
  • The therapy might provide a less invasive and sustainable treatment for MSUD patients harboring mutations in BCKDHA or BCKDHB.

Long-term Assessment: Assess how the therapy affects BCKDH levels in the brain.
Cognition and Behavior Assessment: Check for neurological and cognitive advantages for longer periods.

Source: The Hindu

3. Sources and Health Effects of PM2.5 Pollution in Northern India

What is PM 2.5?

PM2.5, or fine particulate matter, is a type of air pollution that can cause serious health problems. It's made up of tiny solid particles and liquid droplets that are 2.5 micrometers or less in diameter.

Main Highlights from Study Published in Nature Communications

• Sources of PM2.5 vary with sites
  • Delhi: Major sources include ammonium chloride and organic aerosols from vehicles, residential heating, and fossil fuel use.
  • Beyond Delhi, bulk contribution includes ammonium sulfate, ammonium nitrate, and biomass burning organic aerosols.

Oxidative Potential and Health Risks

• PM2.5 oxidative potential has much to do with health risk indicators mainly due to organic aerosols from inefficient biomass and fossil fuel burning.
• By the same measure, traffic emissions contribute only 40% to organic aerosols at urban roadside locations.
• Hitherto, the toxicity of PM2.5 was five times worse in India compared to that of Chinese and European cities.

Air Quality Variations from Season to Season

• Winter
  • Poor ambient air quality from burning cow dung for heating and cooking has increased cold season organic aerosols, especially at night.
  • This winter shows increases in concentration up to 10 fold in comparison with the warm months, mainly due to much more emissions and a shallower boundary layer.
• All of the year Wind Blend
  • Consistent seasonal characteristics: hydrocarbon like organic aerosols from vehicular emission.
  • Urban oxygenated organic aerosols resulted from both fossil (vehicles) and non fossil (cooking) sources.

Policy Recommendations and Implications

• It will significantly reduce exposure to PM2.5 by reducing primary emissions due to incomplete combustion.
• Spatially and specially target strategies for urban and rural areas to address vehicle emissions, residential heating, and industrial pollution.

The study revealed the necessity for local air pollution control in Northern India, especially in high traffic and biomass burning areas, to prevent the most severe health impacts.

Source: The Hindu

4. Advocates (Amendment) Bill, 2025

Context

The Centre withdrew the Bill on February 22, declaring that it needed to have public consultation and present a new draft of the same for reintroduction. The Bar Council of India (BCI) opposed the Bill vehemently, asserting that it jeopardizes the bar's autonomy and independence.

Key Provisions & Impasse

Strike & Boycott by Lawyers Banned

• Section 35 A
  • Forbade advocates and bar associations from striking or boycotting courts, making it such violations would constitute misconduct and cause disciplinary proceedings to ensue.
• Concerns
  • Opponents maintain that strikes are a legitimate instrument for objection, especially in situations of state abuse.

Government Control Over BCI Widened

• Three government nominees were proposed in the BCI other than the Attorney General and Solicitor General.
• Section 49B
  • Dictated that the Central Government could issue binding directions to the BCI.
• Concerns
  • This threatens to infringe upon judicial independence and decrease institutional autonomy of the legal fraternity.

BCI's Powers Greatly Enhanced

• In Section 45B, the BCI was permitted to address disciplinary complaints at a national scale and was empowered to terminate the practice of lawyers at its mere discretion.
• Section 48B endowed the BCI with powers to abrogate the State bar councils when they are unable to perform their functions in a satisfactory manner.
• Concerns
  • Critics argue that this actually goes against the federal structure of legal regulations.

Recognition of Corporate Lawyers and Foreign Law Firms

• The extended definition of "legal practitioner" would include in house counsel and foreign lawyers.
• Gave the Centre the power to regulate the entry of foreign law firms into India.
• Concerns
  • Ambiguities concerning in house counsel having right of audience in courts and whether their advice would be covered by legal privilege.

Way Forward

• The withdrawal gives way to further consultations with bar associations, High Courts, and legal professionals.
• Any future amendments should strike a balance between reforming provisions and maintaining judicial independence and bar autonomy.

The Bill sought to create reforms for the legal profession and was heavily criticized for attempting to undermine bar autonomy, government overreach, and unclear provisions for corporate lawyers.

5. ERONET (Electoral Roll Management System)

Context

Complaints were being made about voter ID numbers (EPICs being the same) for voters in different states. The Election Commission (EC) clarified that the voter's right would be exercised solely at the polling station designated by him in the state of his enrollment in that electoral roll irrespective of the EPIC number.
Thus, the 10 digit EPIC number is a means of identification, and its exercise beyond the designated constituency would not be permitted.

Comments and Remedial Actions by EC

• It has been committed to removing duplication and ensuring that an EPIC number is issued to an individual voter only once.
• It also accepted that implications of past manual, decentralized systems led to some EPIC duplication across states.
• These discrepancies are expected to be systematically amended with the transition to the ERONET system.

What is ERONET?

• ERONET (Electoral Roll Management System) is an internet based platform made available to the election officials.
• ERONET is a web-based system for Electoral officials, in 14 languages and 11 scripts, to handle all processes pertaining to Form 6/6A/7/8/8A/001.
• It allows registration, migration, and deletion of the names of voters in order to help keep a cleaner and more transparent electoral roll.
• It is likely to rid itself of duplication from the past and represents an attempt to standardize voter data across states and Union Territories.

English-all-pages ERO Net

Download

The Election Commission has further reassured voters that duplications will not come in the way of voting rights, and systematic correction processes are taking their course. However, this giving rise to political slanging matches over election integrity.

Credit: The Hindu

6. Gulf Coast Communities in Kerala Rebel Against Offshore Mining Plans

Context

Coastal communities in Kerala have been agitating against the Centre's offshore mining plans, fearing destruction to marine ecosystems and loss of livelihoods. The agitation gained momentum after the 2023 amendment to the Offshore Areas Mineral (Development and Regulation) Act, 2002, which opened offshore mining to private players.
The Kerala Fisheries Coordination Committee has been formed to lead the resistance, with a Parliament march planned for March 12.

Government Plans and Identified Mineral Reserves

• In particular, geological surveys have identified substantial mineral deposits within
  • 745 million tonnes of construction grade sand offshore of Kerala.
  • Lime mud, heavy mineral placers, and polymetallic nodules in excess of the other offshore regions.
• Tranche 1 of the auctions includes 13 offshore blocks
  • Three blocks of construction sand offshore of Kerala.
  • Three blocks of lime mud offshore of Gujarat.
  • Seven blocks of polymetallic nodules offshore of the Great Nicobar Island.
  • The mining zone in Kerala is Kollam Parappu (Quilon Bank), a key fishing hub and a marine biodiversity hotspot.

Fisheries and Scientific Concerns

• Destruction of Marine Ecosystems
  • Kollam Parappu supporting commercially valuable marine species, heavily frequented by traditional and mechanised fishers.
  • Mining is expected to damage fish habitats, lead to depletion of fish stocks, and neutralise biodiversity.
• Fishing conflict escalation
  • The end of fishing grounds will push vessels further to the nearshore waters and escalate conflict among traditional mechanised fisher folk.
• Environmental Risks
  • According to a study done by the University of Kerala, "sediment plumes emanating from mining will aggravate turbidity, thereby compromising water quality, food chains, and spawning grounds."
  • Extraction drilling will entail a heavy toll on freshwater used to wash the sand, adding woes to environmental concerns.
• Unclear Long Term Impact
  • There are no defined boundaries for marine ecosystems, thus making it unpredictable for any mining initiated impacts.
  • The destruction of habitats could incur food insecurity and economic instability for coastal dwellers.

Call for a ‘Right to the Sea Act’

N.K. Premachandran, MP, who is leading the RSP’s protest march, demanded that the Centre introduce a ‘Right to the Sea Act’, similar to the Right to Forest Act, to protect the rights of India’s coastal communities.

He accused the Union government of pushing ahead with the project in a unilateral and opaque manner and raised several critical questions:

• Has the Centre conducted an environmental impact assessment (EIA)?
• Has a social impact study been undertaken?
• Has any effort been made to consult coastal communities and organizations?

After acquiring protection from truckers, the Kerala government and local fishing communities want the entire offshore mining process to stop until a thorough environmental impact study is conducted. With protests intensifying and ecological ruin reckoned as a possibility, the controversy is far from closure.

7. Einstein Ring

Contemporary research into the existence and properties of heat has remained a vital part of gravitational lensing. For over a century, one of the most powerful members of physics, Alfred Einstein, shared his brilliant ability by predicting that massive objects such as galaxies and galaxy clusters might bend light from distant objects through their gravitational influence. This effect, called gravitational lensing, can produce arc like distortions or, on rare occasions, a perfect Einstein ring, should their alignment be perfect.

What is an Einstein Ring?

A rare optical phenomenon where light from a distant object encircles a massive foreground object.
The stunning effect is produced with the help of strong gravitational lensing. By bending spacetime more than its delineation, it distorts and magnifies light.

Discovery of Altieri’s Ring

How was it found?

• The Euclid space mission, launched by European Space Agency (ESA), discovered the Einstein ring in the galaxy NGC 6505 in September 2023.
• This galaxy sits at a relatively close distance from Earth at 590 million light years.
• Bruno Altieri, an astronomer, first detected the ring in fuzzy pictures of the Euclid test.
• Confirmation came by sharp images, resulting in its being christened Altieri's Ring in his honour.

What is its highlight?

• The lensed object being viewed through NGC 6505 is a galaxy that lies 4.5 billion light years away.
• Only five other gravitational lenses have been found at almost the same distance.
• Showcases how new telescopes can uncover hidden phenomena in familiar galaxies.

How Gravitational Lensing Works

How does it work?

• Therefore, according to Einstein's General Theory of Relativity, large massive objects curve space time, or rather, like a heavy object twisting the surface of a trampoline.
• When light nears this great mass, it in turn actually takes on that curved path, thereby altering its route.

Why are Einstein Rings formed?

• When the conventionally distant object, lensing galaxy, and observer all become perfectly aligned, the light distorts symmetrically and creates a ring like structure.
• A common outcome will be numerous distorted images instead of a complete ring.

Why Einstein Rings Matter

• By means of bending light, they provide useful insights into the expansion of the universe.
• A means of testing purportedly Einsteinian notions, that is, it provides an insight into how gravitational forces stretch space time.
• Einstein rings act as a gigantic lens for far off galaxies to aid astronomers in their hunt for faint objects.
• Einstein rings support investigations of dark matter since lensing exhibits mass that is not otherwise observable.

How was the discovery confirmed?

• The Keck Cosmic Web Imager (KCWI) data (March 2024) confirmed the lensing effect.
• Data from the Canada France Hawaii Telescope and Dark Energy Spectroscopic Instrument were used to determine:
• The mass of NGC 6505.
• The lensed galaxy is an old, inactive galaxy no longer forming stars.

8. Cheetahs Vulnerability

Context

Not more than two years after the introduction of cheetahs in India, prey shortage and the competition posed by leopards has been a major concern to authorities monitoring the survival of and well being of the big cats. They became extinct from India in 1952. Cheetahs have been reintroduced at Kuno National Park in Madhya Pradesh via the translocation of:

• Eight cheetahs from Namibia on September 17, 2022
• Twelve cheetahs from South Africa on February 18, 2023

Up until now, according to government sources, ten cheetahs have died, and the current number of cheetahs in the park is 26.

Concerns Over Prey Scarcity

• The Cheetah Project Steering Committee (CPSC) has raised concerns regarding the insufficient prey bounty available for cheetahs on various occasions. In its spur 10th meeting numbering August 23, 2024, the committee noted that:

• Prey density varies widely within Kuno's distinctive sections as follows:
  • Within the 350 sq. km core sanctuary area, there exists a deer density of 17.5 per sq. km.
  • The surrounding area of 400 sq. km has a much lesser density of just 1.5 per sq. km.
• This faces no new issue
  • In fact, during the very first meeting of the CPSC convened on May 30, 2023, the very committee had concluded that prey augmentation must be a continuing effort.

• When asked about initiatives over the last six months on this issue, CPSC Chairman Rajesh Gopal said:
  • Increasing prey populations translocated to this area
  • In situ revival methods by which species like deer breed under conditions where their protectors are nourished and benefit from protection but don't have threats immediately from predation
  • Monitoring cheetahs' hunting behavior because ALL evidence points to the fact that they are making natural kills which indicates some improvement

Competition from Leopards: Another Challenge

• Deprivation of prey coupled with intense competition from about 26 leopards per 100 sq. km densifies the problem for cheetahs, further complicating their chance of survival after reintroduction.

The already low prey base, reduced further through predation from the leopards and other natural causes, threatens to be so minuscule that it will be incapable of natural recovery.

Project Cheetah

Source: BS

Banking and Finance

1. The Matched Plan of SEBI on Mutual Fund Insurance

Context

The mutual fund insurance combo has again found itself in deep trouble with the industry. This is primarily due to worries regarding product complexity and operational tangle, leading generally to shelving the idea.

Industry Reservations & Challenges

• True to Label Investment Concern
  • SEBI’s MF advisory committee believes that MFs should remain pure investment products without additional insurance features.
• Operational Burden
  • The inclusion of insurance would complicate claim processing, increasing workload for fund houses and distributors.
• Past Experience
  • Earlier, many such combo products were available till June 2022, when SEBI banned them on account of structural concerns.

SEBI's Intent & Market Expansion Goals

• Proposed by Former SEBI Chairperson Madhabi Puri Buch (January 2025) to make investments more affordable and accessible.
• MF Industry Growth & Challenges
  • Despite rapid expansion, mutual fund penetration remains concentrated in top cities.
• Investor Base Expansion Efforts
  • Such initiatives like reducing the minimum investment from ₹500 to ₹250 are meant to attract a large retail market.

Current Status & Future Outlook

• "Work in Progress"
  • SEBI had been evaluating recommendations from the Association of Mutual Funds in India (AMFI).
• Impact of Leadership Transition
  • With Tuhin Kanta Pandey replacing Buch as SEBI Chairperson, the possible fate, of the combo product, remains uncertain.
• Regulatory Landscape
  • Under Buch, fast track regulatory changes shaped the MF industry—her exit might slow down or alter policy directions.

The MF insurance combo product literally seems to have gone onto a candle shelf, failing to kindle support from the industry. Operational and regulatory challenges, though, count for more than pros that SEBI could throw behind broadening MF adoption. Therefore, it would be doubtful whether revival could take place with changed leadership.

Source: BS

2. SEBI to Appeal Against Court Order on Alleged Listing Permission Irregularities

Context

The Securities and Exchange Board of India (SEBI) has expressed that it will now appeal an injunction of the Higher Court directing the police in the alleged listing irregularities regarding a company's BSE listing in 1994.

Court Order & Allegations

• The Anti Corruption Bureau Court in Mumbai issued the order following an unrelated miscellaneous application.
• The institution's focus is on former SEBI chairperson Madhabi Puri Buch, three current whole time members, and two BSE officials.
• The complaints levelled against the accused have to do mostly with irregularity in granting listing permission almost 30 years ago.

SEBI's Response & Legal Stance

• No Due Process
  • SEBI claims that the court robed without notice to it and without giving an opportunity to be heard in the matter.
• Doubtful Applicant
  • SEBI calls the complainant a frivolous and habitual litigant; they are in the know that similar matters of previous applications being dismissed.
• Officials Not in Position at That Time
  • SEBI notes that the named officials were not in their current positions when the alleged battery of irregularities occurred.

Legal Route & Proceeding Forward

• SEBI would want to challenge the court injunction through legal proceedings.
• The matter shall see action at higher judicial fora for being dismissed, which SEBI views as without any merit whatsoever.

The dispute underscores concerns about regulatory oversight that has occurred in the bygones, but at the same time stands to show SEBI's strong position against what it sees as a legally flawed decision. The implications of this ruling could also set precedents for the smattering of similar allegations in the financial regulatory environment in India.

Source: BS

3. RBI's Harsh Accommodative Stance Under Governor Sanjay Malhotra

Context

Since Sanjay Malhotra assumed charge as Governor of the RBI in December, the Reserve Bank of India has shifted a little more on the accommodative policy stance to hold support towards the banking and economy, which is facing a slowdown in growth itself.

Key Measures Taken by RBI

Interest Rate & Liquidity Measures

• First rate cut in five years
  • The Monetary Policy Committee (MPC) cut the repo rate by 25 basis points (bps) in February, which marks the beginning of a move towards a less restrictive monetary policy.
• Frequent liquidity injections
  • To ease the tightness within the banking system, RBI undertook:
  • Open Market Operations (OMO) auctions (for the first time in years)
  • USD/INR buy sell swap auctions
  • Daily Variable Rate Repo (VRR) auctions

Postponement of Regulatory Norms Implementation

• To provide relief to banks, RBI has delayed a number of key regulations, like:
  • Liquidity Coverage Ratio (LCR) norms
  • Expected Credit Loss (ECL) framework
  • Project finance regulations

Catalysts for Banking & NBFC Sector

• Relaxed risk weightings on loans to NBFCs & Microfinance Institutions (MFIs) from 125% to 100% → Injecting ₹40,000 crore into banking (~₹4 trillion in loanable funds).
• Removed regulatory restrictions on multiple financial entities, including:
  • Kotak Mahindra Bank
  • Arohan Financial Services
  • Asirvad Microfinance
  • DMI Finance

The "cease and desist" order still remains on Paytm Payments Bank.

Economic Context and Impact

• Addressing Growth Slowdown
  • India’s GDP growth fella at 5.4% (seven quarter low) in July September.
  • Global uncertainties & rupee depreciation, leading to RBI action intervention in forex markets which struck liquidity.
  • Liquidity deficit soared up to ₹3 trillion in January, highest since April 2010.

Market & Analyst Reactions

• Macquarie Research: The RBI action becomes balance of growth support & regulatory flexibility.
• Nomura Report: Coordinated policy approach finally adopted by India but more easing on the cards.
• Emkay Research: Recent policy measures seem credit positive for banks in the medium to long term.

Under Governor Sanjay Malhotra, RBI has adopted a policy growth oriented shift towards easing liquidity and delaying certain regulatory measures. Although analysts cheer the steps, they also seek the necessity for continued policy easing in order to maintain momentum in the economy.

Source: BS

4. Irdai's Move toward Equity Derivatives

Context

At Irdai's direction, insurers could hedge their equity exposure on derivatives, providing a tool for better market volatility management and protection of policyholder returns. This step seems to enhance risk management, but experts suggest it is not going to drastically affect the insurers' particular investment strategy.

Current Regulatory Setup

• Prior to this decision, Irdai permitted the insurers to hedge:
  • Interest rate derivatives in rupees, consisting of:
    • Forward Rate Agreements (FRAs)
    • Interest Rate Swaps
    • Exchange Traded Interest Rate Futures (IRFs)
    • Credit Default Swaps (CDS) for protection to buyers.

Due to the increasing investment in equities by insurers and market volatility, Irdai realized the need to allow the hedging of equity derivatives.

Impact on Life Insurers

• Life insurers generally assign 30-35% of their portfolio to equities, with the remaining portion in fixed income instruments. This is probably higher than general insurers and hence gives them more exposure to equity market risks.

Equity Exposure in Policy Types

• Unit linked policies could be fully equity based or a mix of equity and debt.
• Traditional Fund has fixed equity allocation or flexible equity allocation.
• The average equity to debt ratio is 35:65, with substantial variation across insurers.
• Equity market experts believe Irdai's decisions will provide liquidity in single stock options.

Guidelines & Next Steps

• Key Features of Irdai’s New Guidelines
  • Permitted instruments for hedging:
    • Stock and index futures
    • Stock and index options
• Only for hedging
  • The equity derivatives can be used for risk management purposes. No speculation.

5. Financial Frankenstein

Context

Banks have been aggressively selling mutual funds and insurance policies as substitutes for traditional deposits, primarily to boost fee income. These actions have led to the downfall of low cost deposits, which banks now feel sorry for as costs of borrowing rise.

Did bankers act as Frankenstein?

• Recently, a senior banker told that the financial industry has created many of these creatures.
• Drowning under constant for fee based income, banks persuaded heavily into mutual fund and insurance sales through their branches. By the time they realized their folly, it was all too late.
• Now that they want deposits to feed the loan book growth, they quarrel with their bad choice of these non banking financial products.

Banking Challenges Today

• Banks, even after lowering policy rates, cannot afford to do the same to deposit rates because the costs to the liabilities are high.
• Banks are having issues in attracting savings when competing with higher payoff avenues for investment.
• The CASA ratio has gone down among all major banks, resulting in them being pushed toward high rateCertificate of Deposits (CDs).

Strategies in Response

• Public Sector Banks (PSBs)
  • Continue to maintain low interest rates on savings accounts and depend on government backing.
• Private Banks
  • Offer higher interest rates (up to 8%) to lure depositors.
• Innovative Approaches
  • Banks are exploring giving incentives like insurance covers, discounts for retail loans, and premium banking benefits.

Future Outlook

• Banks must build deposit strategies in segments such as students, professionals, and retirees.
• Just good interest rates will not suffice, with perks and extra service being equally important.
• The industry must balance income from fees with interest based income to avoid the same mistakes from the past.

Deposit strategy reconsideration is needed in banks instead of playing into the hands of fee income.
Otherwise, sooner or later, they could face financial instability as experienced by Frankenstein's uncontrolled creation.

Current and savings accounts (CASA)

• Current and savings accounts (CASA)
  • Term deposits
  • NRI deposits
  • Tapping into State and Central Governments

Current accounts do not accrue any interest, while savings yield meager returns largely in public sector banks (PSBs):

Importance of CASA Deposits

• The CASA Ratio of a bank determines its ability to keep its cost of funds low. A healthy CASA balance can ensure a bank gives a net interest margin (NIM) of around 4% without posing a threat to asset quality.
• The Decline in CASA Deposits
  • Most of the banks have recorded a fall in CASA deposits over the last year:

Credit: BS

Economy

1. EU-India FTA

Bilateralism Rises in Global Trade

• During Business Standard Manthan, held last week, Sitharaman, Union Finance Minister, mentioned how bilateral negotiations are becoming increasingly important as multilateralism is in decline.
• “Multilateralism is sort of out,” said Sitharaman, “and I think India should be looking more toward bilateral agreements in trade, investment and strategic relations.”
• This statement came at a time when the European Commission President was visiting India, leading to an expedited schedule for an EU-India Free Trade Agreement (FTA) in sync with India’s newly emerging trade policy.

The signing of such FTAs is indeed becoming critical for India in the arena of economic and strategic reorientation in the context of a changing global order.

Evidence for the Decline: Anti Multilateralism

Erosion of Global Institutions

• The WTO is weak
  • It has not been able to deal with China's covert export subsidies and has failed to provide a level playing field.
• Crisis of credibility for the WHO
  • An increasing influence of major powers like China has raised concern over its credibility among others.

Retreat from Global Leadership by the U.S.

• Under Donald Trump, the U.S. left the Paris Climate Agreement and crippled the WTO's appellate body, refusing to appoint new members.
• Tariff wars cargoed the global trade norms and coalesced country specific protectionist agonies.

All these changes, particularly chipping away at the national economy, as multilateralism, by its very design, had been offering protection to the weaker economies from the devours of the mightier cities. Since the status of multilateralism has veered toward a trajectory of fragmentation, bilateral agreements have become mainstream.

India's Challenge: Strengthening Bilateral Enagements

Expand Bilateral & Plurilateral Engagements

• It ought to engage with plurilateral mechanisms, such as the Multi Party Interim Appeal Arbitration Arrangement (MPIA), at the WTO.
• Increased focus on engaging in regional and sectoral agreements would provide India leverage and better trade terms.

Strengthening the Capabilities for Negotiation

• The capacity and expertise of negotiators must be strengthened to work for India.
• Government ministries need to improve their interdepartmental cooperation in terms of streamlining the entire process of negotiation and implementation for trade.

Competitively Weighted Concessions

• India should actively work toward bilateral negotiations where it can offer strategically weighted concessions, rather than simple mechanisms that allow India to play veto politics with multilateral negotiations.
• Ultimate priority must be given here to wants put on market access.

Facts To Remember

1 . Madhya Pradesh farmers to get permanent electricity connection for ₹5

In Madhya Pradesh, farmers will now be provided a permanent electricity connection for 5 rupees. At a Kisan Aabhar Sammelan organized in Bhopal yesterday, Chief Minister Dr. Mohan Yadav said that this facility will be made available to farmers in the entire state in a phased manner.

2. HM Amit Shah to inaugurate workshop on sustainability, circularity in dairy sector

Union Home and Cooperation Minister Amit Shah will inaugurate the workshop on sustainability and circularity in the dairy sector in New Delhi today. The workshop will focus on policies and initiatives of the Ministry of Cooperation and the Ministry of Animal Husbandry, Dairying and Fisheries aimed at promoting sustainable dairy farming while ensuring economic growth with environmental responsibility.

3. PM Modi to chair NBWL meeting at Sasan Gir on World Wildlife Day

Prime Minister Narendra Modi will chair a meeting of the National Board for Wildlife (NBWL) at Sasan Gir in Junagadh district of Gujarat on the occasion of World Wildlife Day today. The NBWL has 47 members, including the Chief of Army Staff, members from different states, representatives from NGOs working in this field, chief wildlife wardens and secretaries from various states.

4. Jaipur to host 12th Regional 3R & Circular Economy Forum from March 3-5

Pinkcity Jaipur is all set to host the 12th Regional 3R and Circular Economy Forum in Asia and the Pacific. This three-day Event kicks off today at the Rajasthan International Centre, Jaipur. The forum focuses on “Realizing Circular Societies Towards Achieving SDGs and Carbon Neutrality in Asia-Pacific.

5. PM Modi urges commitment to biodiversity conservation on World Wildlife Day

Prime Minister Narendra Modi has urged everyone to reaffirm their commitment to protect and preserve the incredible biodiversity of the planet. On the Occasion of World Wildlife Day today, Mr Modi emphasized that every species plays a vital role and highlighted the importance of safeguarding their future for generations to come.

6. Sri Lanka gets fourth tranche of bailout package from IMF

The IMF has agreed to release the fourth tranche of $334 million from its $2.9 billion bailout package to Sri Lanka to strengthen the island nation's recovery from its 2022 bankruptcy.

7. Yuki and Popyrin win doubles title in Dubai

Yuki Bhambri and Alexei Popyrin of Australia beat second seeds Harri Heliovaara of Finland and Henry Patten of Britain 3-6, 7-6(12), [10-8] in the doubles final of the $3,415,700 ATP tennis tournament in Dubai.

8. NCLAT rejects petitions on admissibility of SFIO report

Appellate tribunal NCLAT has dismissed petitions by Deloitte Haskins and Sells and its two associates, challenging the admissibility of the second interim investigation report by the Serious Fraud Investigation Office (SFIO) on Infrastructure Leasing and Financial Services (IFIN).

Daily Current Affairs Quiz
4 March, 2025

International Affairs

1. India-Australia Economic Cooperation

Context

Australia expressed continuing faith in the economic ascent of India, backing its aim to become the third largest global economy by 2030, and supporting India's permanent membership in the United Nations Security Council. Recently, Prime Minister Anthony Albanese of Australia announced the New Roadmap for Australia Economic Engagement with India to expand cooperation in various sectors ranging from trade to investment to geostrategic partnership.

Trade Surge between India and Australia

• The export markets of India grew by 35% over the last five years, while exports to Australia surged by 66%, the latter nearly double the speed showing complementary economic strengths.
• The trade between the two nations has experienced a fillip largely due to the Economic Cooperation and Trade Agreement (ECTA).

Focus Areas under the Roadmap

The roadmap identified four "Superhighways of Growth":

• Clean Energy
  • Australia stands at the forefront as a producer of lithium, nickel, and cobalt and thus will be the fountain of India’s green transition and EV manufacturing goals.
• Education & Skills
  • Australian universities are exporting to India (GIFT City, Noida) to skill 20 million Indians every year.
• Agribusiness
  • Food security and trade enhancement through sustainable agriculture solutions.
• Tourism
  • Enhance cultural ties and promote travel between two nation states.

The other visible path of prosperity will come alive through the seven 'Major Economic Roads' including investments, technology, sports, arts & culture, resources, defence, space, and health.

Harnessing the Indian Diaspora

People to people ties are at an all time high with the 1 million strong Indian diaspora, the fastest growing population group in Australia.
Australia is investing ₹132 crore in the Centre for Australia India Relations and ₹22 crore in the Maitri grants program to further strengthen this 'human bridge' between the two nations.

Going Forward: CECA

• As enterprises seek new opportunities for investment and trade, progress on the CECA will therefore be critical to expanding market access and deepening economic collaboration.

Implications

The New Roadmap indicates Australia's long term commitment to enhancing India's economic strength, putting forth a clear, structured approach to an intensified partnership.

2. The White House Clash

Credit: TH

Context

A day after the heated exchange at the Oval Office between President Donald Trump, Vice President J.D. Vance, and Ukrainian President Volodymyr Zelenskyy, protests for Ukraine erupted across numerous cities in the U.S. Meanwhile, a survey by the PEW Research Center highlights an increasing partisan divide regarding U.S. aid to Ukraine and NATO issues.

Moulding Attitudes on U.S. Support for Ukraine

• Now, more Americans think the U.S. is giving too much aid (30%, up from 27% immediately prior to the November elections).
• 22% feel the U.S. is not providing enough, a 4% increase since the elections.
• While 23% believed the U.S. was providing the right amount of aid, acceptability of this view is waning across all political affiliations.

Party Split (Chart 1 and 2)

• 50% of Republicans are in the opinion that the U.S. is giving too much support to Ukraine, whereas fewer than 15% of Democrats concur.
• The share of Democrats who perceive aid to Ukraine as "just right" has dropped dramatically (by 12 points), whereas Republicans only saw a minor 3 point drop.

Concerns Based on National Security

• 39% of Americans maintain that aiding Ukraine benefits U.S. national security; 27% contend it has no impact at all.
• Partisan Split (Chart 3):
• Democrats are universally in favor of considering Ukraine aid beneficial to U.S. security, particularly those 65 and older.
• Republicans, especially young Republicans, are relatively more inclined to say that it harms national security.

NATO Membership of the U.S.: Eroding Faith

• 63% of Americans think NATO helps the U.S., down from 66% in 2024 (Chart 4).
• Partisan Split
  • 82% of Democrats support NATO membership, whereas only 47% of Republicans agree.
  • The majority of Republicans now think that the U.S. doesn't benefit much from NATO, if at all.

Decreasing Support for Additional European Defense Spending

• A smaller share of Americans (39%) now believes that European allies ought to increase their defense spending, down from 47% in 2024 (Chart 5).

A deepening partisan divide over aid to Ukraine, NATO and national security means that greater challenges could loom for U.S. foreign policy in the future. With the Trump administration signaling a shift in priorities, the role of the U.S. in general security alliances continues to remain controversial.

Source: TH

3. India-Belgium Defence Ties

Context

India and Belgium deliberated upon defence engagements in Indo Pacific with a view to the maritime domain and, by extension, industrial cooperation. Defence Minister Rajnath Singh met Belgian Defence Minister Theo Francken and Princess Astrid in New Delhi to discuss boosting Belgium’s defence investments in India.
An "institutionalised defence cooperation mechanism" is likely in further discussions between the two sides.

India-EU Defence Collaboration

• India and the EU committed to deepening security ties and consider a Security of Information Agreement (SoIA).
• India has expressed interest in becoming part of the European Union's Permanent Structured Cooperation (Pesco) framework for joint defence projects.
• European defence companies are making overtures to Indian firms in order to bump up production and take India somewhere in the global supply chain.

Strategic Importance

• With Russia Ukraine war and changing global security dynamics pushing Europe to enhance its defence capabilities.
• India’s below par defence manufacturing base makes it an important player as part of EU defence supply chains.
• Boosted maritime cooperation in the Indo Pacific is in alignment with the cherished Act East Policy for India and EU Indo Pacific strategy.

This promising India Belgium and India EU partnership will open a new chapter in global defence cooperation for security in the Indo Pacific but beyond.

Source: TH

National Affairs

1. The Sacred Orans

Context

In pursuance of the judgment of the Supreme Court of India, all sacred forests in Rajasthan known as orans were, from December 2024, protected under a High Court order recognising the socio-ecological and cultural significance of orans in T. N. Godavarman Thirumulpad v. Union of India. The ruling brought orans under the purview of the biodiversity-related laws, but the issue remains whether formalisation undermines community governance.

The meaning of Orans

• These are sacred groves maintained by local communities from time immemorial, each dedicated to some deity and with a complete ban against cutting trees.
• The ecological and economic functions they serve, among others, include:
  • Support biodiversity
  • Enhance sources of water by trapping runoff and raising underground water levels
  • Community efforts at watershed management

Yet, despite the concern for mere empowerment of communities that the Court expressed, the whole idea of formalisation, as presented, makes one apprehensive:

Declare Orans as Forests under the Forest (Conservation) Act, 1980

• There is protection, but there are exceptions within the Forest Conservation Amendment Act, 2023 even for diversion of forest land for zoos, safaris and ecotourism-related activities.
• This may interfere with the age old practices of the communities, resulting in the limited access of local communities.

Declare Orans as Community Reserves under the Wildlife (Protection) Act, 1972.

• With regard to this Act, the governance committees would have a very limited capacity to make effective decisions with the control virtually being that of the State.
• This would risk undermining informal community institutions that are currently managing the orans.

Orans may become ‘Common Forest Land’ under the Forest Rights Act, 2006.

• Only eligible communities/individuals can claim rights, in all likelihood excluding informal governance structures preserving orans at present.
• There is a risk that bureaucratic obstacles may delay recognition of traditional rights.

Strengthening Community Led Governance

• It will not annul community institutions, but replace them with its own.
• There should be identifying functioning informal governance models for replication in similar contexts.
• Collaboration should be ensured between local communities, civil society, and the government.
• The State would be a backstop support while communities are fully entrusted with decision making authority.

While the Supreme Court's ruling acknowledged the cultural and ecological significance of orans, the formalization could disturb traditional governance systems.

2. Cities Coalition for Circularity (C-3)

Context

India launched the Cities Coalition for Circularity C-3, a multi national platform for city to city collaboration, knowledge sharing, and partnership with the private sector in support of sustainable urban development.

Key Objectives of C-3

• To encourage circular economy principles of reduce, reuse, and recycle (3R).
• Enable and encourage collaboration among policymakers, industry leaders, and researchers.
• Develop sustainable waste management and resource efficiency across Asia Pacific.

Prime Minister's Vision

• In a special written message, PM highlighted:
  • India's leadership in advocating a Pro, Planet and People (P3) approach.
  • Importance of 3R and circular economy principles to sustainable urban growth.
  • Indication of India to share expertise and experience in circular economy initiatives.

To further strengthen the coalition, he proposed the formation of a working group to develop the structure and operational framework for the coalition.

Key Signing of the CITIIS 2.0 Agreement

A key Memorandum of Understanding (MoU) for CITIIS 2.0 was signed at the time of the launch in the city of Jaipur.

• ₹1,800 crore in agreements were announced under the initiative.
• The funds will reach 18 cities across 14 states.
• The selected projects would serve as lighthouse models for other urban areas.

C-3 will play a very crucial role in making Indian cities sustainable and resource efficient, said Manohar Lal, Union Minister of Housing and Urban Affairs.

3R and Circular Economy Forum

Previous Development

• The Regional 3R and Circular Economy Forum in Asia and the Pacific was inaugurated in 2009 with the objective of promoting:
  • Sustainable waste management
  • Resource efficiency
  • Circular economy policies

A Milestone: The Hanoi 3R Declaration (2013-2023)

• Outlined 33 voluntary goals to transition towards a resource efficient and circular economy.
• Addressed challenges such as rapid economic growth, resource depletion, and rising waste generation.

The launch of C 3 marks a significant step in India's commitment to sustainability. Through this initiative, India aims to lead global efforts in circular economy practices, ensuring a greener, more resilient urban future.

Source: TH

3. Gangetic Dolphins First Survey

Context

A very large survey has brought out the figure of 6,327 Gangetic dolphins inhabiting the waters of the Ganga and its tributaries, it is the very first standardized assessment of their population. At present, because of varied previous counting methodologies, this number cannot yet indicate trends in population over time.

Distribution of Dolphin Population

• Main stem Ganga: 3,275 dolphins
• Tributaries of Ganga: 2,414 dolphins
• Main stem Brahmaputra: 584 dolphins
• Tributaries of Brahmaputra: 412 dolphins
• Beas River: 101 dolphins
• Indus River Dolphins: 3 Individuals

This survey is the first step undertaken in scientific conservation efforts, covering a huge expanse of river stretches that totals 8,507 km.

Difficulties in Counting the Dolphins

• For dolphins found in the rivers, the population statistics were difficult to include:
  • Submerged in water for an inordinate time, only coming up occasionally for a breath.
  • Without any most distinctive feature to indicate individuals, like stripes in tigers.

New Survey Methodology

• Acoustic Hydrophones (Underwater microphones), which capture dolphin echolocation clicks from underwater, will be used to create sounds that can be together used by the observers to triangulate dolphins locations, thus preventing duplicate counting.

Threats of Gangetic Dolphins

• For entangling fishnets is one of the leading causes of death.
• Further studies are being conducted to detect how pollution and environmental degradation would affect dolphin survival.

Roadmap for Conservation in the Future

• For four years next survey with the very same improved devices methods will be used.
• Prime Minister had stressed local community participation in conservation while releasing the report in the National Board for Wildlife meeting in Gujarat.
• Compulsory educational outreach programs with students attached to raise awareness concerning dolphin habitats.

State Wise Dolphin Population

• Uttar Pradesh (UP) is the state, which, taken as a whole, boasts the highest number of Gangetic dolphins.
• Next comes Bihar, West Bengal, and Assam.

With standardized survey methods, simple and focused conservation strategies, India is gearing up for a major leap in the direction of ensuring a favorable future for the Gangetic dolphin, one of the most relevant indicators of river ecosystem health.

Source: TH

4. Aditya-L1 Mission Update

Context

The Indian Space and Research Association has announced the second set of scientific data released by ISRO's solar observation mission Aditya L1, providing crucial information regarding the Sun's photosphere, chromosphere, and corona, as well as in situ particle and magnetic field measurements at the first Earth Sun Lagrange Point (L1).

The Scientific Journey of Aditya L1

• Launch Date: September 2, 2023 using PSLV C 57.
• Insertion in Halo Orbit: January 6, 2024, in Lagrange Point (L1), at 1.5 million km from the Earth toward the Sun.
• Current Status: It has been in its third revolution around L1, continuously observing the Sun.

The mission serves as a treasure trove of data for solar parameter studies and helps augment the understanding of solar activity, space weather, and their effect on Earth.

5. Bose Metal

What Is Superconductivity?

• Metals are materials that provide resistance to the flow of current.
• Superconductors would conduct current without any resistance (e.g., zinc at 272.3ºC) due to the fact that they host Cooper pairs, which are two electrons bound together at low energy states.
• So the older theory has it that, at 0K, the metals can either be very good insulators (zero conductivity) or good superconductors (infinite conductivity).

What Are the Bose Metals?

• A peculiar metallic state in which
  • Cooper pairs form (like in superconductors).
  • But superconductivity doesn’t set in the material conducts better yet never attains zero resistance.
  • It stands against all existing theories of superconductivity and quantum behavior.

Niobium Diselenide (NbSe₂) A Bose Metal?

The Experiment

• Material: Ultra thin Niobium Diselenide (NbSe₂).
• Situation: Applied under particular magnetic fields.
• Results:
  • Cooper pairs formed.
  • Hall resistance was zero (which proved that Cooper pairs were indeed charge carriers).
  • No superconducting state occurred.

Significance

• Strong evidence for the existence of the Bose metal.
• Proves to challenge theories on superconductivity, yet it can forge new avenues in physics modeling.

Applications

• No direct applications to date, but:
  • Enhances the understanding of quantum materials.
  • May impact the future generation of superconductors and electronics.
  • Pours knowledge into disordered metals and quantum phase transitions.

There may be some forsaken few who saw the glimmer of a new state of matter meeting neither the perceived classical nor the microscopic rules and potentially on a path to a new physics in condensed matter.

Source: TH

6. Obesity Crisis in India

Context

As per National Family Health Survey, there is such a five fold increase in overweight and obesity cases in India as revealed by a new study published in The Lancet over the past three decades. The number of overweight or obese individuals increased from 53 million in 1990 to 236 million in 2021, projected to surpass 521 million by 2050 in urgent action failure, Making India the second most affected country in the world after China.

This includes the key findings of the study

• 1990: 53 million overweight or obese Indians.
• 2021: 236 million.
• 2050 (Projected): Over 521 million (second highest in the world).
• Slide: Comparison Between Nations:
• China: Had 464 million overweight/obese individuals in 2021 and projected to increase to 696 million by 2050.

What is Obesity?

Obesity is a chronic disease that occurs when there is too much body fat. It can lead to many health problems, including heart disease, type 2 diabetes, and some cancers.

Definitions of BMI

Body mass index (BMI) is a calculation that estimates body fat and compares weight to height. It's a quick and inexpensive way to screen for weight categories like underweight, overweight, and obesity.

• Overweight: BMI between 25-30 kg/m².
• Obese: BMI of 30 kg/m² or higher.
• Younger Generations Affected More:
  • People are gaining weight faster than the earlier generation.
  • Earlier onset of obesity is more likely to have higher boluses of Type 2 diabetes, increased high blood pressure, cardiovascular illnesses, and cancers.

Need for Urgent Action: 5 Year Plan (2025-30)

The study's authors call for global and national policy interventions in order to curb the obesity crisis.

• Balancing Overnutrition & Undernutrition
  • India is paradoxical: 180 million Indians suffer from obesity while 35% of under five children are malnourished (NHFS 5, 2019 21).
• Key Policy Recommendations
  • Regulating ultra processed foods.
  • Improving maternal and child health by nutritional diets & breastfeeding supports.
  • Encouraging physical activity & healthier living environments.
  • Cut back on cooking oil consumption (as per PM Narendra Modi).

According to Dr. Jessica Kerr, co lead author of the study, preventing obesity should come at top priority among low and middle income countries. The absence of an action plan could transform into a dramatic rise in an obesity related health care in the next decades. That holistic policy must advocate healthier diets and physical exercise, and improved urban planning to reverse the current trend.

Source: TH

Banking and Finance

1. Virtual Digital Assets (VDAs)

With the evolution of blockchain technology and expansion of digital economies, countries all over the world have begun amending their regulations in view of ensuring that Virtual Digital Assets (VDAs) are properly governed. India’s Income Tax Bill, 2025, sets forth a clear legal structure for VDAs under Section 2(111), and the country’s tax policies thus have corresponded to global standards.

What are Virtual Digital Assets (VDAs)?

• According to the Income tax act, 'virtual digital asset' refers to any information, code, number, or token (not being Indian currency or foreign currency) generated through cryptographic means or otherwise and can be called by whatever name.
• It can be transferred, stored, or traded electronically. The definition of VDA also specifically includes a non-fungible token, i.e., NFT, or any other token of similar nature, by whatever name is called.

VDAs as Property and Capital Assets

• Legal Classification & Taxation
  • For the first time, the VDAs have been explicitly classified in India as:
  • Property (Section 92(5)(f))
  • Capital Assets (Section 76(1))

This means that any gains resulting from the transactions involving the VDAs will be taxed in a manner analogous to property deals or transactions involving stocks and bonds.

Tax Features

• Fixed 30% tax on income arising from the transfer of VDAs (no deductions allowed, except for the cost of acquisition).
• No deductions will be allowed for mining, transaction fees, or platform commissions.
• Tax Deducted at Source (TDS) at the rate of 1% will be applicable to all transactions involving VDAs, including peer to peer (P2P) transactions.
• The exemption limit is ₹50,000 for small traders and ₹10,000 for others.

Global Comparison

Compliance and Reporting Requirements

Heightened Regulation over Crypto Transactions

• Failure to report VDA holdings will lead to an assumption of classified as undisclosed income (Section 301).
• The tax authorities are permitted to confiscate the VDAs under investigation (Section 524(1)), along with any cash, gold, or real estate.
• VDA dealers (such as exchanges, wallet providers, and traders) must report transactions in a prescribed format (Section 509).
• To enable better financial monitoring, VDAs must still be reported in Annual Information Statements (AIS).

Challenges and Road Ahead

• While the Income Tax Bill, 2025 goes a long way toward laying down taxation, there are grave regulatory gaps to fill:
  • No investor protection laws.
  • No standard market regulation.
  • No effective enforcement mechanism against fraud.

India's taxation approach, therefore, goes so far as to reaffirm that VDAs are a non shadow asset class. For a robust, safe digital economy, the demand for stronger financial regulation, consumer protection, and standardized compliance guidelines has become urgent.

Source: TH

2. Slow IPO Market

Context

Just 14 companies filed Draft Red Herring Prospectus (DRHP) forms in February as opposed to 29 in January, the lowest ever to show since November 2024.
Decline in Fundraising: The overall amount being sought for IPOs dipped to ₹9,695 crore, which is a low of 9 months.

What is Slow IPO Market?

The condition called the Slow IPO Market is attributed to the low DRHP applications, which observed a new low of 3 months.

What is Initial Public Offerings?

What is Behind the Slowdown?

• Market Volatility
  • Since the beginning of October, companies have been extra cautious because of fluctuations in the market.
• Political Uncertainty
  • The apprehension of investors has heightened since the likely return of Donald Trump to the White House in January.
• Wait and Watch mode
  • IPO filings have been stopped by companies, in the hope that more stability and bullishness would follow.

Wider Market Effect

• Brokerage Stocks Suffered
  • An onslaught of selling for a long period combined with possible SEBI changes in regulations related to the derivatives markets meant declines of up to 18% in a couple of brokerage stocks.
• RIL Weakens
  • Stock of reliance industries (RIL) fell tracking weak earnings.

Source: BS

3. Bank Deposit Insurance

Context

The Indian government is actively considering increasing the deposit insurance limit from Rs 5 lakh to Rs 15 lakh. This move comes after the recent scam at New India Co-operative Bank, which raised concerns about the safety of depositors' money.
Plays a key role in ensuring depositor safety: Deposit Insurance and Credit Guarantee Corporation (DICGC).

Understanding Bank Deposit Insurance

Bank deposit insurance is a financial safety net that protects depositors from losses if their bank fails. It helps stabilize the financial system and prevent panic.

• Current Coverage
  • Deposit insurance covers "principal + interest" up to ₹5 lakh per bank.
  • If ₹5 lakh is principal, forfeiture of interest in a bank failure.
• Risk Management Strategies for Depositors
  • Distributing deposits among multiple banks reduces risk exposure.
  • Different sequences of joint accounts: They will be insured separately for ₹5 lakh each.

How DICGC Works?

Established in 1978 with the merger of Deposit Insurance Corporation with Credit Guarantee Corporation.

• Collects insurance premiums from banks, not depositors.
• Premium rate: 0.12% per annum (₹0.12 per ₹100 of assessable deposits).
• Deposit Insurance Fund (DIF) stood at ₹1.98 trillion in FY24.

Change coming in Deposit Insurance

• Risk Based Premiums
  • RBI Deputy Governor Swaminathan J suggests connecting the insurance premium with the risk profiles of individual banks.
• High risk banks will end up paying more in insurance premiums encouraging better risk management.

Raising Awareness

• 97.8 percent of the deposit accounts fully insured but only 43.1 percent of the total deposits protected.
• To ensure greater awareness among depositors about the benefits of deposit insurance, targeted awareness campaigns are planned by DICGC.

In a scenario of financial uncertainty, a higher deposit cover of ₹15 lakhs could become a great boon for depositors and inspire confidence in the banking system of India.

Source: BS

Economy

1. India's GDP growth rate for Q3FY25 at 6.2%

Context

India's real GDP grew by 6.2% in Q3FY25, which is improved against the revised 5.6% in Q2FY25, but still among one of the slowest growth rates since Q4FY23. The poor performance of manufacturing activities and the services sector amid uncertainties surrounding global trade is rendering the government's 6.5% full year growth target increasingly difficult to attain.

Key Highlights

• Sectoral Performance
  • Growth was mainly due to the primary sector, which grew sharply to 5.2% from 1.8% last year.
  • However, manufacturing (4.8%) and services (7.4%) slowed sharply relative to 12.4% and 8.3% in the previous year.
• Global Trade Challenges
  • Proposed 25% U.S. import tariffs on steel and pharmaceuticals might pose a major risk.
  • About 31% of India's $8.7 billion pharma exports go to the U.S., and any potential shifts in the production towards the U.S. will be detrimental to trade revenue.
• Consumption & Spending
  • Not to forget, government consumption saw a tremendous rise of 8.3% (against 2.3% last year), as did private consumption, meanwhile, grew 6.9% (against 5.7%), aided by moderating inflation.
• Inflation & RBI Outlook
  • For its part, the Reserve Bank expects inflatory pressure to average around 4.8% in FY25, easy to 4.2% the following year in FY26, in keeping with its 4.0% medium term target. Questions remain over data veracity, though.
• NSO’s Data Revision
  • The National Statistical Office (NSO) has done some tinkering with its data collection methods, in order to allow some "industry wise/institution wise detailed information." Data reliability, however, is under serious doubts, given the lack of transparency on the actual consequences.

While strong government spending and improved consumption provide some respite, there are severe challenges from global trade pressures, slow industrial growth, and worries concerning data credibility. Therefore, the 6.5% full year growth target will require a show of greater strength against external economic shocks and engagement of domestic demand.

2. Manufacturing PMI

Context

The Manufacturing PMI in India has fallen to a 56.3 in February from a earlier figure of 57.7 in January.
Such a figure is currently below 14 month but still well above contractionary territory. The Purchasing Managers' Index (PMI) is the barometer for an economy's manufacturing activity a reading above 50 implies expansion, the below value indicates contraction.

Main Features

• Slower Growth
  • The February PMI is the most feeble since December 2023 but still indicates overall a positive business outlook.
• Sector Performance Figures
  • Consumer, intermediate, and investment goods were reported.
• Employment
  • Manufacturing firms expanded their workforce with job creation at its second highest level in survey history.

Demand and inflation trends

• New Orders & Exports
  • Strong domestic and global demand kept new business intakes rising for the 44th consecutive month.
• Pricing Pressure
  • Easing input costs notwithstanding, firms increased prices owing to increased labour and material costs (e.g., bamboo, leather, rubber, telecom).

Chief India Economist, HSBC

• According to an expert insight from Pranjul Bhandari, Chief India Economist, HSBC, At its current pace of slowdown, India's manufacturing is still rather strong, carrying optimistic business outlooks.
• Global demand is also sustaining such growth, encouraging businesses to increase purchasing activity and hire new employees.

Purchasing Managers' Index (PMI)

The Purchasing Managers' Index (PMI) is a leading economic indicator that controls business activity over the manufacturing and services spectrums. Monthly based surveys of companies on economic trends and market conditions provide a base for it.

Types of PMI

• Manufacturing PMI – It measures the performance of the manufacturing sector.
• Services PMI – It assesses the activities present in the services sector.
• Composite PMI – It is an index that aggregates manufacturing and services activities.

How is the Manufacturing PMI Derived?

PMI is calculated from the survey responses provided by manufacturing companies based on five key variables:

• New Orders (30%)
• Output (25%)
• Employment (20%)
• Suppliers' Delivery Times (15%)
• Stock of Items Purchased (10%)

PMI values are interpreted as follows:

• Above 50 is the expansion of business activity.
• Below 50 is the contraction of business activity.
• Closer to 50 is little change in business conditions.
• Growth or decline rates are determined by comparison of month over month PMI values.

Global PMI Measurement

The Purchasing Managers' Index (PMI) was first published in 1948 by the Institute for Supply Management (ISM), USA. The Singapore Institute of Purchasing and Materials Management (SIPMM) compiles PMI for Singapore. IHS Markit is known to be producing PMI for 30 countries, with India being one of them. The Manufacturing PMI in India dates back to survey responses from 500 manufacturing companies.

Why is PMI Important?

• Early Economic Indicator
  • The PMI itself is released even before other major economic indicators such as GDP or industrial output., making it exceedingly handy for forecasting economic trends.
• Helps Businesses Plan
  • Manufacturers and suppliers use PMI data to adjust production levels and anticipate demand.
• Investor confidence
  • The stock market investors use PMI to assess the economic health to make investment decisions confidently.

Even though some momentum waned within India's manufacturing sector, it is still in expansion mode, with booming job creation and resilient demand. Looking ahead, however, some inflationary pressures and uncertainties in the global context would dent this momentum in future growth.

Source: BS

3. India to Overtake Japan as the Fourth Largest Economy

Key Highlights:

• It is estimated that India's GDP would grow by 6.5% in FY25, marginally greater than the earlier projection of 6.4%.
• Revised one percentage point up for FY24 GDP growth as its economy began showing stronger performance.
• So, India now stands as having economy of ₹331 trillion ($4.2 trillion in FY25) and thus is getting closer to Japan's $4 trillion GDP (2024).
• Looking at Japan's steady and slow growth, it appears that India would soon overtake Japan's economy in 2025.

India’s GDP Growth vs. Other Major Economies

India’s figures are based on financial years (April-March).

India’s Economic Expansion in Dollar Terms

Revised estimates and exchange rate fluctuations have been accounted for in this projection.

Major Issues

• Middle income trap
  • Though growth is rapid, India is still trapped in the lower middle income category.
  • Rupee depreciation may get a real iGDP effect if it shows annual decline of about 2.25% against the dollar.
• Sustained growth is needed
  • Policy support, infrastructure investment, and strong domestic demand are the means needed to drive continuity.

With steady growth along with favorable conditions in the world, India is going to overtake Japan, which will become the fourth largest economy by 2025. Only the US, China, and Germany will then be ahead of it.

Source: BS

4. Recommendations by RBI for MSME Lending

Context

The Deputy Governor Swaminathan J mostly appealed for greater empathy from the banks toward MSEs who face financial deprivation. Digital solutions, alternative credit models, and wider acceptance of TReDS should be considered in order to improve MSME finances.
Delayed payments, information scarcity, and financial illiteracy were brought forward as the major issues.
The 29th meeting of the Standing Advisory Committee (SAC) took place in Ahmedabad concerning the review of MSME credit flow.

Recommendations by RBI for MSME Lending

• Empathy should lead the process
  • Instead of strict measures, banks should show compassion and embrace MSEs in distress.
• Digitally enable
  • Fintech solutions should be the order of the day for immediate credit access.
• A new horizon in credit appraisal
  • Move from traditional parameters to dynamic lending based on trustworthiness in terms of repayment.
• Continuous use of TReDS
  • TReDS be relied upon by banks for maintaining liquidity.

Hence, their take on ABI is that with MSMEs being the backbone of the Indian economy, the RBI advocacy for such innovative and inclusive banking solutions leads to financial stability and growth in that sector.

5. Single Nodal Agency (SNA) System

Context

The SNA system aims at not only improving the transparency of centrally sponsored schemes (CSS), but also improving their efficiency. The current system reserves funds in several accounts to ensure "Just in Time" release. So far, it has helped the Union government save ₹11,000 crores.

Why Use of Fund Must Be Made Efficient?

• Averts wasteful interest servicing, Avoids idle funds and associated fiscal deficits with market, borrowing costs.
• Changes Transparency
  • In terms of the most recent Budget statement, ₹1 trillion from CSS happened to remain in state accounts unspent.
• Facilitates cash float management
  • Thus, punctual fund availability will be ensured for projects such as Jal Jeevan Mission, Pradhan Mantri Awas Yojana, and Swachh Bharat Mission.

Issues & The Way Forward

• States possess unspent funds
  • to identify bottlenecks which inhibit spending.
• Contention for CSS rationalization
  • State demands greater spending flexibility and recommends that funds should flow freely from the Centre.
• Future reforms
  • Better balancing state authority and central supervision for better economic outcomes may be suggested by finance commissions.

The SNA system is bound to improve governance and fiscal governance through resource trade-off in the country.

Source: BS

6. MGNREGA Work Demand Remains High

Context

As of February 2025, MGNREGA has a total of 21.8 million households seeking work, which is a minor increase of 3% from February of the previous year. There has been a sustained demand growth for the work that is always higher than the previous year towards the end of November 2024.
Funding Shortfall: MGNREGA has a net negative balance amount of ₹18681.24 crore as of the 3rd of March, 2025.

Financial Scenario

• Pending dues in total: ₹14,239.17 crore.
• Unskilled wages: 929.14 crore (6.52% of total dues).
• All other pending dues relate primarily to material costs.
• States with highest negative balances:
  • Tamil Nadu: ₹3,443 crore
  • Uttar Pradesh: ₹2,817 crore
  • Maharashtra: ₹2,758 crore
  • Bihar: ₹2,082 crore

Work Demand Trend

• MGNREGA demand continues to stay high indicating both rural distress as well as dependency on employment.
• Even though demand remains high, funds are in shortage which raises concerns over timely payments for wage and material procurement.

More likely further fund allocation might be needed to cater demands on rise.
Delayed payments could have repercussions on rural livelihoods as well as project completion.
Sustained increase in demand may signal wider economy or employment issues in rural India.

Facts To Remember

1. Tiger Zeenat to be released into larger enclosure soon

Tiger Zeenat, which had strayed into Jharkhand and West Bengal in December before being tranquillised and brought back to Odisha’s Similipal Tiger Reserve (STR), is expected to be released into a larger enclosure as part of a phased acclimatisation process.

2. Govt launches 5 projects for hydrogenfuelled vehicles

The government has launched five pilot projects to deploy hydrogenbased vehicles for trial as part of the National Green Hydrogen Mission, the Ministry of New and Renewable Energy said. As many as 37 hydrogenfuelled vehicles, including buses and trucks, will be deployed for trial run under the pilot projects across the country.

3. Set up centralised digital verification for QCOs: GTRI

The government should set upa centralised digital verification system before issuing new quality control orders (QCOs) with an aim to prevent fraud and ensure the integrity of certification processes, think tank Global Trade Research Initiative (GTRI) said. QCO´s are issued to contain imports of lowquality products and protect consumers. GTRI claimed that India is facinga growing problem of substandard imports falsely claiming to have Bureau of Indian Standards certification.

4. Uttarakhand approves ‘Mukhyamantri Ekal Mahila Swarozgar Yojana’

The Uttarakhand government has approved the “Mukhyamantri Ekal Mahila Swarozgar Yojana,” aimed at empowering unmarried, divorced, abandoned, destitute, and differently-abled single women by providing them with financial assistance of up to 2 lakh rupees.

5. Govt working with vision of self-reliant India, MSMEs play transformative role in growth: PM Modi

Prime Minister Narendra Modi today said that the government is working with the vision of a self-reliant India and has accelerated the pace of reforms.

6. India’s R&D spending doubled in last decade: Union Minister Jitendra Singh

Union Minister Dr. Jitendra Singh has said that the country’s Research and Development spending has doubled in the last decade, from more than sixty thousand crore in 2013-14 to 1.27 Lakh Crore rupees.

7. Over 1.4 million women associated with Panchayati Raj Institutions: Union Minister Rajiv Ranjan Singh

Union Minister of Panchayati Raj Rajiv Ranjan Singh, alias Lalan Singh, has highlighted that nearly 1.4 million women across the country are associated with Panchayati Raj Institutions today.

8. Health Minister JP Nadda chairs 9th Mission Steering Group Meeting of NHM

Union Minister for Health and Family Welfare, Jagat Prakash Nadda, today chaired the 9th meeting of the Mission Steering Group of the National Health Mission (NHM) at Bharat Mandapam in New Delhi.

9. Bombay HC stays FIR order against ex-SEBI chief, 5 others

The Bombay High Court today granted a stay on the order of a special PMLA court directing the Maharashtra Anti-Corruption Bureau (ACB) to file an FIR against former Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch and other SEBI and Bombay Stock Exchange (BSE) officials in connection with a listing fraud case.

International Affairs

1. U.S.-Taiwan Relations

Credit: BBC

Context

This updated edition of the U.S. State Department factsheet on Taiwan has raised discussions on the developments in U.S. Taiwan relations, particularly with regard to the updated factsheet which omitted the former declaration that the U.S. does not support Taiwan's independence. Instead, added new affirmation of support for Taiwan's membership in international organizations, which has been met with strong protest from China and regarded as a policy regression on the part of the United States.

Key Aspects of U.S. Taiwan Relations

Taiwan Relations Act (TRA), 1979

• The bedrock of U.S. Taiwan relations.
• Promotion of robust commercial, cultural, and defence ties.
• Mandates the U.S. provision of defensive arms to Taiwan.
• Induces constant arms sales from the U.S. to Taiwan, angering China.

Donald Trump’s Attitude Toward Taiwan

• Instability in U.S. China Relations
  • Trump's tariff and trade policies are often held responsible for increased strain in U.S. China relations while having a bearing on Taiwan.
• Concerns Over Taiwan's Semiconductor Industry
  • He has explained that Taiwan has robbed the U.S. chip industry.
• Demand for Elevated Defense Spending
  • He demands Taiwan to contribute more to guarding itself and obliges it to inflate the defense budget (currently slightly above 2.5% of GDP).
• Weapon Deals Through and Political Support
  • Approved arms sales worth USD 10 billion in his final stint.
  • Enacted Taiwan legislative acts including the Taipei Act and the Taiwan Assurance Act.
• Ambiguous Commitment Toward Taiwanese Security
  • Suggested that he would be too far away to help if China invaded Taiwan.

Taiwan's Vulnerability

• Increasing aggressiveness coming from China
  • Frequent military maneuvers across the Taiwan Strait.
  • Spy balloons and cyber attacks against Taiwan.
• Diplomatic isolation:
  • Taiwan has lost a few of the countries that had been its diplomatic allies under the Democratic Progressive Party (DPP) government.
  • At present, Taiwan is recognized officially by only 12 countries.
• Impact upon Taiwan by the U.S. China Conflict
  • For China, Taiwan is a major part of their national reunification and President Xi Jinping's dream.
• For the U.S.: Taiwan is important because of
  • Its semiconductor industry (Taiwan Semiconductor Manufacturing Company, TSMC, is a world leader).

New U.S. policy on Taiwan heightens tension with China. Trump has issued mixed signals on Taiwan's ability to defend itself, sowing doubt in Taipei about U.S. government intentions. Pressure on Taiwan is increasingly military and diplomatic by China.

2. Strengthening India-U.K. Relations

Context

External Affairs Minister S. Jaishankar is commencing his visit to the United Kingdom (U.K.) in pursuit of bilateral ties. Meetings at London have been engaged in trade, security and diplomatic engagement, where issues such as India-U.K. Free Trade Agreement (FTA), talent mobility, security cooperation, and technology partnerships have been discussed.

Discussions for India U.K. Free Trade Agreement (FTA)

• Meeting with the Trade and Business Secretary Jonathan Reynolds: Progress made in the India U.K. FTA, a long awaited trade deal facilitating improved economic cooperation.
• The FTA has been high priority for both countries where market access, tariff, and investment issues were discussed.

Discussions of Security and Mobility with U.K. Home Secretary: Yvette Cooper

Topics include

• Flow of talent and people to people exchanges.
• Counter trafficking and tackling extremism.
• Enhancing collaboration in these areas has a considerable impact on India and U.K. relations, especially under the concerns of illegal migration and security threats.

Expansion of India’s Diplomatic Presence

• New Indian consulates will be opened in Belfast on March 7 and Manchester on March 8. It is expected to:
  • Foster trade and investment ties.
  • Improve support to the Indian diaspora in the U.K..
  • U.K. Foreign Secretary David Lammy, therefore, bartered that this would enhance economics and community relations.

High Level Talks at Chevening House

• Jaishankar and Lammy to deliberate on information technology security initiative birthed during David Lammy's visit to Delhi in July 2024.
• Areas of collaboration include
  • Critical minerals (Important for technology and renewable energy industries).
  • Artificial Intelligence (AI) and telecommunications.
  • Resilient supply chains and affordable healthcare.

India U.K. relations are being expanded across the board, in trade, technology, security, and diplomatic outreach. Negotiation of the India U.K. FTA continues to be a major emphasis, as both sides are keen to have a closure to it.

3. India-Belgium Relations

Context

A high profile economic delegation from Belgium comprised Princess Astrid and Deputy Prime Minister Maxime Prévot, visiting New Delhi to amplify Belgium India ties. Discussion points were strategic autonomy in defense, economic cooperation, and the resultant geopolitical shifts caused by the U.S. policy change on Ukraine.

Major Points from the visit

Belgium's Call for Strategic Autonomous Defense

• European concerns over shifted U.S. policy on Ukraine gave rise to a demand for an independent defense strategy for Europe.
• Belgium plans to build its defense sector by virtue of Indian collaboration.
• India and Belgium are to sign an MoU on defense cooperation between them by the end of 2025.

Top Level India Belgium Meetings

• Princess Astrid met Prime Minister Narendra Modi and discussed matters boosting bilateral cooperation.
• Deputy PM Prévot & Defense Minister Theo Francken illustrated the support of Belgium for Ukraine and furthered the India Belgium defense ties.
• Belgium will post a Defense Attaché in India for further working together in defense.

Indian Diplomacy on Russia Ukraine Issue

• MoFA consultations for Foreign Secretary Vikram Misri to Moscow.
• Preparations for the Modi Putin bilateral talks are made as Putin may visit India in 2025.
• Modi was also invited to the Victory Day celebrations of Russia on May 9.

Economic and Technological Cooperation

• Belgium's business delegation of 300 members has come to expand economic cooperation.
• 24 MoUs signed across core sectors, which include:
• Defense technology – Belgium will assist "Make in India" initiative by India.
• Food processing, health, engineering, and education.
• Belgium intends narrower economic ties with India as Europe will become used to a shift in global geopolitics.

India Belgium Joint Venture in Defense

Belgium has partnered with Pune based Electro Pneumatics and Hydraulics (EPH) Pvt. Ltd. to create a Joint Venture (JV) in India. The JV is targeted primarily at India's light tank program particularly the Zorawar light tank, developed by DRDO and Larsen & Toubro (L&T).

This JV promotes the employment of major stats in India Belgium defense, coinciding with their most recent global defense cooperation memorandum of understanding which is to be signed by the end of 2025.

Key Features of the Joint Venture

Targeting Zorawar Light Tank for Indian Army

• The Zorawar light tank was developed as a counter against China's military threats in eastern Ladakh.
• Zorawar's undergoing advanced trials, where the turrets from JCD & EPH will be used.
• Projected demand: may ultimately come to 700 light tanks for India.

Beyond the Light Tank: Larger Defense Programs

• Such cooperation will go beyond Zorawar, extending to India's many defense programs.
• JCD is counting on India's skills in AI and electronics to produce the next generation turret systems.
• Some collaboration opportunities include
  • Technologies related to advanced combat vehicles.
  • Turret modernization for armored forces.
  • AI driven battlefield systems.

Electro Pneumatics & Hydraulics

• 25 years experience in the defense sector, especially simulators and missile launchers.
• Generate revenues of ₹300 crores, having its manufacturing facility at Chakan based in Pune.
• About 35-40% of total revenue comes from the defense sector.

Strategic Importance of the Partnership

• It directly strengthens the Make in India initiative and PATs simply foreign dependence.
• Most certainly strengthens the Indo-Belgian defense ties in light of the fact that it precedes the signing of the MoU on defense cooperation (2025).
• Also makes India's military preparedness stronger against that backdrop of border tensions.
• It certainly positions India as a global defense manufacturing hub with AI and electronics innovations in the arsenal.

Growing Belgium India relations will mainly focus on defense, trade, and strategic autonomy. Belgium needs a more independent defense in Europe while there's still a fair degree of uncertainty regarding American commitments towards Ukraine. India continues to engage diplomatically with both Russia and Europe for a balanced foreign policy. Defense cooperation and economic investments show the deepening India Belgium partnership.

4. Tariffs on Canada, Mexico, and China by Trump

Context

President Trump of the United States has imposed sweeping tariffs on Canada, Mexico, and China, raising barriers against possible trade wars and threats of worldwide economic instability. Besides, the newly introduced tariffs will come into effect on Tuesday, i.e.

• a tariff of 25% on imports from Canada and Mexico
• a 10% tariff on energy products imported from Canada
• and an increase of another 10% on tariffs with respect to goods from China

These steps have incurred hurt feelings among respective nations, which put inflation as a cause for concern, volatility in markets, and tensions in international diplomacy on the front burner.

Key Tariff Measures & Global Responses

• U.S. Tariffs & Immediate Economic Consequences
  • Canada & Mexico: 25% tariffs on imports, including Canadian energy products (10%).
  • China: Previous 10% tariff on imports doubled to 20%.
• Economic Consequences for the U.S.
  • U.S. consumers facing escalated prices due to increased import costs.
  • Disturbance in the market as globally investors remain anxious.
  • A possible surge in inflation could jeopardize domestic economic stability.

Retaliatory Actions by Trade Partners

• Canada's Response
  • Within 21 days, $100 billion in tariffs on American goods.
  • Trudeau's statement: Trump wants to diminish Canada's economy, so it becomes easier for the U.S. to annex it.
  • Likely to affect U.S. exports in agriculture, manufacturing, and technology sectors.
• China's Response
  • Tariffs of 5% to 15% on an array of U.S. farm exports.
  • Further export controls and other trade restrictions on over two dozen U.S. companies.
  • Chain reaction in retaliation could affect U.S. agriculture and technology industries.
• Mexico's Response
  • President Claudia Sheinbaum announced tariffs in retaliation on goods imported from the United States.
  • Complete list of goods targeted yet to be announced.
  • A longer delay would suggest Mexico seeks to negotiate a solution instead of escalating tension.

Wider Implications

• Risk of Full Paying Trade War
  • Higher costs for consumers across the globe.
  • Possible disruption of supply chains into significant industries.
  • Higher tensions in North America affecting USMCA trade relations.
• Political and Diplomatic Ramifications
  • Canada U.S. relations with a lot of strain, accentuated by Trudeau's charge of annexation.
  • Erosion of China U.S. relations as Beijing doubles down on its own economic countermeasures.
  • Anything goes for Mexico U.S. trade relations, hanging on the balance of Sheinbaum's tariff plans.
• Domestic U.S. Economic Threats
  • Higher inflation and cost of living.
  • Economic uncertainty may pose a threat to the 2026 elections.
  • Possible loss of access to markets for U.S. exporters.

Almost certainly, Trump-initiated tariff measures on Canada, Mexico, and China will raise tensions and disrupt world trade. In the U.S., the immediate economic fallout means higher prices for consumers, inflation risk, and volatility in the market. Retaliatory tariffs from the nations involved will likely follow, aggravating diplomatic relations.

5. The Blue Ghost

Context

U.S. private firm Firefly Aerospace succeeded in the landing of its uncrewed Blue Ghost spacecraft on the Mare Crisium area of the moon. The compact car sized lunar lander is carrying ten scientific payloads for a two week research mission and is a significant achievement in the commercial space race.

The Important Aspects of the Mission

• Size of Lander: Compact car.
• The site of landing: Mare Crisium an ancient volcanic basin on the northeastern Earth facing side of the moon.
• Scientific Goals
  • To conduct lunar surface investigation for NASA and commercial clients.
  • To test new technologies for future moon missions.
  • To investigate volcanism and lunar surface composition.

NASA's Strategic Vision and Space Dominance

• According to NASA's acting administrator, Janet Petro, the U.S. plans to dominate space to maintain its global leadership.
• The mission serves the goals of NASA's Artemis program, which aims to build sustainable lunar exploration.
• The U.S. is in a race against China, Russia, and private enterprises to take the lead in lunar exploration and deep space exploration.

The Role of Private Space Companies

• Firefly joins the ranks of other private companies in moon commercialization.
• The mission is being managed through NASA's Commercial Lunar Payload Services (CLPS) program to foster public private partnerships in space.

Broader Implications

• The New Moon Race
  • U.S. vs. China: China has ambitious plans for a lunar base by 2030.
• Rise of Private Companies
  • Private firms are now playing a leading role in space exploration.
• Scientific and Economic Potential
  • The moon holds resources (helium 3, water ice) that could serve as potential for future space industries.
• National Security and Geopolitical Implications
  • According to the U.S., any lunar domination will be critical to sustaining space supremacy.
  • Possible military and economic rivalry over lunar resources.
  • The heightened militarization of space can lead to new international regulatory ripples.

With its successful moon landing, Firefly Aerospace has become a historic milestone in the private sector of space. A lunar dominance is U.S. policy now, while the commercial space race has grown even hotter with China and others racing to establish a long term presence on the moon.

6. US Strategic Cryptocurrency Reserve

Context

The announcement from US President Donald Trump on forming a strategic cryptocurrency reserve has already caused a sharp increase in the crypto market and put serious concerns among economists. The reserve will comprise Bitcoin, Ethereum, Ripple, Solana (SOL), and Cardano (ADA).

Major features of the strategy for the strategic crypto reserve

Purpose & Structure

• The reserve is modeled around the US Strategic Petroleum Reserve, intended to stabilize markets during disruptions.
• Unlike products like oil, which have a supply demand basis for these actions, cryptocurrency cannot be said to have that same basis.
• The move could signal official recognition of cryptocurrencies as a legitimate financial asset.

Expected Effects on Markets

• The estimated seized cryptocurrencies in the USA sum up to about $17 billion, while China boasts an approximate $19 billion.
• An actual reserve might act as a precursor to more central banks and sovereign wealth funds adding crypto assets to their portfolios, sustaining price increases over a long term.
• US interference in cryptocurrency markets will bring heightened price "volatility" sensitive enough in nature to contribute to sky high gains.

Concerns & Controversies

Undermining the US Dollar

• The USA issues the world reserve currency (USD) and can invoke printing money as a means for global transaction settlement.
• Such a development might weaken confidence in the dollar and raise questions concerning the US government faith in its own currency as it creates a crypto reserve.

Market Manipulation Potential

• In case the President controls the reserve instead of being administered under the Federal Reserve, it may allow Trump intense leverage over crypto markets.
• A huge buy or sell operation from the US government would probably cause huge price fluctuations favoring those who are privy to inside information.
• Trump and his close allies, including Elon Musk, are known to have personal crypto interests, raising conflict of interest concerns.

Centralization Risks

• In contrast to Bitcoin and Ethereum, which are still considered decentralized, companies like Ripple, Solana, and Cardano are run by private entities.
• This could be politically complicated and regulatory if certain government linked entities own substantial amounts of money.

The US strategic cryptocurrency reserve may, in consequence, herald a new global financial landscape by accelerating the mainstream acceptance of the economic phenomenon. However, it also raises serious issues regarding potential financial instability, conflict of interest, and the role of the US dollar.

National Affairs

1. Offshore Mining

Context

The Kerala Assembly has unanimously passed a resolution against the country's decision regarding offshore mining along the coastline of the State. Chief Minister Pinarayi Vijayan moved it, with much apprehension on the consequences regarding the environmental, economic, and security implications.

What is Offshore Mining?

Offshore mining is the process of extracting minerals and precious stones from the seabed. It can involve pumping the material to the shore and leaving tailings on the beach.

Critical Concerns Raised

• Environmental Damage to Marine Ecosystems
  • Destruction of the fragile marine ecosystem would be a consequence of deep sea mining.
  • Impacts Kerala's electrifying fisheries sector as it threatens fish resources and biodiversity.
• Economic Effects on Fishing Community
  • Fishing is an important livelihood for thousands of people in Kerala.
  • Decrease in fish stock would harm employment and income due to offshore mining activities.
• Threat to National Security
  • The amended Offshore Areas Mineral (Development and Regulation) Act, 2002 allows private people to access strategic deep sea minerals.
  • The aspect of security risk is raised from the government of the State due to the control of important resources.
• Worries over Central Government Policy
  • Under the 2023 amendment of the Act, the Union Ministry of Mines can auction deep sea mineral blocks.
  • Kerala clearly states that this sort of measure is taken without proper consultation and disregard to the interests of the State.

Expert Warnings and Way Forward

• Marine experts and environmentalists keep revealing the long term ecological impacts they are predicting.
• The State government demands for the reconsideration of the move and advocates for sustainable marine resource management.
• More inclusivity from Kerala places the demands of local livelihoods and environmental concerns before putting such policies into action.

By standing firm and united against offshore mining, Kerala would make strides towards protecting her coastal line, the economy, and marine biodiversity from potentially irreversible damages.

Source: TH

2. Issues Related To Income Tax Bill, 2025

Context

The Income Tax Bill, 2025, introduced in Parliament, seeks to repeal the Income Tax Act, 1961, ostensibly to put in simple tax laws for easier compliance and administration. But, while the Bill brings some structural changes, it does not tackle issues that are more complex, in fact, in some areas, it further empowers the government by expanding the contours of its power.

Key Issues with the Bill

Lack of True Simplification

• The Bill uses dense arcane language making comprehension by taxpayers hard.
• Changing a legal term from "notwithstanding" to "irrespective" does not make much of a clearer statement.
• Global standards favor plain language in legal drafting, and this Bill does not follow that practice.

Cosmetic Changes Without Policy Reform

• The basic philosophy of taxation remains unchanged, giving the impression of a revamped version of the 1961 Act.
• Some redundancies have been cleared, but to have amended these through amendments instead of a completely fresh law detracts from the spirit of this new law.
• Cross referencing of older legislation (for example, designing "income" by reference to the 1961 Act) negates any reason for a new statute.

Risk of Increasing Litigation

• The 1961 Act has seen several court decisions interpreting different provisions, thereby providing clarity to taxpayers.
• Such changes to the Bill could reopen a lot of the settled legal debates now causing lengthy litigation and uncertainty.

Reassessment Powers Very Wide

• Income tax authority would previously reopen completed assessments on the grounds that "reason to believe" that some income has escaped the tax net.
• In 2021, this was diluted to reopen on the grounds of "information", a vague term.
• The Bill doesn’t repair this ambiguity, allowing much room for the discretion of tax officials.

Unprecedented Digital Intrusion

• The search and seizure laws are immensely broadened under this Bill.
• Officials shall inspect electronic devices, cloud storage, e mails and social networking accounts, and other digital platforms.
• If the taxpayer denies access, authorities are allowed to override access codes and enter the system.
• The law of the land does not provide judicial oversight, and tax authorities can keep the reasons for the search private.

What the Bill has Achieved?

• Elimination of some obsolete provisions.
• Collation of compliance timelines into tables/schedules.

What the Bill has Failed to Achieve?

• Truly simple tax laws accessible to all.
• Addressing issues concerning excessive governmental power.
• Create legal certainty using unintended unnecessary changes.

Rather than repealing and reenacting the tax law, a more prudent approach would be to refine the existing Act by eliminating complexities and reducing discretionary powers. If passed in its current form, the Bill risks increasing litigation, reducing transparency, and expanding state surveillance in unprecedented ways.

Source: TH

3. Delimitation Debate in India

Context

After a considerable hiatus, delimitation has returned to the fore when the Tamil Nadu Chief Minister voiced his concern over changes in Lok Sabha and State Legislative Assembly constituencies. The delimitation exercise would next be conducted after the first Census post 2026. Meanwhile, arguments have flared across party lines on the impacts of the 2021 Census delay on federalism and political representation.

Constitutional Provisions Regarding Delimitation

• Definition
  • Delimitation process is the fixing of number and boundaries of constituencies for the Lok Sabha and the State Assemblies.
• Authority
  • The Delimitation Commission constituted under an Act of Parliament carries out this process.
• Historical Background
  • The delimitation exercises were held on the basis of the 1951, 1961, and 1971 Census.
• Present Scenario
  • The number of Lok Sabha seats was stopped at 543, as per the outcome of the 1971 Census, when the population of India was counted at 54.8 crore. This freeze aimed for population control enhancement, revised after the completion of the first Census after 2026.

Delimitation Issues

• Population growth uneven
  • Higher population growth has recorded for the Northern States (like UP, Bihar, MP, Rajasthan).
  • On the contrary, Southern and small northern States (like Kerala, Tamil Nadu, Punjab, Himachal Pradesh, Uttarakhand, Northeast) grew slowly due to the effective population control measures.
  • Newly apportioned seats based on Census will soon deny representation from southern and smaller States.
• Two Possible Scenarios Indicated for Delimitation
  • Scenario 1: Retain the number of seats at 543 and redistribute these among states based on latest population figures.
  • Scenario 2: Bring in an increment of Lok Sabha seats to 848, proportionately increasing all states.
• Federal Imbalance Possibilities
  • If a population based criterion exists, then larger northern states will gain political weight through more seats while the southern and smaller northern states become politically weaker.
  • The above could transform the representation of southern states from 24% into near 19%, creating a reduced voice in national policymaking.
  • This could undermine the federal structure, therefore causing discontentment among states with a successful population management.

Possible Solutions and Way Forward

• 543 Cap for Lok Sabha Seats
  • Similar to the U.S. House of Representatives, which has capped its seats at 435 since 1913, despite population growth.
  • It has had 543 MPs in India over the last five decades, whereas the population spoke from 55 crores to 145 crores.
  • India, which expects its population to peak at 165-170 crore and will subsequently decline, should retain this number.

Increase Number of State Assembly Seats

• While seats in Lok Sabha stay the same, the number of MLAs in each State can be increased according to demographics for better local representation.
• Representation through an alternative model
  • Weighted voting system: MPs could have different voting weights based upon the population so that the bigger States may not have lesser representation.
  • Additional Rajya Sabha representation: Smaller States could, through increased representation in the Rajya Sabha, be compensated for their disability.

Source: TH

Banking and Finance

1. Multi-Asset Allocation Fund (MAAF)

Context

In the recent equity market corrections, the flexible asset allocation plans found their fullest expression in the higher differentiated, debt oriented MAAF returns thus demonstrating their very much needed relevance today.

Multi-Asset Allocation Fund

A “Multi Asset Allocation Fund” is a mutual fund that invests in a mix of different asset classes like equity, debt, gold, real estate, and commodities, with the objective of diversifying an investor’s portfolio and reducing overall risk by spreading investments across various markets that may react differently to economic changes; essentially, it allows investors to gain exposure to multiple asset types through a single fund, managed by a professional fund manager who adjusts allocations based on market conditions.

Key Points

• Diversification
  • Multi asset funds come with a huge advantage of risk diversification. By spreading investments across several classes of assets the fund has to build stability more so during market fluctuations. This diversified exposure may help in minimizing the potential impact of poor performance of one class of assets.
• Hybrid Nature
  • Multiasset funds are usually categorized under hybrid funds. They vary between different kinds of assets by blending equities, bonds, commodities, and much more into a single portfolio, which makes them more versatile with changing market conditions.
• Allocation Flexibility
  • Such funds have flexibility in asset allocation. The proportion between various asset classes could be changed with respect to specific fund and the needs of investor. This is what allows an investor to select a mix based on his personal tolerance for risk as well as personal objectives while investing.

Few Examples of the Asset Classes Incorporated

• Equity Stocks
  • Exposure of the performance by companies and overall market growth.
• Bonds
  • Generates income in the form of interest payments with lower volatility.
• Gold
  • An inflation hedge and store of value REITs Investments in real estate, properties and associated assets.
• Commodities.
  • Those include physical assets like oil and gas and agricultural products.

Investment Strategy and Taxation Considerations

• Risk Appetite Matching MAAF Selection
  • Investors with higher risk tolerance might prefer an equity oriented scheme with a longer investment horizon.
  • Those who are conservative and are looking for a shorter time frame would have gone for debt heavy MAAFs.
• The Taxation Impact on Asset Allocation
  • Equity taxation: Requires minimum 65% allocation to equities.
  • Hybrid taxation: Requires at least 35% equity exposure.

Factors Driving Recent MAAF Performance

• Higher exposure to gold, silver, and debt instruments boosted returns.
• Investments in REITs, InvITs, and arbitrage strategies provided additional diversification.
• Foreign equities allocation (DSP Mutual Fund) helped mitigate downside risks.

The rise of flexible, debt oriented MAAFs suggests that adaptive asset allocation is gaining ground. In the course of the larger growth of multi asset funds, investors should think of matching their own selection of MAAFs based on risk appetite, taxation stipulations, and investment objectives and not get stuck with immediate past performance.

Source: BS

2. SEBI Consultation Paper Regarding Market Regulations

Context

There was a sharp decline of almost 20% in BSE Ltd's stock price following the issuance of SEBI's consultation paper regarding market regulations. Initially, fears rose regarding a possible plunge in trading volumes, but analysts believe that some of the SEBI proposals might be less damaging than anticipated.

The paper is comprised of two parts.

Part-A Index Derivative Changes (Mainly Affected by the Market)

• Change from Notional Value to Delta Based Open Interest Calculation
  • Open interest (OI) calculation will shift from the current notional value calculation mode to one based on delta based future equivalent approach.
  • SEBI has proposed a limit of ₹500 crore net future equivalent for each entity.

Reality Check

• SEBI states that 89% of index derivative positions in November were within the proposed limit, meaning only 11% exceeded it.
• The intention behind the ruling is to prevent systemic risks should OI exceed ₹10,000 crore, which is a rare occurrence.
• This points towards the fact that perhaps trading volumes will not be impacted as much as originally feared.

Part-B Non Benchmark Indices Rules (Nifty Bank, BSE Bankex, etc.)

• New eligibility criteria for non benchmark indices derivatives (excluding Nifty 50 & Sensex)
  • Minimum 14 constituents (vs. Nifty Bank's current 12)
  • Top stock weight capped at 20% (vs. HDFC Bank's present 33% in Nifty Bank)
  • Combined weight for the top 3 stocks capped at 45%

Reality Check

• It is quite simple for exchanges (NSE, BSE) to modify index composition to fulfil the newly imposed requirements. Hence derivatives based on those indices are highly unlikely to be discontinued.
• The measure really puts bounds on stock price manipulations by large players, thereby improving market integrity.

Effect on Single Stock Derivatives

• SEBI states that the revised position limits would apply for single stock derivatives
  • 15% of free float market cap (down from 20%).
  • 60x average daily delivery value (up from 30x).
• Reality Check
  • The net impact is uncertain, but it probably impacts a few low liquidity F&O stocks.

Market concerns are exaggerated; actual trading volume impact could be limited. SEBI's new rules tackle systemic risk & manipulation risk in the market rather than restricting trading activity.

Source: Mint

3. Mitraa Platform

Context

There are millions of investors in India who have lost touch with old mutual fund (MF) investments owing to dead accounts. One solution paving the way to this issue is Mitraa (Mutual Fund Investment Tracing and Retrieval Assistant), a platform launched by the Securities and Exchange Board of India (SEBI) to assist investors in tracking and recovering dormant MF folios.

What is Mitraa?

• A centralized online platform assisting investors in locating and recovering lost mutual fund investments.
• Developed in collaboration with KFin Technologies and CAMS, India's largest qualified registrar and transfer agents (QRTAs).

Why Was Mitraa Developed?

• Pre 2006 MF Accounts Lacked PAN Requirement
  • Prior to PAN becoming a mandatory requirement in 2006, a number of mutual fund investors opened accounts unlinked to PAN.
  • Consequently, such accounts practically became dormant, leaving them difficult to trace.

Definition of Inactive Folios

• Under this definition, SEBI termed an inactive folio wherein the investor has not initiated any transactions (financial or otherwise) for 10 years but still holds units.
• There are an estimated over 7.5 million inactive folios throughout the industry.

How Does Mitraa Work?

• Investors can search for old mutual fund folios using any of several identifiers rather than restricting themselves to PAN only.
• Search Parameters
  • Primary Identifiers: PAN, registered phone number, email, or bank account number.
  • Additional Identifiers: Name, address, PIN code, city or nominee details.
  • Investors can visit MFcentral.com to access Mitraa.

Challenges & Reactions from the Industry

• Verification Problems
  • Investors may find it a challenge to prove ownership if they opened accounts prior to PAN being compulsory.
  • Having SEBI's policy of fixing inaccuracies with multiple unique identifiers such as being able to punch in different PIN codes actually works in favor of those trying to work this out.

Source: Mint

Economy

1. FTAs and Customs Duty Impact in India

Context

India's ongoing negotiations for trade deals with developed economies like the U.S., EU, and UK could further pressure customs duty collections that are expected to grow only 2.1% to ₹2.4 trillion in FY26.

Growing Revenue Loss Due to FTAs

• Customs duty foregone in FY25: ₹94,172 crore.
• Major revenue losses by region
  • ASEAN: ₹37,875 crore
  • Japan: ₹12,038 crore
  • South Korea: ₹10,335 crore
• FTAs with Australia (₹5,234 crore) and UAE (₹4,841 crore) also impacted revenue considerably.

New Trade Agreements on the Rise for India

• India U.S. Trade Deal
  • Negotiations for "mutually beneficial" bilateral trade agreement (BTA) to commence within 7 8 months.
• India EU-FTA
  • The deadline is set for December 2025.
• India UK FTA
  • No fixed deadline; Commerce Minister Piyush Goyal emphasized speed but not haste.

Challenges and Considerations

• Impact on Customs Revenue
  • India’s high tariffs require substantial reductions in FTAs, which would lead to greater customs revenue loss.
  • Currently, only 25% of India’s imports come under FTAs.
  • After FTAs with U.S., UK, and EU, this is expected to be 60-65%, further increasing revenue forgone.

India’s expanding free trade agreements with larger economies will continue to erode customs revenue. While this will help the growth of trade and industry, the policymakers need to find a balance between trade liberalization and the domestic industry protection.

2. India Financial System Stability Assessment: IMF

Context

The International Monetary Fund (IMF), in its report titled "India Financial System Stability Assessment," expresses concerns about the risks of Non Banking Financial Companies (NBFCs) for the financial system of India. The report identified:

• The overexposure of NBFCs to power and infrastructure sectors
• Interconnectedness of NBFCs with other financial markets
• Possible banking risks in case of stagflation

Key Findings

NBFC Risks Due to Power Sector Exposure

• 63% of power sector loans in FY24 came from just three large infrastructure financing NBFCs, rising from 55% in FY20.
• 56% of NBFC lending was financed through market instruments, the remainder by bank borrowings (which have increased since FY19).
• State owned NBFCs (e.g. IREDA) are in even greater risk.

Interconnectedness with Banks & Market Instruments

• With massive reliance on market instruments and bank borrowings, NBFCs become vulnerable to liquidity shocks.
• Any stress on the NBFCs may cause spillover to the entire financial system, affecting banks and investors.

Stagflation Stress Test on Banks

• IMF simulated a stagflation scenario (low growth + high inflation).
• Public sector banks (PSBs) may struggle to maintain the minimum requirement of the 9% Capital Adequacy Ratio (CAR).
• IMF suggests PSBs strengthen capital reserves by retaining earnings instead of paying dividends to the government.

Conclusion & Recommendations

• For NBFCs: Reduce overdependence on power & infrastructure sectors and enhance risk management.
• For Banks: Strengthen capital buffers in order to withstand shocks in case of economic downturns.
• For Policymakers: Ensure financial stability within the purview of NBFC bank linkages and preparations for potential external risks.

Source: TH

3. RBI Likely to Cut Repo Rate Again!

Context

Economists project a cut in the repo rate by 25 basis points (bps) in April in support of economic growth.
The February meeting of the MPC saw the policy repo rate cut by 25 bps to 6.25%, this was the first cut after nearly five years.

Key Highlights:

Liquidity is tight, with the banking system remaining in a ₹1.09 trillion deficit for 11 weeks consecutively. Concerns abound that cuts in rates may actually not mean cuts in lending rates due to liquidity.
GDP growth is expected to slow down to around 6% in FY25, following a revision of 9% in FY24.

Economic & Monetary Policy Outlook

• Reasons for Rate Cut Expectations in April
  • The inflation trends are getting softer, especially in respect of food prices.
  • Economic growth is slowing, requiring policy stimulus.
  • The macroeconomic measures are put in place to assist recoveries.
  • The MPC's dovish bias frankly gives space for further easing.
• Leading economists and institutions will have the following views
  • DBS Bank: Expects a 25 bps cut in April and possibly thereafter shift towards an accommodative stance.
  • UBS: Forecasts a 50 bps reduction of the repo rate in this cycle and some measures aimed at interbank liquidity.
  • HDFC Bank: The rationale for further rate cuts is supported by moderate Q3 GDP growth.

Challenges

• As of Monday, the deficit in banking system liquidity stood at ₹1.09 trillion for the last 11 continuous weeks.
• Poor transmission of rate cuts means lending rates that do not link to an external benchmark may not go down.
• Some economists argue that more liquidity problems take precedence over rate cuts

In April, a cut is anticipated but liquidity will likely hinder the cut's effectiveness. RBI may be required to inject liquidity into the system to facilitate financial conditions. Except for tepid credit growth, continued liquidity tightening may be another constraint.

4. Trump's Reciprocal Tariff Threat

Context

President Donald Trump's threat to impose reciprocal tariffs on India does evoke certain economic concerns. Beyond that, such a threat seems to provide an opportunity for India to revisit its protectionist trade policies and adopt a more liberal approach toward enhancing manufacturing and exports.

Challenges in the Indian Trade Regime Today

High Tariffs & Protectionism

• India has one of the highest tariff structures in the world.
• Manufacturing tariffs: 13.4% greatly over 3x higher in comparison to the US (3.6%) and EU (3.8%).
• Agricultural tariffs: 40%, far exceeding that of the US (7.1%) and EU (9.4%).
• Many goods are subject to tariffs greater than 50%, restricting the Indian trade policy.

Unpredictable Trade Policies

• India would hardly ever raise applied tariffs less than WTO bound rates.
• The passing of dated Quality Control Orders (QCOs) on various items, polyester and viscose included, creates non tariff barriers that add uncertainty to the business climate.

Complexity & Administrative Drudgery

• 65 different ad valorem tariff rates and 145 unique specific tariffs as per 2024.
• These issues are compounded by an array of cess and duties.
• Recent cases like Volkswagen’s $1.4 billion penalty for classification issues highlight complexity costs.

Possible US Retaliations and Consequences

• To retaliate, Trump has imposed 100% tariffs on Indian export, which can effectively cripple these industries like textile, engineering goods, and auto components.
• This might result in eroding investor confidence, thereby damaging India’s global trade reputation.
• This might put India’s China+1 opportunity in jeopardy: Global firms will be discouraged from diversifying their supply chains into India.

Two Possible Options for India

An Approach of Bargaining Using Transactions (Risky)

• Proceed with bilateral negotiations to reduce some tariffs and give concessions to the USA.
• This, on the other hand, could trigger a sustained period of uncertainty, postponing investment decisions.
• Increased risk of post agreement monitoring by the USA, which will burden the businesses with compliance.

Structural Trade Reforms (Recommended Course)

• Tariffs should be unilaterally rationalized to uplift competitiveness and manufacturing exports.
• Key Reforms Required
  • Introduce a uniform tariff in the range of 5 10%% to simplify the structure.
  • Remove QCOs and non tariff barriers restricting imports.
  • Make low cost inputs accessible, enhancing competitiveness for Indian exports.

Agriculture

1. India’s Agricultural Exports Amid U.S. China Trade War

Context

There may be only a few advantages to India’s agricultural exports in the ongoing trade war between the U.S. and China, with cotton as the biggest gainer. On the other hand, domestic farmers will be threatened if U.S. agricultural products flood the Indian market.

Key Developments

China’s Retaliatory Tariffs on U.S. Agricultural Imports

• As of March 10, China imposed duties on imports from the U.S., including:
  • Chicken, wheat, corn, cotton, sorghum, meat, soybeans, and dairy products.
  • The new tariffs followed the announcement of increased U.S. import duties on Chinese goods to 20%.

Gains to India

• Cotton is the only major Indian export that is likely to benefit.
• Soybes and wheat will lose out due to limited surpluses and export restrictions.
• Exports of agricultural products from India for FY24:
• China: $3.54 billion
• U.S.: $5.52 billion

Risk of U.S. Surplus Entering India

• U.S. farmers could export surplus (e.g., maize and soybeans) to India, thereby depressing prices for domestic products.
• From the other end, China cut back on imports from the U.S., down 14% in 2024 following a 20% drop in 2023.

Challenges for Indian Agricultural Exports

• Trade Barriers Globally
  • Developed countries apply non tariff measures in markets i.e. EU’s carbon tax; deforestation regulations, etc.)
• Structure of Challenges
  • Minimum integration into global value chains.
  • Indian high import duty further restricts export trade competitiveness.
  • Technology lag behind that of other countries.
  • Indian logistics cost: 8 9% vs. 5 6% in developed countries.

India's capacity to benefit from the present agri export bargain due to the U. China given dynamics is however appallingly narrow; the primary beneficiary being cotton. On the other hand, the threat of U.S. surplus imports would be deleterious to half a dozen domestic farmers, especially on maize and soybeans. On top of that, continued imposition of trade barriers and logistics have crippled India's competitive standing as an export player.

2. Benefits of the MSP

Context

As the Union government and farmers debate over the legally assured Minimum Support Price, regarding a recent study conducted by the ICAR National Institute of Agricultural Economics and Policy Research (NIAP) regarding the unequal benefits of the Minimum Support Price.

The Limited Scope of MSP

• Only 15% of paddy farmers and 9.6% of wheat farmers avail of MSP enabled procurement.
• Small and marginal farmers, who form the majority of the country's farming community, get disproportionately smaller benefits.

Large Farmers Dominate the MSP Procurement Part

• 31.3% of total paddy farmers and 23.5% of total wheat farmers sell in the market a big portion of their surplus through MSP.
• In contrast, only 10.5% of small paddy farmers and 4.5% of small wheat farmers are in the fold of MSP procurement.

The Productivity & Income Effects

• Farmers selling at MSP enjoy
  • Yield in paddy higher by 13.5%
  • Yield in wheat higher by 5%
• Better price realization for MSP than open markets
  • Paddy: 13.2% price over advantage
  • Wheat: 3.5% price advantage
• Total income increase
  • 23.2% higher in paddy cultivation
  • 9.6% income increase from wheat cultivation

Problems and Concerns

• The majority of MSP benefits are heavily skewed towards larger farmers who provide higher marketable surpluses.
• Small and marginal farmers become disadvantaged due to lack of access to procurement.

Policy Suggestions

The study recommends the following for an inclusive MSP:

• Increase in the reach of Price Deficiency Payment Scheme for price support.
• Targeted procurement of small and marginal farmers for equitable distribution.
• MSP access be widened so that all farmers categories enjoy the benefits.

Facts To Remember

1. Bangladesh: Chowdhury Rafiqul Abrar sworn in a 23rd Advisor, given charge of Education

In Bangladesh, Chowdhury Rafiqul Abrar, a retired Professor of Dhaka University’s International Relations (IR) Department, took oath as an adviser on Wednesday, expanding the advisory council of the interim government.

2. NITI Ayog releases strategic paper on implication of quantum computing on national security

Niti Aayog today released a strategic paper on the rapid evolution of quantum computing and its implications on national security in New Delhi. NITI Frontier Tech Hub (NITI-FTH), in partnership with the Data Security Council of India, released the paper with the aim of accelerating the country’s transition into a Frontier Tech Nation.

3. Cabinet approves 𝐫𝐨𝐩𝐞𝐰𝐚𝐲 𝐩𝐫𝐨𝐣𝐞𝐜𝐭s, Revision of Livestock Health and Disease Control Programme

The government has approved the development of the Sonprayag to Kedarnath ropeway with a length of 12.9 kilometres. Briefing media in New Delhi today, Information and Broadcasting Minister Ashwini Vaishnaw said, the total cost of the project will be over four thousand crore rupees.

4. Govt launches Model Women-Friendly Gram Panchayat initiative in New Delhi

Minister of State for Panchayati Raj Prof. S. P. Singh Baghel and Minister of State for Health and Family Welfare Anupriya Patel today launched the Model Women-Friendly Gram Panchayat initiative of the Ministry of Panchayati Raj at a National Convention in New Delhi.

5. Arab leaders adopt Egypt’s Gaza reconstruction plan

Arab leaders have approved a 53 billion dollar reconstruction plan for Gaza, that aims to avoid displacing Palestinians from the enclave. The plan was accepted at the closing of the emergency Arab summit in Cairo yesterday with full support from participating Arab leaders. Egyptian Foreign Minister Badr Abdelatty said that the plan includes the establishment of a seaport and an airport in the Gaza Strip and the recycling of the rubble left by the destruction in Gaza.

International Affairs

1. Trump on Tariffs

Context

Former U.S. President Donald Trump has gone out on a limb to criticize high tariffs charged by India and other countries as being "very unfair." He announced that beginning April 2, he would level reciprocal tariffs against any nation that imposes high duties on American goods.

Key Highlights:

• Tariff Policy
  • Trump claimed that any foreign product entering under his government would bear tariffs, some leisure rates.
• Target Countries
  • He said that European Union, China, Brazil, India, Mexico, and Canada all charge higher tariffs on the U.S.
• Tariffs on India
  • He attacked India over auto tariffs, which, he claimed, are actually over 100%.
• Reciprocal Tariffs
  • Trump makes it clear again that retaliatory tariffs would be launched against countries like India and China, restating what he had said during the visit of Indian Prime Minister Narendra Modi to the United States.
• Firm Stance
  • He made it clear that no country, India included, was going to be let off the hook, and he stated that the tariff structure was non negotiable.

Trump's Comments on Ukraine and U.S. Aid

Former U.S. President Donald Trump mentioned the gratitude expressed by Ukrainian President Volodymyr Zelenskyy for the U.S. assistance provided to Ukraine in its war against Russia and expressed readiness for negotiations for peace and an agreement on critical minerals with the U.S.

Key Highlights:

• Zelenskyy's Letter
  • Trump quoted Zelenskyy as saying that Ukraine is ready to negotiate a peace deal with Russia as soon as possible and no one wants peace more than Ukrainians.
• U.S. Support
  • The letter from Zelenskyy acknowledged America's contribution toward maintaining Ukraine's sovereignty and independence.
• Critical Minerals Agreement
  • Trump said that Ukraine is ready to sign an agreement on critical minerals with the U.S. for the future support of America.
• Vice President J.D. Vance's Contribution
  • Vance, who took a prominent role in the tense White House meeting last week, made a skeptical commentary on the British French idea of an international security force for postwar Ukraine, thus further estranging bilateral diplomatic talks.

Former President Donald Trump's strong stance on tariffs and U.S. foreign policy continues to create waves. Tariff measures against reciprocating nations, such as India and China, were a clear indication of his hard position against international trade fairness. His remarks regarding Ukraine indicate existing complexities in diplomacy, with special regard to U.S. support and agreements over critical minerals.

2. Space Debris

Context

Two days ago in Makueni County, Kenya, a metal object weighing 500 kg fell from the sky on the date of December 30, 2024. The Kenya Space Agency has termed this to be a separation ring from a rocket going into space, but some experts have voiced skepticism.
That is, the present case showcases the growing concern over space debris alongside other notable past incidents in the USA and Australia.

The Increase in Space Debris Problems

• The more access there is to space, the greater the number of rockets, satellites, and spacecraft launched into this environment.
• Falling debris raises serious questions about accountability, liability, and safety.
• Unfortunately, with the lack of clear legal definitions, this becomes harder with regard to enforcement and responsibility.

International Space Laws Existing Legal Frameworks and Their Shortcomings

• The Outer Space Treaty (1967) states that states are responsible for space activities, whether conducted by government or private entities.
• The 1972 Liability Convention establishes "absolute liability" for damages caused by space objects on Earth, meaning that launching states are automatically responsible for any such damage.

Enforcement Challenges

• The issue of whether or not the debris can be considered a "space object" under liability laws raises the possibility for legal disputes.
• An example of these past cases is:
  • Soviet satellite Cosmos 954 (1978) crashed with a nuclear reactor into Canada. After years of negotiations, Canada received only $3 million of the $6 million cleanup costs as compensation.
  • Unidentified or decades old debris would complicate holding the original launching state accountable.

Space Governance Gaps

Uncontrollable Reentries and Their Severity

• In July 2024, China’s Long March 5B rocket core stage (23 tonne metal structure) crashed into the Pacific Ocean, narrowly avoiding populated areas.
• Modern rockets usually have disposal mechanisms for such events, but Long March 5B lacks one and involves dangerous reentry.
• A SpaceX Falcon 9 rocket debris fell in Poland in March 2024, while no clear authority owns responsibility after loss of control.

Super Constellations Add to the Risk

• The likes of SpaceX Starlink, Amazon Kuiper, and Eutelsat OneWeb would reportedly be launching more than 100,000 satellites by 2030.
• Older satellites without deorbiting plans will worsen debris accumulation in space.
• Thus, voluntary UN guidelines (such as the 25 year deorbit rule) have maximum 30% compliance, hence weak in enforcement.

Necessary Changes

• Binding Global Regulations
  • The UN's COPUOS must enforce mandatory requirements that will be utilized to accomplish controlled reentries.
  • Certain penalties, including launch bans should be instituted against such non compliance.
• Stronger National Policies
  • Governments should include debris mitigation strategies as conditions for launch licenses.

The launching bodies should have to come out with debris mitigation strategies as a prerequisite for applying for launch license. Controlled reentry systems can be made available for the spacecraft however, they can also be transferred to a graveyard-orbit.

• Advanced Tracking Systems
  • To improve the activity of monitoring as well as into early predictions of reentry, expansion of tracking tools like that of U.S. Space Fence expected to be included.
• Sustainable Space Practices
  • In that way promote destruction nullifying technologies and re-useable rockets culture for dirtless clutter and, later on, improves safety within space.
• Updating the 1972 Liability Convention.
  • Create an independent international tribunal with powers of binding enforcement to bring into accountability responsible parties.

Space is not without law. It may soon become the space where uncontrol reentry turns into more frequent occurrences and with it, danger. The era of self-governing guidelines is over; it is now time for collective action by all nations in putting in place strong enforceable laws and mechanisms for accountability before the sky starts falling.

National Affairs

1. Discovery of largest Buddha head in Odisha’s Ratnagiri

Context

On December 1, 2024, archaeologists excavating Ratnagiri, Odisha (Jajpur district), discovered important Buddhist artifacts, including a large Buddha head, which indicates the presence of a major statue. This revive six decades of interest in the Buddhist heritage of the area.

Key Discoveries

• Buddha Sculpture
  • A large Buddha head, palms, and fingers from what is likely a meditating Buddha statue, Khondalite in stone.
• Other Artifacts
  • Three sculpted heads of various sizes.
  • A monolithic elephant sculpture.
  • Hundreds of votive stupas, varying from the simplest to the most ornate.
  • Brick and stone masonry structures.
  • Stone carved votives depicting divinities arranged into a Vajrayana Buddhist offering practice.
  • Two granite stone tablets inscribed with Sanskrit in Kutila (Siddhamatrika) script.
  • Ceramic artifacts, mostly of fine grey ware, in a variety of shapes and sizes.
• Importance
  • It is significant that so many votive stupas point to this site as a major pilgrimage center for Vajrayana Buddhism.
  • The niches in the votive stupas probably housed male and female Buddhist divinities.
  • Further study will determine if this is the largest Buddha head found in India.

The excavation will continue until March before work is halted due to extreme summer heat.
More studies will help determine the influence of Buddhism in the area and the importance of these discoveries.

Source: TH

2. Supreme Court Ruling on Domicile Based Medical Reservations

Context

In Dr. Tanvi Behl vs. Shrey Goyal (2025), the Supreme Court struck down domicile based reservations for post graduate medical admissions. The ruling held that State specific quotas are unconstitutional under Article 14 (Right to Equality), claiming that merit should prevail over the State's right to decide.

Article 14 (Right to Equality)

The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India, on grounds of religion, race, caste, sex or place of birth.

Impact on State Health Planning

Loss of Medical Workforce Stability

• Domicile quotas ensure that trained doctors remain in their States, which are being used to address many chronic specialist shortages.
• The post graduate education case is the primary case for qualification for medical specialist education, as MBBS degree programs are mainly for general training.
• The absence of reservations means that States will invariably have to look at external recruitment, which is unreliable and inefficient.

Erosion of Competitive Federalism

• States invest enormous funds into medical colleges, while expecting these graduates would help serve the states' healthcare systems.
• The moment the states feel secure about the local specialist workforce, they may downgrade their financial commitment into medical education, and this will worsen their healthcare infrastructure.
• Central institutions such as AIIMS, PGIMER, JIPMER enjoy selection autonomy, while State run medical colleges are denied the same creating an unfair disadvantage.

Implications for Public Health & the Constitution

• Article 21 (Right to Life) denotes access to healthcare, making medical education more of a public health issue than an academic one.
• State medical colleges are not merely institutions of institutional learning but vital links in the public healthcare system.
• The health sector, centralised beyond reason, confisei States of autonomy, and in return, deny them the adjustments necessary for dealing with local health care needs.

Absolute Meritocracy Is a Fallacy

Flaws of NEET PG

• Meritocracy is not absolute: entrance tests do not provide full consideration of regional disparities and socio economic barriers.
• Any inconsistencies in merit assessment were exposed in 2023 when the NEET PG qualifying percentile was brought down to zero by the National Medical Commission (NMC) for filling vacant seats.
• If regional and socio economic factors were to be taken into account in undergraduate admissions, how could post graduate admissions be exempt?

Court Interpretations on Merit & Equity

• Earlier Supreme Court cases(Jagdish Saran (1982), Pradeep Jain (1984), Neil Aurelio Nunes (2022), Om Rathod (2024))have ruled that:
  • Merit must be defined in a social context.
  • What matters are public service outcomes and not exam results.
  • Domicile quotas would ensure that communities get access to healthcare services, in the context of social justice.

Source: TH

3. Supreme Court Calls for Regulation of Digital Humour

Context

The Supreme Court has recommended that the Government introduce regulatory measures to prevent vulgarity and perversion in the name of humour on digital platforms.
The Court suggested that any such regulation should meet the following criteria:
- Respect freedom of speech and expression.
- Stay within the parameters of "reasonable restrictions" under the Constitution.

Freedom of Speech - Article 19(1)(a)

Freedom of speech is the right to express ideas and opinions without fear of censorship, retaliation, or legal action. It applies to many forms of expression, including speech, writing, pictures, and performances.

How is freedom of speech protected in India?

• In India, Article 19(1)(a) of the Constitution guarantees freedom of speech and expression.
• This includes the right to express oneself through speech, writing, pictures, movies, banners, and more.
• However, there are reasonable restrictions that can be imposed on this right.

Existing Legal Frame: Is There a Need for Fresh Regulations?

While the Supreme Court now calls for configurations on new laws, there already exist certain existing laws which tackle digital obscenity, such as:

• Bharatiya Nyaya Sanhita (BNS)
  • Defines obscene digital content as such which is "lascivious or appeals to prurient interest".
  • Punishable under criminal law.
• Information Technology (IT) Act
  • Contains similar penal provisions for obscene online content.
• Cable Television Network Rules (Programme Code)
  • Prohibits programmes which are offensive to decency.
• Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021
  • Provides an age based classification of contents.
  • Has a grievance redressal mechanism as follows:
  • Platform level complaint handling.
  • Self regulatory body.
  • Government inter departmental committee.

Challenges & Concerns

• Overreach of Law Enforcement
  • Frequent FIR filings due to complaints against digital content overburden courts with judicial intervention.
  • Universal reach of the Internet does not allow justification on universal jurisdiction where one complaint can cause widespread legal consequences.
• Risk of Over Regulation
  • Such legal threshold will entertain all creative expression and set up barriers to digital freedoms. The prevailing regime of laws is beyond sufficient, and any further legislation might lead censorship and abuse.
• Need for a Balance Approach
  • The offensive content will be addressed, but the response should be compiled.
  • Mature societies should weigh legal consequences against artistic freedom and public sensibilities.

4. Quantum Computing and National Security

Context

Quantum computing is dual use technology significant for defense, intelligence, and cybersecurity. The advancements may lead India highly open to technological surprises and strategic blind spots, posing national security risks.
Threats include:
- Breaking encryption & compromising banking systems.
- Disturbance and dislocation of financial markets & infrastructures supporting digital payments.

India’s Readiness for Quantum Preparedness

• Current Global Investments in Quantum Computing
  • China: $15 billion
  • US: $5 billion
  • Europe: $1.2 billion
  • India: $0.75 billion (Lagging far behind global leaders)
  • Investment Rise in 2024: 50 deals of $1.5 billion invested (2x YoY growth).

NITI Aayog Recommendations

• Bolster India’s Quantum Ecosystem to maintain comparability.
• Evolve early warning systems for tracking advancements across the globe in quantum technology.
• Identify vulnerabilities within critical national systems.
• Establish guidelines for crypto agility with reference to digital security.
• Cultivate bilateral collaborations for working together on quantum technology.

Strategic Vision

• Strategic vision for leadership in quantum technology includes
  • Strong policy frameworks.
  • Advanced research & talent cultivation.
  • Quantum capabilities at a large scale.
  • Those who prepare today will shape the future; those who fail to prepare risk falling behind.

Banking and Finance

1. RBI to Inject Rs. 1.9 Trillion in Banking System

Context

The Reserve Bank of India (RBI) announced on Wednesday its its plan to infuse Rs 1.9 lakh crore into the banking system through open market purchases of government securities and USD/INR swaps in March.

Liquidity Issues & RBI Measures

• Liquidity Measures By RBI
  • "OMO Auctions" of 60,000 crores worth of buying government securities in 3 tranches.
• Forex Swaps
  • A USD/INR buy sell swap of $5 billion (January 2025).
  • A USD/INR buy sell swap of $10 billion (February 2025).
• Banks are feeling the strain of liquidity due to certain challenging conditions prevailing in the market and have approached the RBI for some additional measures.

Rupee Performance & Forex Market Trends

• Rupee Gains in a Weaker Dollar
  • On March 5, 2025, the rupee appreciated by 0.36% from 87.27/USD to 86.96/USD.
• Yet other factors pushing the rupee higher
  • USD weakness amid US economic concerns, RBI intervention through state owned banks, and global positive vibes aiding Asian currencies.
• General Performance of the Rupee
  • Depreciation during FY25 stood at 4.09%.
  • CY25 depreciation stood at 1.55%.
• An expected range for the rupee: ₹88~89 per USD anticipates a rate cut in April.

Global Issues Affecting Both INR and Dollar Index

• On an import specific note
  • The 25% tariffs imposed on imports from Mexico & Canada.
• Chinese import duties doubled to 20%.
  • The slew of protectionist measures has cast an uncertainty cloud over US economic growth & inflation.

Outlook

Short Term: INR should trade keeping an appreciation bias.
Long Term: INR may depreciate toward ₹88 89/$ with an April rate cut.
Liquidity Watch: The RBI's intervention will play a key role in managing liquidity stress and stabilizing the money markets.

Source: TOI

2. RBI Announces G-Sec Purchases

Key Announcements made by RBI

Open Market Purchase of Government Securities (G-Secs) worth ₹1 Lakh Crore.
Liquidity injection to be conducted in two tranches:
- ₹50,000 crore on March 12
- ₹50,000 crore on March 18
Forex Swap of $10 billion (36 month tenor) on March 24.

Objectives of the Move

• The decision was taken after a careful review of the current and evolving liquidity conditions in the banking system.
• The objectives of the RBI are to keep sufficient liquidity in the financial markets and to support economic stability.
• The RBI specifically stated that it is monitoring liquidity and market conditions continuously and would take necessary action to keep the financial flows smooth.

Possible Implications

• The G-Sec purchase will inject liquidity into the banking system, making it easier for funds to flow.
• The Forex swap may help with the currency volatility management and the stabilization of rupee with respect to the dollar.
• All these actions show that the RBI is acting reactively on financial liquidity management and supporting economic growth.

The latest measure of the RBI is a signal for strategic intervention to boost liquidity and stabilize the financial system, thereby ensuring smooth market operations under evolving economic conditions.

3. Fintech Engagement by RBI

Context

Interaction is part of the ongoing engagement of RBI with the payments and fintech ecosystem. RBI Governor Sanjay Malhotra met with fintech firms, payment system operators, and self regulatory organizations to emphasize responsible innovation and compliance. This recognition has been given by RBI for a very crucial importance that fintechs play in the overall financial ecosystem and economy in India, like payment systems, account aggregators, and digital lending service providers.

Key discussion Points

• Strengthening the digital public infrastructure.
• Developing a unified lending interface similar to UPI.
• Expansion of use cases for central bank digital currency (CBDC).
• It has also been discussing fraudulent transactions and mule accounts.

Finquery Portal & CBDC Initiatives

• RBI launched the Finquery portal for direct engagement with fintech for promoting transparency, innovation, and regulatory clarity.
• CBDC Use Cases
  • Bank of Baroda modeled a small merchant loyalty program on CBDC for banks.

Clarifications on Regulatory Actions

• RBI reaffirmed its commitment to innovation and clarified that the regulatory actions taken recently were addressed to non compliance in critical areas and not against innovation.
• The discussions saw participation from the Deputy Governors M. Rajeshwar Rao, T Rabi Sankar, Swaminathan J., and executive directors.

New RBI Executive Director: Ajit Joshi

• Appointment: Ajit Joshi as Executive Director, RBI.
• Will supervise:
  • Department of Statistics and Information Management.
  • Financial Stability Department.

Source: BS

Economy

1. India Push for Simplified Trade Norms

Challenges Faced by EU Companies in India

• Existing regulations and trade barriers
  • Quality Control Orders (QCOs) and Customs procedures are overly complicated and should be simplified or done away with totally.
  • Streamlining the labelling, testing, and import processes is of utmost importance.
• Facilitate cross border digital transactions without data localisation restrictions.
• Issues relating to labour and intellectual property
  • The hindrance of complexity in the process of visa and work permits has been detrimental to mobility of talents.
  • Weak enforcement of intellectual property (IP) laws exposes businesses to risks of counterfeit goods and data.

Investment Outlook & Business Sentiment

• Strong confidence in the growth of the Indian market
  • 92% of European businesses feel that there will be a positive impact of the proposed EU-India Free Trade Agreement (FTA).
• 72% will most likely invest more in India within two years.
• 80% view India as an expanding sales market and 61% view it as an emerging production hub.

EU Investors Focus on Key Sectors

More technology driven and sustainable industries can be expected as India improves trade practices.
76% of firms surveyed plan to invest beyond pre 2025 levels.

Why India?

• 66% said political stability was an advantage.
• 60% said India gained from its geopolitical position.
• 60% liked having a skilled labour force.
• 59% said that India is gradually easing the way of doing business.

Proposed FTA: A Game changer for EU India Trade

• Historically, the EU is India's primary trading partner, emanating 12.2% of the trade share in total Indian trade in 2023.
• The EU-India FTA is expected to grow trade in goods & services, bringing economic growth.

It reflects as the EU firms remain optimistic about India's market potential while identifying regulatory hurdles to be cleared. There will be more investment and trade opportunities under the EU India FTA once the aforementioned major trade, taxation, and regulatory barriers are addressed.

2. World Bank Report on India's Growth

Context

India needs an annual GDP growth of 7.8% for the following twenty years to achieve high income status.
Historical judgments: South Korea achieved similar results by means of consistent reforms.

Key Reforms Needed

• Investment & Capital Formation
  • 40% investment to GDP ratio by 2035.
  • Strengthen private sector participation & financial markets.
  • Reduced investment friction and increased infrastructure spending.
• Productivity & Industrialization
  • Technology adoption & innovation are needed.
    Raise the ease of doing business and encourage R&D.
    Focus on maintaining the competitiveness of labour intensive sectors.
• Human Capital & Regional Development
  • Forge a path to women accounting for only 55% by 2050 in the suitable workforce.
  • Target the laggard states with the implementation of resources in addressing regional disparity.
  • Improve public expenditure efficiency in these low income areas.
• Trade & Global Integration
  • Reduce tariffs and non tariff barriers to provide greater trade openness.
  • Build upon participation in global value chains.
  • Formulate policies in alignment with changing global economic and geopolitical forces.

Outlook & Policy Implications

• Disruptions to global trade & realignment of investment pose risks.
• India will need to sustain high growth underpinned by accelerated reforms, facing challenges from the external environment.
• Multi pronged strategies need to be carved out by policymakers in the fields of trade, investment, and human capital.

3. Rupee Gains and Dollar Weakens

Context

Rupee appreciations of 0.36%, closing at ₹86.96/USD (previous close ₹87.27/USD). Highest gain in a single day since February 11.

Rupee Up on These Factors

• Weakness of the Dollar
  • Dollar index down by 0.6% to 104.9 (lowest since Nov 2024).
  • Market fears regarding US economic growth & trade tariffs.
• RBI Intervention
  • State owned banks sold dollars for the RBI.
  • Providing support to stabilise rupee volatility.
  • Positive Global Cues:
  • Asian currencies stronger to help rupee.

Trade Tariffs and Uncertainty

• US Tariffs Update
  • 25% on imports from Mexico & Canada.
  • Import duties on China now doubled to 20%.
  • Trump said India would be hit by reciprocal tariffs from April 2.
• Market Reaction
  • Initially, the rupee was expected to weaken.
  • Talks of tariff removal on Canada created uncertainty, which led to rupee appreciation instead.

Outlook

Short Term: The rupee is expected to remain positive for appreciation.
Long Term: It is expected to start depreciating towards ₹88–89/USD with an expected cut in April.
Volatility is high on account of the developing US trade policies.

Agriculture

1. India’s Gene Bank

What is a Gene Bank?

• A Gene Bank is an institution where seeds, pollen, and tissue samples are stored for conservation purposes to keep plants from extinction.
• First Gene Bank in India (Established 1996)
  • Under the auspices of ICAR NBPGR, New Delhi, which has 12 Regional Stations.
  • Maintains 0.47 million accessions of cereals, millets, legumes, oilseeds, and vegetables.

Announcement of India's Second National GenBank

• Provided in the Budget 2025-26 by the Ministry of Finance.
• Capacity: 1 million lines of germplasm to strengthen agricultural biodiversity.
• Note
  • Contribute towards the preservation of crop diversity and food security.
  • Assist the public and private sectors alike in managing genetic resources.
  • Support India's role in global biodiversity conservation.
• International Scope
  • Generate support for SAARC and BRICS countries not having established gene banks.
• Importance Against Global Challenges
  • To alleviate threats posed by climate crisis, natural calamities, and geopolitical risks.
  • To provide a guarantee for the long term sustainability of India's germplasm.

Discussions conducted during the Webinar marry the long term vision of India in the Viksit Bharat 2047 through economy, innovation, and workforce empowerment.
With the commissioning of the new National GenBank, this is strategically aimed at improving food security, conservation of biodiversity, and global agricultural resilience.

Source: PIB

Facts To Remember

1. DRDO conducts trial of life support system for LCA Tejas

The Defence Research and Development Organisation (DRDO) on Wednesday announced the successful high-altitude trial of an indigenous integrated life support system (ILSS) for the light combat aircraft (LCA) Tejas.

2. RBI names Joshi as executive director

The Reserve Bank said it has appointed Ajit Ratnakar Joshi as Executive Director (ED) who will look after the Department of Statistics and Information Management and Financial Stability Department.

3. HDFC Bank Launches Project HAKK to Support IAF Pensioners and Veterans

The bank signed an MoU with the IAF (through the office of the Assistant Chief of Air Staff – Accounts & Air Veterans) and CSC Academy. HDFC Bank has introduced Project HAKK (Hawai Anubhavi Kalyan Kendra) to offer support and services to Indian Air Force (IAF) pensioners, veterans, and their families.

4. President Murmu to inaugurate “Nari Shakti Se Viksit Bharat” conference on Women’s Day

President Droupadi Murmu will inaugurate a national conference in New Delhi on International Women’s Day on the 8th of this month. The Conference is being organised on the theme of “Nari Shakti Se Viksit Bharat” by the Women and Child Development Ministry.

5. RBI Governor engages with Fin-Techs, Payment System Operators

Reserve Bank of India’s Governor Sanjay Malhotra held an interaction with non-bank Payment System Operators and FinTechs along with their associations and SROs yesterday.

6. DoSJE Secretary Amit Yadav inaugurates Rashtriya Karmayogi Jan Seva Programme

Department of Social Justice and Empowerment (DoSJE) Secretary Amit Yadav said that the fundamental purpose of government service is to bring meaningful change to people’s lives.

7. India condemns security breach by separatists during EAM Jaishankar’s UK visit

India has condemned the security breach by separatists and extremists during the visit of External Affairs Minister Dr S Jaishankar to the United Kingdom.

8. Israel’s new military chief takes office, vows to strike enemies with ‘tremendous force’

Eyal Zamir has taken over as the 24th Chief of the Israel Defense Forces (IDF). He has warned that Israel’s multi-front conflict would be ongoing and vowed to strike its enemies with tremendous force

Daily Current Affairs Quiz
7 March, 2025

International Affairs

1. India-Australia Defence Cooperation

Context

Chief of Defence Staff (CDS) General Anil Chauhan's visit to Australia has reinforced defence collaboration between India and Australia. This historic visit focused on enhancing interoperability, maritime security, and reciprocal deployments, marking a significant step in bilateral military cooperation.

Key Highlights of the Visit

First-ever Visit by an Indian CDS

• General Chauhan was hosted in Canberra by Australian Chief of Defence Force Admiral David Johnston.
• Discussions centered on long-term defence and security collaboration.

Enhanced Defence Cooperation

• Key focus areas:
  • Maritime Domain Awareness
  • Reciprocal Information Sharing
  • Deployments from Each Other’s Territories
• Strengthening interoperability through joint exercises across maritime, land, and air domains.

Strategic Importance

Australia’s Perspective

• India is considered a top-tier security partner.
• Both nations are committed to regional stability in the Indo-Pacific.
• Collaboration is taking place under the Comprehensive Strategic Partnership and through trilateral and quadrilateral frameworks such as the QUAD.

Admiral Johnston’s Statement

• Emphasized the importance of the India-Australia defence partnership.
• Stressed strengthening people-to-people links and engaging with key regional partners.

This visit underscores India and Australia’s growing defence cooperation, aimed at fostering regional security and stability. The partnership is evolving towards deeper interoperability, information sharing, and strategic deployments, ensuring a stronger Indo-Pacific defence framework.

2. COP-30

Key Highlights

• COP30 Dates & Location: Scheduled for November 10-21, 2025, in Brazil.
• Key Focus Areas:
  • Global Ethical Stocktake (GST) to track progress on the 1.5°C target.
  • Transition from fossil fuels and deforestation.
  • Tripling renewable energy and doubling energy efficiency.
  • Scaling up climate finance to $1.3 trillion annually.
  • Climate adaptation measures for vulnerable communities.
  • Implementation of COP28 agreements.

Global Temperature Trends

• January 2025 was the warmest on record, with global temperatures 1.75°C above pre-industrial levels.
• Copernicus Climate Change Service (C3S) reported:
  • Global avg. temp in Jan 2025: 13.23°C.
  • 0.09°C warmer than Jan 2024.
  • 0.79°C above the 1991-2020 avg., despite La Niña’s cooling effect.

The Role of the Global Ethical Stocktake (GST)

• Assessing Climate Progress: A review mechanism under the Paris Agreement conducted every five years.
• Led by Brazil's President Lula da Silva & UN Secretary-General Guterres.
• Six global dialogues planned, covering regions like the Arctic, involving:
  • Youth, women, scientists, religious leaders, business leaders, activists, indigenous communities, and traditional societies.
• Goal: Align global behaviors and decisions with the 1.5°C target.

Brazil’s Adaptation Strategy

• National Adaptation Plan with 16 sub-programs targeting:
  • Vulnerable urban communities affected by heatwaves and wildfires.
  • Food security systems impacted by extreme weather.
  • Early warning systems for climate disasters.

IPCC Chair’s Perspective

• Jim Skea (IPCC Chair):
  • Achieving Sustainable Development Goals (SDGs) is impossible without climate action.
  • Article 2 of the Paris Agreement is crucial:
    • Keep global temp rise below 2°C, aim for 1.5°C.
    • Enhance adaptation capacity and climate resilience.
  • IPCC’s stance: Science-driven, not political.

COP30 aims to accelerate climate finance, enforce fossil fuel transition, and strengthen climate adaptation efforts. The Global Ethical Stocktake will serve as a critical accountability mechanism to ensure countries align their policies with the 1.5°C target, reinforcing global climate commitments.

National Affairs

1. U.S.-India Relations Under Trump: A Detailed Analysis

Context

The external affairs minister S. Jaishankar in his address at Chatham House, London, spoke of the changing dynamics of U.S.-India relations during those days under President Donald Trump. He touched upon the changing geopolitical landscape, spurring strategic cooperation and the emergence of economic and connectivity initiatives which reflect Indian interests.

Geopolitical Shifts & Multipolarity

• U.S. Moving Toward a Multipolar World
  • Jaishankar noted that the policies of the Trump administration reflect a shift toward multipolarity that favors India from the standpoint of its global positioning.
  • Historically, the United States was seen as a member of the Western bloc (post 1945), but under Trump, its self perception is taking the shape of a country first approach, defined against the backdrop of traditional Western alliances.
• India's Strategic Advantage
  • Accordingly, the shift in U.S. policy allows India to emerge as a far more equal partner in dialogue with Washington, advancing India's own vision of a balanced world order.
  • Changes in the Trump administration's policies thus open new avenues of Indo U.S. collaboration across a wide array of sectors.

Strengthening Strategic & Security Partnerships

• The Quad: A Shared Strategic Enterprise
  • Jaishankar underscored the importance of the Quadrilateral Security Dialogue (Quad) with the participation of India, the U.S., Japan, and Australia.
  • Unlike NATO, where burden sharing is a contentious issue, Quad members offer each contributor fair share in return, enabling better cooperation among themselves.
  • This strategic alignment matters for the stability of the Indo-Pacific region.

Connectivity, Energy & Economic Collaboration

• Trump's Brief for Connectivity Initiatives
  • Jaishankar affirmed that the Trump administration stands somewhat positively disposed toward connectivity projects that involve joint ventures in consonance with board Indian interests.
  • An example in this respect is the India-Middle East Europe Corridor (IMEC), an intricate connectivity initiative that was discussed in Trump's meeting with Prime Minister Modi at the White House.
• Potential Payoffs for India
  • Through these connectivity projects, India would acquire:
    • Enhanced spice routes passing through India, the Middle East, and Europe.
    • Strengthened ties with the U.S. and allied countries through economic partnership.
    • Improved cooperation in infrastructure and technology of strategic importance.

Broader Implications for Indo U.S. Relations

• Windows for Deeper Cooperation
  • Energy, defense, and technology under Trump presented India with strategic and economic opportunities.
  • By espousing multipolarity, therefore, the U.S. has surprisingly provided support to India's global aspirations.

2. Balancing Federal Principles & Democratic Representation

Context

The recent all-party meeting chaired by Tamil Nadu Chief Minister M.K. Stalin in Chennai has reignited the debate over delimitation, urging a freeze on the strength of the Lok Sabha and State Assemblies until 2056. This proposal reflects concerns over regional representation disparities, particularly for southern States, if seat allocation is strictly based on population growth.

Key Issues in Delimitation

Population Growth & Representation Imbalance

• Since the last delimitation exercise (2002-2008), India's electorate has grown by 45%, leading to significant malapportionment in many constituencies.
• Example: Bangalore North (3.2 million voters) vs. Udupi Chikmagalur (1.6 million voters)—showcasing disproportionate voter representation within Karnataka itself.

North-South Divide in Seat Allocation

• Southern States, which have successfully controlled population growth, fear a loss of Lok Sabha seats if representation is strictly based on numbers.
• CM Stalin warns that using 2026 Census data could lead to an “indelible injustice” against progressive States.

Federalism vs. Democratic Representation

• The Constitution allows apportionment to be done “so far as practicable”, implying that factors beyond population (such as governance efficiency and development) should be considered.
• Some suggest State-wise delimitation (adjusting constituencies within States without altering national seat distribution), but this may disadvantage large, rapidly growing States.

Need for a Balanced Approach

Building a Consensus

• The Union government must ensure inclusivity in setting the terms for the next Delimitation Commission.
• A transparent, federal approach can prevent distrust between the ruling party at the Centre and regional stakeholders.

Respecting Federalism While Ensuring Fair Representation

• Delimitation should not penalize States that have achieved population control and economic progress.
• A flexible, data-driven model balancing population numbers, governance efficiency, and regional concerns is necessary.

The delimitation debate is a crucial test of India’s democratic ethos and federal structure. A premature, rigid implementation could deepen regional imbalances, while an overextended freeze may worsen malapportionment. The key lies in consensus-building, policy flexibility, and equitable representation, ensuring that no region is unfairly disadvantaged in shaping India’s political future.

3. INSV Tarini

Departure & Voyage Details

• Vessel: INSV Tarini
• Departure: March 5, 9:10 a.m. (local time) from Port Stanley, Falkland Islands
• Next Destination: Cape Town, South Africa
• Expedition: ‘Navika Sagar Parikrama-II’ – A global circumnavigation

Crew & Mission

• Sailors: Lieutenant Commander Dilna K. and Lieutenant Commander Roopa of the Indian Navy
• Current Leg: Fourth phase of the circumnavigation
• Objective: Showcasing India’s maritime capabilities and promoting women’s participation in ocean sailing

INSV Tarini

• Background
  • INSV Tarini is the Indian Navy’s second sailboat.
  • Built at Aquarius Shipyard Goa.
  • Commissioned for operation on 18 February 2017 after intensive sea trials.
• Design Features
  • Type Cruising sloop designed for long range sailing.
  • Hull sandwich wood core and fibre glass ensures the durability needed.
  • Sails Fitted with six sails including a mainsail genoa stay downwind and storm sail.
• Windvane monitoring for emergency steering
  • Capability Designed to withstand extreme conditions and support long duration voyages.
• Builder
  • Aquarius Shipyard Private Limited

Navika Sagar Parikrama-II

Two Indian Navy women officers Lt Cdr Roopa A and Lt Cdr Dilna K, will set sail on a globe circumnavigating expedition aboard INSV Tarini. This expedition named Navika Sagar Parikrama-II is to repeat the first version of the circuit and showcase India’s maritime potential and work towards the vision of equipping women to sail in the ocean.

Previous Indian Navy Expeditions

• Transoceanic voyage from Goa to Rio de Janeiro via Cape Town and back.
• Sailing expedition from Goa to Sri Vijaya Puram formerly Port Blair and back.
• Sortie from Goa to Port Louis Mauritius performed in a dual handed mode.

Significance

• Symbol of Women Empowerment: Highlights the role of women officers in high-seas missions
• Maritime Excellence: Strengthens India’s presence in global sailing expeditions
• Next Phase: The voyage continues towards Cape Town, further advancing India’s naval capabilities in ocean navigation

INSV Tarini’s journey exemplifies resilience and skill as it moves forward in this historic expedition.

4. AI Kosha: India’s New AI Dataset Platform

Overview of AI Kosha

• Launched by: Union Government of India
• Purpose: A repository of non-personal datasets to aid AI model and tool development
• Current Dataset Count: 316 datasets
• Primary Focus:
  • Language translation tools for Indian languages
  • Other datasets include:
    • Health data from Telangana’s Open Data Initiative
    • 2011 Census data
    • Satellite imagery from Indian satellites
    • Meteorological and pollution data

AI Kosha as Part of IndiaAI Mission

• IndiaAI Mission: A government-backed initiative with a budget of ₹10,370 crore
• Seven Pillars of IndiaAI Mission:
  • AI Kosha is part of the Datasets Platform pillar
  • Other pillars include Compute Capacity, which provides shared access to GPUs

Boosting Compute Capacity for AI Development

• Government Initiative:
  • Commissioned 14,000 GPUs for shared AI model training and execution (earlier target was 10,000 GPUs)
  • Additional GPUs to be added quarterly
• Foundational AI Model Development:
  • Inspired by DeepSeek (China’s AI model built at low cost)
  • Growing interest from Indian start-ups to develop a homegrown foundational AI model

Government’s Open Data Strategy

• Existing Open Data Platforms:
  • data.gov.in – Over 12,000 datasets from various government agencies
  • Government has appointed Chief Data Officers across Ministries to encourage dataset contributions
• Past Efforts to Leverage Non-Personal Data:
  • 2018 Committee led by Kris Gopalakrishnan explored mandatory data-sharing by private firms
  • Proposal (2020): Access to non-personal data from private firms (e.g., ride-sharing traffic data) for start-ups & policymaking
  • Pushback from private sector: Concerns over competition and proprietary data protection

Key Takeaways

• AI Kosha strengthens India’s AI ecosystem by providing crucial public datasets for model development.
• Increased GPU access supports start-ups and researchers in AI innovation.
• Government’s data-sharing policies face challenges, especially regarding private-sector data.
• India aims to develop its own foundational AI models to reduce reliance on foreign technology.

AI Kosha marks a significant step towards self-reliant AI development in India, but its success will depend on dataset expansion, private sector cooperation, and regulatory clarity.

4. India Semiconductor Mission (ISM) Phase 2

Context

The Central government has finalized the framework for Phase 2 of ISM and is holding internal discussions before the official rollout.

Key Highlights:

• The scheme will focus on:
  • Strengthening semiconductor design and innovation.
  • Supporting raw materials, equipment, gases, and specialty chemicals for semiconductor manufacturing.
  • Enhancing the fabless semiconductor ecosystem by modifying the Design Linked Incentive (DLI) scheme to support more ambitious projects.
• Government's Goal: To build a sustainable and competitive semiconductor ecosystem while moving up the value chain.

Key Challenges Identified

• Risk of overcapacity in legacy nodes due to global supply chain dynamics.
• Need for localized supply chains to reduce dependency on other geographies.

CDIL-Infineon Partnership

• CDIL Semiconductors (India) & Infineon Technologies (Germany) have signed an MoU to explore collaboration opportunities in India's semiconductor market.
• Key Aspects of the Partnership:
  • Infineon will supply bare die wafers to CDIL.
  • CDIL will package and produce discrete & module semiconductor products for Indian customers.
  • Focus areas include e-mobility, renewable energy, and energy-efficient appliances.
• Industry Impact:
  • The partnership is expected to accelerate semiconductor manufacturing in India under the "Make in India" initiative.
  • India is being positioned as a hub for semiconductor innovation and excellence.

Future Outlook

• Upcoming ISM Phase 2 Announcements will determine the scale and scope of government incentives and industry participation.
• Increased localization of semiconductor supply chains will be a priority to reduce import dependencies.
• More international partnerships like CDIL-Infineon may emerge as India strengthens its semiconductor ecosystem.

Banking and Finance

1. SEBI Issues Warning Against Sunshine Global Agro Property Transactions

Key Highlights

• Markets regulator SEBI has warned the public against buying or dealing with properties owned by Sunshine Global Agro and its directors.
• Reason for Warning: SEBI discovered that some individuals/entities are illegally purchasing, encroaching, or trespassing on the company's properties.
• Legal Consequences: SEBI has made it clear that unauthorized possession or trespassing will lead to legal action under applicable laws.

Background

• 2014 Ban: SEBI prohibited Sunshine Global Agro (formerly Sunshine Forestry Pvt. Ltd.) from raising funds from investors or launching any new schemes. The company was found to be running an unauthorized Collective Investment Scheme (CIS) involving the sale of Jatropha Bush Groups and plant/trees.
• 2019 Directive: SEBI barred the company and its directors from selling or disposing of assets, except for refunding investors.
• Non-Compliance & Recovery Action: After Sunshine Global Agro failed to comply, SEBI initiated recovery proceedings against the company and its directors.

Public Advisory

• Avoid transactions involving properties linked to Sunshine Global Agro.
• Verify ownership records before engaging in any property deals.
• Unauthorized dealings may lead to legal action by SEBI.

Source: The Telegraph

2. RBI Moves to Boost Liquidity

Key Highlights

• Liquidity Injection: RBI to infuse ₹1.87 trillion into the banking system to ease financial year-end liquidity constraints.
• Policy Transmission Focus: Despite a 25 bps repo rate cut in February, tight liquidity has kept interest rates elevated in some segments.
• Open Market Operations (OMO): RBI will purchase ₹1 trillion in government securities in two ₹50,000 crore tranches on March 12 and March 18.
• USD/INR Swap Auction: A $10 billion buy-sell swap with a 36-month tenor announced to manage forex liquidity.

Current Liquidity Situation

• Banking system liquidity was in a deficit of ₹55,000 crore as of March 6.
• Deficit persisted for 11 consecutive weeks, despite previous RBI measures:
  • ₹60,000 crore OMOs
  • $5 billion and $10 billion forex swaps in Jan-Feb
• Liquidity swung from a ₹1.35 trillion surplus in Nov 2024 to a ₹2.07 trillion deficit in Jan 2025, improving to ₹1.59 trillion deficit in Feb 2025.

Market Reactions & Expert Views

• Nomura Report: RBI's actions suggest a proactive approach to shift the system into surplus, ensuring effective policy transmission.
• Harsh Dugar (Federal Bank ED): Banks may lower deposit rates, improving lending rate transmission.
• Treasury Head (Private Bank): RBI aims to stabilize short-term rates ahead of major outflows.
• Radhika Rao (DBS Bank): Measures reflect an accommodative stance, boosting market confidence.
• Suyash Choudhary (Bandhan Mutual Fund):
  • Underlying liquidity conditions have not been conducive for rate transmission.
  • These measures signal RBI’s intent to sustainably move liquidity into surplus.

Potential Impact

• Lower Deposit Rates: With improved liquidity, banks might cut deposit rates, easing funding costs.
• Bond Market Relief: Corporate bond spreads and state government security yields could stabilize.
• Forex Market Stability: Active RBI intervention in forex markets may ease rupee depreciation concerns.
• Policy Transmission Boost: Lending rates, especially marginal cost of funds-based lending rate (MCLR) loans, could see better transmission.

Upcoming OMO Auction – March 12

RBI will buy ₹50,000 crore worth of government securities, including:

• 7.10% GS 2029
• 7.18% GS 2033
• 7.10% GS 2034
• 7.40% GS 2035
• 7.41% GS 2036
• 7.23% GS 2039

The RBI’s liquidity measures are larger than market expectations and could shift the banking system to surplus, ensuring better monetary policy transmission and stabilizing short-term rates.

Source: BS

3. Digital Footprint-Based Credit Assessment Model for MSMEs

Key Highlights

• Launched by: Union Finance Minister Nirmala Sitharaman
• Event: Post-Budget interaction in Visakhapatnam
• Announced in: Union Budget 2024-25
• Objective: Enable Public Sector Banks (PSBs) to conduct in-house MSME credit assessment, reducing reliance on external agencies.

How the New Credit Model Works

• Uses MSME Digital Footprints to determine creditworthiness.
• Automated loan assessment for both:
  • Existing to Bank (ETB) borrowers
  • New to Bank (NTB) borrowers
• Data Sources for Credit Scoring:
  • PAN authentication via NSDL
  • Mobile & email verification (OTP-based)
  • GST data via service providers
  • Bank statement analysis through Account Aggregators
  • Income Tax Return (ITR) verification
  • API-enabled commercial & consumer credit bureau checks
  • Fraud detection & hunter checks via APIs

Significance & Expected Impact

• Faster, automated loan approvals for MSMEs.
• More objective & transparent credit decisions.
• Boosts financial inclusion by facilitating credit for small businesses.
• Strengthens PSBs’ capability to evaluate MSME loans without external dependency.

Government’s Vision

• Encourage digital transformation in MSME lending.
• Ensure easier access to credit, fostering growth in the MSME sector.
• Improve efficiency & reduce fraud risks in loan approvals.

This initiative is expected to enhance financial accessibility for MSMEs, supporting their expansion and contribution to the Indian economy.

Economy

1. India's Bigger Share in US Electronics Market

Key Highlights

• Bilateral Trade Agreement (BTA): India is negotiating a BTA with the US to boost electronics exports, particularly in smartphones, air conditioners, colour TVs, wearables, and audio devices.
• Current Market Share: In 2023, India accounted for only 1.9% of the US’s $520 billion electronics imports, with total exports valued at $10 billion.
• Tariff Advantage:
  • The US has imposed a 20% tariff on smartphones, while India's tariff stands at 16.5%, creating an opportunity for Indian exports.
  • Mexico lost its Free Trade Agreement (FTA) benefits, now facing a 25% tariff, providing India a chance to expand its presence in desktops, servers, colour TVs, and air conditioners.

US Electronics Import Landscape (2023)

Challenges & Opportunities for India

• Dominance of China, Vietnam & Mexico:
  • China leads in smartphones (75%), laptops (77%), and wearables (43%).
  • Vietnam is a strong player in switching & routing systems (21%).
  • Mexico dominates in desktops, colour TVs, and air conditioners, benefiting from past FTAs.
• India’s Strategy:
  • Push for zero-duty imports for smartphones under the BTA, as the US lacks local manufacturing.
  • Reduce or eliminate tariffs on colour TVs & air conditioners to stay competitive.
  • Leverage US tariff hikes on China & Mexico to expand India's export footprint.

The ongoing BTA negotiations and tariff shifts could significantly boost India's electronics exports to the US market, provided the right policy measures are implemented.

2. Private Investment in India

Government's Role in Capital Expenditure

• Capital expenditure rose from 1.67% of GDP (2019-20) to 3.4% (2024-25).
• Goal: Stimulate demand & eventually pass investment leadership to the private sector.

Private Investment Trends & Challenges

• Tepid private investment, despite post-pandemic economic recovery.
• Pre-COVID weakness in investment due to the twin balance sheet problem (stressed corporate & bank balance sheets).
• Balance sheets now healthy, but private firms remain cautious about expansion.
• Capacity Utilization:
  • Stands at ~75% (just above long-term average).
  • Typically, firms expand at this level, but investment hesitancy persists.

Key Factors Limiting Private Investment

• Global Economic Uncertainty
  • Geopolitical risks, including Donald Trump’s return as US President, impact confidence.
• China’s Overcapacity
  • Excess Chinese supply limits India’s export growth potential.
• Weak Export Performance
  • Exports-to-GDP ratio fell from 25% (2013) to 18.7% (2019), now recovering but still below peak.
  • Investment & economic expansion closely tied to export performance.

Government's Efforts to Boost Investment

• Simplification of regulations:
  • 42,000+ compliance rules removed since 2014.
  • 3,700+ legal provisions decriminalized.
  • Proposed Deregulation Commission to improve business climate.
• Infrastructure Spending & Incentives
  • Major public investments in infrastructure to encourage private participation.

Policy Outlook & Future Growth

• India’s high-growth period in the 2000s was fueled by 1990s reforms & strong exports.
• Structural reforms to boost ease of doing business will take time to yield results.
• Additional steps needed:
  • Enhancing global trade competitiveness.
  • Creating domestic demand certainty to drive private sector confidence.
  • Strengthening state-level business policies in coordination with the Centre.

While the government is laying the foundation for private investment through deregulation & infrastructure development, global & domestic uncertainties remain key hurdles. India must revitalize exports & create a stable economic environment to encourage large-scale private sector participation in growth.

3. India’s Economic Growth Forecast for FY26 – Crisil Report

Growth Projection

• India’s economy is projected to grow at 6.5% in FY26.
• Growth driven by strong domestic demand despite global uncertainties (geopolitical issues, US-led trade actions).

Key Assumptions & Drivers

• Normal monsoon & stable commodity prices.
• Cooling food inflation expected to ease cost pressures.
• Tax benefits from the budget to boost consumption.
• Lower borrowing costs encouraging spending and investment.

Sectoral Outlook

• Manufacturing Growth: Expected to average 9% annually between FY25-FY31 (compared to 6% pre-pandemic).
• Manufacturing’s GDP share to increase to 20% by FY31, driven by investments and efficiency improvements.
• Services sector remains primary growth driver, albeit at a slower pace.

Economic Resilience

• India has built “safe harbours” against external shocks:
  • Healthy economic growth.
  • Low current account deficit & external public debt.
  • Adequate forex reserves, providing policy flexibility.
• Short-term growth: Driven by urban and rural consumption.
• Medium-term growth: Supported by investments and efficiency gains.

Inflation Outlook

• Inflation softened in FY25, mainly due to lower non-food inflation.
• Food inflation remained high but is expected to decline further in FY26.
• This will help lower headline inflation and support economic stability.

Source: Mint

4. Pradhan Mantri Mudra Yojana (PMMY) – Disbursement Update (2015–2025)

Total Disbursement & Demand for Credit

• ₹31.85 trillion disbursed out of ₹32.61 trillion allocated under PMMY (April 2015 – Feb 2025).
• Indicates strong credit demand among micro and small businesses.

Top Beneficiary States (Disbursal Amounts)

1. Tamil Nadu – ₹3.21 trillion
2. Uttar Pradesh – ₹3.07 trillion
3. Karnataka – ₹2.98 trillion
4. West Bengal – ₹2.78 trillion
5. Bihar – ₹2.77 trillion
6. Maharashtra – ₹2.69 trillion

Scheme Overview

• Launched: 8 April 2015.
• Objective: Provide collateral-free institutional credit via banks, NBFCs, and microfinance institutions.
• Eligibility: Individuals with a business plan for small enterprises in:
  • Manufacturing
  • Trading
  • Services
  • Allied agriculture sectors

Impact & Revisions

• Financial Inclusion & Job Creation: The scheme has empowered small businesses and entrepreneurs, contributing to grassroots economic growth.
• Loan Limit Increase: Raised from ₹10 lakh to ₹20 lakh, effective October 2024 (as per Union Budget 2024-25).

Recent Trends & Performance

• Q3 FY25: Record disbursement of ₹3.39 trillion (highest quarterly since inception).
• H1 FY25: Loan disbursements declined to ₹1.86 trillion (from ₹1.92 trillion in H1 FY24) – first dip since COVID-19.
• Loan Accounts Approved (2015–2025):516 million, with the highest numbers in:
  • Bihar – 58 million
  • Tamil Nadu – 57 million
  • Uttar Pradesh & West Bengal – 50 million each
  • Karnataka – 49 million

Source: Mint

Facts To Remember

1. Sudan files case against UAE at the ICJ over ‘complicity in genocide’

Sudan has filed a case against the UAE arguing that the Gulf state is complicit in genocide over its alleged support for Sudan’s paramilitary Rapid Support Forces, the International Court of Justice announced on Thursday. Khartoum contends that the UAE is complicit in the genocide of the Masalit community in Sudan.

2. Trump delays tariffs on most imports from Mexico until April

U.S. President Donald Trump said on Thursday that he has postponed 25% tariffs on most goods from Mexico for a month amid widespread fears of the impact of a broader trade war. No details were released about what led to the move. No change was announced regarding the new tariffs imposed on Canada.

3. South Korean fighter jets accidentally drop bombs, civilians among 15 injured

Two South Korean Air Force fighter jets accidentally dropped eight bombs on a village during a joint training exercise with U.S. forces on Thursday, officials said, with civilians among 15 persons injured.

4. PM Narendra Modi launches various development projects at Silvasa in UT of Dadra & Nagar Haveli and Daman and Diu

Prime Minister Narendra Modi inaugurated and laid the foundation stone for various projects worth 2,587 crore rupees at Silvasa in Daman, Diu, and Dadra Nagar Haveli.

5. Bihar boosts dairy exports: CM flags off Ghee, Gulab Jamun & Makhana shipments to USA, Canada

In a major boost to the export of dairy products from Bihar, three consignments of Ghee, Gulab Jamun and Makhana worth over 48 lakh rupees were today flagged off to the USA and Canada.

6. India finds increasing convergences with Europe, hopes for FTA conclusion by year-end: EAM Jaishankar

External Affairs Minister Dr S Jaishankar has said that India today finds increasing convergences with Europe and highlighted the growth of the Indian economy.

7. Jan Aushadhi Diwas being celebrated to promote affordable generic medicines

Today is Jan Aushadhi Diwas. The day is celebrated to raise awareness about the scheme and promote the use of generic medicines. Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) aims to make quality generic medicines available at affordable prices to all.

8. RBI likely to cut rates by 50-75 bps in 2025-26 to support consumption: CRISIL Report

The Reserve Bank of India (RBI) is expected to cut benchmark rates by 50-75 basis points during 2025-26 to support consumption and lower borrowing costs, credit rating Agency Crisil’s India Outlook 2025 report has said.

9. Aravindh Chithambaram leads Prague Chess Festival 2025 Masters

At the 7th Prague International Chess Festival 2025 Masters, Indian Grand Master Aravindh Chithambaram drew with David Navara in the penultimate round and made a sole lead of 5.5/7 yesterday.

Daily Current Affairs Quiz
8 March, 2025

International Affairs

1. India-China Relations

Context

Chinese Foreign Minister Wang Yi emphasized the need for India and China to support rather than undermine each other, likening their relationship to a ballet between the elephant and the dragon. He acknowledged positive strides in bilateral ties following the resolution of the Eastern Ladakh military stand-off.

Key Diplomatic Developments

• The Xi Jinping-Narendra Modi meeting in Kazan (October 2024) provided strategic guidance for better bilateral ties.
• Since then, both sides have:
  • Strengthened exchanges at various levels.
  • Increased practical cooperation.
  • Achieved several positive diplomatic outcomes.

China’s Position on Border Disputes

• Wang Yi reiterated China’s view that:
  • Border differences should not define bilateral relations.
  • The two nations should prevent disputes from escalating into larger conflicts.

A Unified Global South Against Hegemony

• Wang Yi positioned India and China as key leaders of the Global South, advocating for:
  • Opposition to hegemonism (a veiled reference to the U.S.).
  • Strengthening global democracy in international relations.
  • Greater cooperation to enhance the influence of the Global South.

2. U.S.-Iran Nuclear Tensions

Context

U.S. President Donald Trump has written to Iran’s Supreme Leader Ayatollah Ali Khamenei, urging negotiations to prevent nuclear weapon development. Warned that military action is an option if Iran refuses to negotiate. Shift in approach from his hardline first-term stance, which could create tensions with Israel, a key U.S. ally.

Iran’s Response

• Foreign Minister Abbas Araghchi rejected direct talks as long as the U.S. continues its "maximum pressure" campaign.
• Stressed that Iran’s nuclear program cannot be dismantled through military action.

Background: JCPOA & U.S.-Iran Relations

• 2015 JCPOA (Iran Nuclear Deal)
  • Imposed restrictions on Iran’s nuclear program in exchange for sanctions relief.
  • Trump withdrew the U.S. in 2018, reimposing harsh sanctions.
• Iran's reluctance to return to diplomacy stems from the breakdown of trust post-JCPOA collapse.

Geopolitical Implications

• Potential rift with Israel: Israel has opposed diplomacy with Iran and conducted airstrikes on Iranian sites.
• Tensions in the Middle East: Iran’s nuclear ambitions remain a flashpoint in regional security.

Way Forward

Trump’s outreach signals a possible diplomatic opening, but Iran remains firm on not engaging under pressure. The situation remains delicate, with military confrontation still a possibility.

3. U.S.-India Free Trade Agreement (FTA)

Context

U.S. Secretary of Commerce Howard Lutnick emphasized the need for a broad-based FTA instead of a product-by-product trade deal, which could take years. Urged India to lower tariffs across the board in exchange for greater trade opportunities with the U.S.

Key Highlights from Lutnick’s Address

• Advocated for a comprehensive tariff reduction policy between India and the U.S.

Background & Current Negotiations

• Commerce Minister Piyush Goyal visited Washington (March 4-6) ahead of the April 2 implementation of U.S. reciprocal tariffs.
• India seeks a reprieve, but President Donald Trump has indicated reluctance to offer concessions.
• Both nations are negotiating a Bilateral Trade Agreement (BTA) by October 2025, which may serve as a precursor to an FTA.

Implications

• If India agrees to an FTA, it could open doors to greater access to U.S. markets but might also require significant tariff reductions.
• The U.S. remains firm on enforcing “reciprocal tariffs” if negotiations do not lead to favorable outcomes.

This development signals a high-stakes trade discussion, with India balancing strategic economic interests while seeking trade concessions from the U.S.

National Affairs

1. Duplicate Voter ID Issue

Context

• The Election Commission (EC) acknowledged the issue of duplicate voter ID numbers and committed to resolving it within three months by ensuring a unique national EPIC number for all voters.

Background of the Controversy

• The controversy surfaced after the Trinamool Congress (TMC) raised concerns, alleging that voters from other states were being added to West Bengal's electoral roll.
• The EPIC (Electors Photo Identification Card) is a 10-digit unique number issued by the EC to every voter.

EC's Response and Explanation

• The EC conducted a sample inquiry of over 100 electors, concluding that those with duplicate EPIC numbers were still genuine voters.
• It explained that since 2000, some Electoral Registration Officers (EROs) had mistakenly used the wrong EPIC series, leading to duplicate numbers across states.
• Because each State/UT managed its own voter database, the issue remained undetected for years.
• To fix this, the EC will:
  • Assign a unique EPIC number to all voters with duplicate numbers.
  • Ensure that future voters receive unique EPIC numbers.

Appeal Process for Affected Voters

• First Appeal: File a complaint with the District Magistrate/District Collector/Executive Magistrate under Section 24(a) of the Representation of the People Act, 1950.
• Second Appeal: If unsatisfied, escalate the matter to the Chief Electoral Officer of the respective State/UT.

Key Questions Raised

• If voter IDs were always supposed to be unique, why were duplicate EPIC numbers issued?
• Why did it take decades for the EC to acknowledge and attempt to fix the issue?
• Was the EC misrepresenting facts when it previously claimed all voter IDs were unique?

The EC's initiative to assign a unique national EPIC number is a crucial step toward electoral transparency. However, the delay in addressing the issue has led to political backlash, raising concerns about electoral integrity and voter list management.

2. Deciphering the Indus Valley Script

The recent claim by cryptographer Yajnadevam (Bharath Rao) regarding the successful decipherment of the Indus Valley script is a groundbreaking development in linguistics, archaeology, and historical narratives. His methodology—using cryptographic techniques based on Claude Shannon’s information theory—offers a fresh approach to a puzzle that has eluded scholars for decades.

This decipherment, if validated, could fundamentally alter our understanding of the Indus Valley Civilization (IVC), its linguistic heritage, and its connection to later Indian history.

Methodological Breakthrough in Decipherment

Why Previous Attempts Failed

• Traditional approaches relied on assigning meanings to symbols in short inscriptions, but the inconsistency of symbol meanings in longer texts led to multiple conflicting interpretations.
• The lack of a bilingual inscription (like the Rosetta Stone for Egyptian hieroglyphs) made conventional linguistic comparisons difficult.

Cryptographic Approach to Decipherment

• Rao applied Shannon’s principle that once enough coded messages are read, the correct solution will emerge uniquely.
• By analyzing symbol frequency and positional patterns, he reconstructed the linguistic structure of the script.

Establishing Sanskrit as the Indus Script’s Language

• Eliminating Agglutinative Languages:
  • Indus inscriptions contained tripled symbols, which do not occur in agglutinative languages like Dravidian or Sumerian but do appear in Vedic Sanskrit.
  • Indus script had complex compound words, similar to Sanskrit but unlike agglutinative languages.
  • Flexible word order in the script matched Sanskrit's grammatical structure, unlike the rigid prefixes and suffixes in agglutinative languages.
• Validation through Brahmi:
  • The physical similarity of Indus script symbols to Brahmi script and the existence of mixed inscriptions (Indus + Brahmi) suggest that Brahmi evolved from the Indus script, indicating an unbroken linguistic tradition.

Historical Implications of Decipherment

Impact on the Aryan Invasion Theory

• The widely accepted Aryan migration theory states that Sanskrit entered India around 1,500 BCE via steppe migrants.
• However, if the Indus script is Sanskrit-based and dates back to 4,000 BCE, this suggests Sanskrit was already present in the subcontinent thousands of years earlier.
• This would disprove the idea that Sanskrit was imposed by invaders and instead point to indigenous linguistic and cultural continuity.

Rethinking the North-South Divide

• A major argument supporting a historical north-south divide is that northern Indians descend from Aryans, while southerners descend from the original Dravidian inhabitants of the IVC.
• If the Indus script is Sanskrit-based, this undermines the claim that the IVC was Dravidian-speaking.
• Instead, it suggests cultural and linguistic unity between ancient and modern Indian civilization, rather than an imposed northern culture.

Confirming the Maritime & Economic Power of the IVC

• Indus inscriptions mentioning the ocean as ‘home’ correlate with archaeological evidence of extensive Indus trade networks, especially with Mesopotamia.
• References to deities, rituals, and daily life indicate a sophisticated spiritual and social structure, potentially linked to later Hindu traditions.

Challenges & Skepticism in the Academic Community

While Rao’s findings are highly significant, they will inevitably face rigorous academic scrutiny. Some key challenges include:

• Lack of independent verification: No other cryptographers or epigraphists have confirmed Rao’s decipherment.
• Absence of universally accepted translations: The Indus script is still largely undeciphered, and Rao’s work must be tested against multiple inscriptions to gain acceptance.
• Contradictions with existing linguistic models: Mainstream scholars argue that linguistic continuity over thousands of years is rare, requiring further evidence.

Despite these challenges, if Rao’s decipherment holds up under peer review, it could revolutionize Indian history, linguistic studies, and cultural identity.

A Paradigm Shift in Understanding the Indus Valley Civilization

The potential decipherment of the Indus script in Sanskrit challenges long-standing historical narratives about India’s linguistic and cultural evolution. If validated, it could:

• Refute the Aryan migration theory by proving Sanskrit’s existence in India since at least 4,000 BCE.
• Establish a direct link between the Indus Valley Civilization and later Indian traditions.
• Redefine India’s historical identity as an unbroken civilization rather than one shaped by external conquests.

While more validation is needed, this breakthrough offers an exciting avenue for rewriting ancient history with new, data-driven insights.

Source: TOI

3. India’s Defence Deals

Context

India has recently undertaken major defence upgrades across its Army, Air Force, and Navy, reinforcing its military capabilities amid regional security challenges.

Army Strengthens T-72 Tank Fleet with Russian Engines

• Contract Signed: India has inked a $248 million deal with Russia’s Rosoboronexport (RoE) for the procurement of 1,000 HP engines for its T-72 tanks.
• Technology Transfer: The deal includes local integration and licensed production at Armoured Vehicles Nigam (Heavy Vehicles Factory, Avadi, Chennai) under the ‘Make in India’ initiative.
• Upgraded Mobility & Firepower:
  • Current T-72 tanks are fitted with 780 HP engines; the new 1,000 HP engines will significantly boost battlefield mobility and offensive capability.
  • India has 2,400 T-72 tanks and is also inducting 1,300 T-90S ‘Bhishma’ tanks (out of 1,657 being produced under Russian license).
  • Indigenous tank projects:
    • 118 Arjun Mark-1A tanks (with major upgrades) ordered for ₹7,523 crore in 2021.
    • 354 light tanks under Project Zorawar (₹17,500 crore) to enhance high-altitude warfare capabilities, especially for the Ladakh standoff with China.

IAF's C-17 Globemaster Lands at Kargil for the First Time

• Strategic Airlift Milestone: The Indian Air Force's C-17 Globemaster-III aircraft made its first-ever landing at Kargil airfield, near the Line of Control (LOC) with Pakistan.
• Trial Run:
  • Took off from Hindon airbase (Delhi NCR) and successfully landed at Kargil’s 9,700-feet-high airstrip (surrounded by mountains).
  • Next step: Conducting night landings at Kargil.
• Significance: Enhances logistical and operational capabilities in forward areas, crucial for rapid troop and equipment deployment in conflict scenarios.

Indian Navy Wraps Up Major Combat Exercise in Indian Ocean

• Tropex 2024 Concludes:
  • A three-month-long naval exercise tested India’s maritime war-fighting readiness.
  • Participation:
    • 65-70 warships
    • 10 submarines
    • 80+ aircraft and helicopters
    • Joint participation from the Army, IAF, and Coast Guard
• Focus Area: Indian Ocean Region (IOR), amid growing China-Pakistan naval cooperation.
• Objective: Strengthening combat readiness, interoperability, and maritime security.

As India faces evolving security challenges, these measures reinforce its strategic deterrence and operational preparedness.

Source: TOI

Banking and Finance

1. SEBI’s New Chairperson Prioritizes “Optimum Regulation”

Context

SEBI’s new chairperson, Tuhin Kanta Pandey, emphasized the need to remove outdated and redundant regulations. Stressed that capital markets are dynamic, requiring adaptive and efficient regulation. SEBI will focus on “optimum regulation” rather than maximum regulation.

Background

• Former SEBI Chairperson Madhabi Puri Buch faced scrutiny over alleged offshore fund holdings and a stake in an advisory firm, raising concerns about SEBI’s objectivity.
• Pandey, in his first public address, emphasized that transparency must extend to SEBI itself.

Key Themes in SEBI’s Approach

A. Governance & Ethical Standards

• Regulatory bodies and corporations must uphold the highest standards of governance, transparency, and ethics.
• SEBI aims to review and modernize outdated norms to ensure regulations remain relevant.

B. Shift Towards Balanced Regulation

• Pandey rejects overregulation, advocating for “optimum regulation” instead.
• SEBI will employ a mix of incremental and bold reforms, rather than large-scale disruptive changes.
• Regulatory clean-up: Unnecessary or outdated laws may be scrapped, making compliance easier.

C. Market Accessibility & Investor Confidence

• Encouraging both domestic & foreign investments:
  • SEBI acknowledges the stability provided by domestic institutional investors (DIIs) while recognizing the need to attract Foreign Portfolio Investors (FPIs).
  • A conducive investment climate will be promoted to ensure sustained foreign capital inflows.
• Simplifying processes at all touchpoints (entry, transactions, and exit) to enhance market participation.

D. Technology & Financial Inclusion

• SEBI aims to leverage technology for transparency and efficiency in market operations.
• Financial inclusion initiatives include:
  • Low-value mutual fund SIPs (to encourage retail investment).
  • SME REITs (to widen investment options for small investors).
  • Specialized investment funds (catering to niche investor segments).
• Investor education remains a key pillar of SEBI’s approach, ensuring informed decision-making and risk awareness.

Potential Impact on the Financial Ecosystem

For Investors

• Retail investors may benefit from a more investor-friendly ecosystem, with better transparency, investor education, and accessible investment options.
• A stable regulatory environment will boost confidence among institutional investors and encourage long-term investments.

For Corporations & Market Participants

• Reduced compliance burden due to the review of outdated laws.
• Greater ease of doing business, making India’s markets more attractive for both domestic and global players.

For the Indian Capital Markets

• A balanced mix of domestic and foreign capital could strengthen India’s growth trajectory, ensuring market stability.
• The focus on technology-driven reforms and governance standards may enhance market efficiency and global competitiveness.

Way Forward

Pandey’s vision for SEBI marks a departure from excessive regulation towards a more dynamic and market-responsive approach. By focusing on governance, investor awareness, financial inclusion, and a balanced regulatory framework, SEBI aims to create an efficient, transparent, and resilient capital market that can sustain India's economic growth.

Source: Mint, BS

2. RBI’s Gold Reserves

Context

The Reserve Bank of India (RBI) has been aggressively increasing its gold reserves since 2020, making it the second-largest buyer globally after China. This shift signals a deeper strategic and economic intent beyond mere diversification.

Key Highlights:

India is the second-largest gold buyer (post-2020), trailing only China. Total gold added (2020-2024):

• India: 244 tonnes
• China: 336 tonnes

In Q4 2024:

• India added 22.54 tonnes (second-largest buyer globally).
• China added only 15.24 tonnes.
• Singapore reduced holdings by 7.65 tonnes.
• Poland topped the list with 28.53 tonnes.

As of Jan 31, 2025, India’s gold reserves stand at 879 tonnes after adding 3 tonnes in 2025.

Key Reasons Behind RBI’s Gold Accumulation

• Hedging Against Global Economic Uncertainty
  • The post-pandemic world has been marked by high inflation, currency volatility, and rising geopolitical tensions.
  • Gold serves as a safe-haven asset in times of economic instability, insulating India’s reserves from fluctuations in the US dollar and other foreign currencies.
• Geopolitical Strategy & De-dollarization Trends
  • The Russia-Ukraine conflict and resulting sanctions exposed vulnerabilities in relying too heavily on the dollar-based global financial system.
  • BRICS nations, including India, have been increasing their gold reserves, possibly as a long-term hedge against potential shifts in global trade and financial settlements.
  • While India officially denies any de-dollarization policy, its growing gold stockpile suggests a cautious move toward greater monetary sovereignty.
• Balancing Forex Reserve Composition
  • Gold as a proportion of India’s total forex reserves has been rising, indicating an RBI strategy to reduce reliance on US Treasuries and other fiat-denominated assets.
  • Unlike fiat currencies, gold is not subject to credit risk and holds intrinsic value, making it a long-term store of wealth.
• Central Bank Behavior & Market Sentiments
  • Emerging market central banks have been increasing gold reserves in response to US monetary tightening and interest rate volatility.
  • The RBI’s continued buying reflects a belief that gold prices will remain strong due to sustained central bank demand globally.
  • India’s accumulation pattern aligns with a broader trend of diversification away from dollar-heavy reserves.

Potential Implications of This Strategy

• Increased Financial Stability
  • A well-balanced reserve mix strengthens India’s financial resilience during economic downturns or global liquidity crises.
  • Holding gold reduces exposure to external shocks, such as rapid currency depreciation or global credit risks.
• Stronger Bargaining Power in Global Trade & Finance
  • Countries with larger gold reserves often enjoy greater credibility and financial leverage in international trade negotiations.
  • This accumulation could signal India’s intent to play a more assertive role in global financial policymaking.
• Impact on India’s Policy Direction
  • While RBI remains committed to a diversified forex strategy, its gold-buying pattern suggests a long-term shift toward asset-backed reserves rather than purely fiat-based holdings.
  • This trend could influence future monetary policies, trade agreements, and financial stability measures.

The RBI’s continued gold accumulation is a strategic response to geopolitical risks, economic volatility, and changing global financial dynamics. While India officially maintains that it has no de-dollarization agenda, the steady increase in gold reserves points to a long-term strategy of diversification, risk mitigation, and financial autonomy.

3. Nestlé India Receives SEBI Warning Over Insider Trading Breach

Context

SEBI has issued a warning to Nestlé India for a breach of insider trading regulations by a designated person of the company.

Key Highlights:

• Compliance Officer Notified: Nestlé India's compliance officer received the administrative warning letter from SEBI on Thursday.
• No Financial Impact: The company clarified that the incident had no material impact on its financials, operations, or other activities.
• Limited Disclosure:
  • Nestlé India did not disclose the findings of the letter.
  • The identity of the person involved remains undisclosed.
• No Immediate Response: Nestlé India has yet to provide an official comment to Reuters.

This incident underscores SEBI's strict enforcement of insider trading laws, reinforcing the need for corporate transparency and compliance.

4. RBI’s VRR Auctions Signal Easing Liquidity Tightness

Context

Recent variable rate repo (VRR) auctions by the Reserve Bank of India (RBI) have seen subdued demand, signaling a significant shift in banking system liquidity. This trend suggests that the central bank’s recent measures to inject liquidity are beginning to take effect, potentially altering its policy stance in the near term.

Falling Demand for VRR

Despite offering substantial funds, banks have shown reduced appetite for liquidity through VRR auctions. This shift implies that the liquidity crunch, which had been a major concern since late 2024, is easing. The banking sector appears to have sufficient funds, diminishing the need for borrowing from RBI.

Implication

• Banking system stability: Lower demand for short-term funds suggests banks are managing liquidity better, reducing dependency on RBI’s repo window.
• Easing financial stress: The reduced strain indicates that prior liquidity injections are working, making room for smoother credit flow.

RBI’s Strategic Moves: Preemptive or Reactive?

RBI’s recent interventions—open market operations (OMOs) and forex swaps—are designed to ensure surplus liquidity, especially ahead of the fiscal year-end. These moves reflect a proactive stance rather than a reactionary measure.

Why This Matters

• Ensuring Policy Transmission: RBI’s priority is to make sure the recent repo rate cut (first in 5 years) translates into lower borrowing costs.
• Managing Forex Volatility: By engaging in dollar-rupee swaps, RBI balances currency stability with liquidity needs.
• Preventing Seasonal Squeeze: March typically sees liquidity tightening due to tax outflows, but RBI’s actions seem to have preempted severe constraints.

The Bigger Picture: A Shift in Policy Stance?

With liquidity constraints easing, the RBI might shift focus from aggressive interventions to a more measured approach. This opens up critical questions:

• Will RBI reduce further liquidity injections?
  • Given the improving situation, RBI may not need additional large-scale OMOs.
• How does this impact future rate cuts?
  • A more liquid system supports the case for further rate cuts if inflation remains controlled.
• What about external risks?
  • While domestic liquidity is stabilizing, global market fluctuations and capital outflows could still pose risks.

Future Outlook

• Dividend Transfers from RBI (May 2025)
  • Expected to further boost liquidity, potentially allowing for more accommodative monetary policies.
• Global Dollar Strength vs. Rupee Stability
  • Reduced forex market interventions could signal RBI’s confidence in the rupee’s resilience.
• Banking Sector Response
  • If banks continue to show weak demand for repo funds, RBI might reconsider its liquidity injection pace.

RBI’s recent actions highlight a fine-tuned approach to liquidity management, balancing the need for surplus funds with inflation risks. While the liquidity situation seems under control for now, external shocks and fiscal year-end pressures could still influence RBI’s next moves. How the central bank adapts to these evolving conditions will shape India’s financial stability in the coming months.

Source: Mint

Economy

1. India’s Services PMI Rebounds Amid Economic Challenges

Context

Services PMI in February rose to 59, up from 56.5 in January, marking a strong rebound from a 25-month low.

Highlights

• Manufacturing PMI, however, fell to 56.3, a 14-month low, but both sectors remain in expansion mode (PMI > 50).
• GDP Growth (Q3FY25): The National Statistical Office (NSO) reported 6.2% real GDP growth, reinforcing economic resilience despite capital outflows.
• Sensex Performance: Strong Q3FY25 corporate earnings indicate long-term economic strength.

Challenges Ahead

• Trade Tensions & Tariffs
  • U.S. President Donald Trump’s reciprocal tariffs (effective April 2) pose risks for India's manufacturing sector.
  • Global protectionism could impact exports and economic growth.
• AI Disruption in Services
  • The IT sector’s growth forecast: Expected to rise 5.1% in FY25 (from 3.8% in FY24), but below its historical 16% CAGR.
  • AI is reshaping the industry, reducing earnings from new contracts and changing hiring & training practices.
• Geopolitical & Economic Risks
  • NASSCOM’s 2025 Strategic Review highlights geopolitical instability & rising tariffs as major concerns.
  • A potential U.S. recession could hurt India’s economy, given America is India’s largest trading partner.

The Way Forward

To mitigate these challenges, India must:

• Diversify its trade partnerships beyond traditional markets.
• Adapt to AI-driven disruptions in the IT sector.
• Strengthen domestic demand to offset external risks.

Agriculture

1. Govt Extends Subsidised Loan Scheme to Cooperative Sugar Mills

Context

The Centre notifies a scheme allowing cooperative sugar mills to access subsidised loans for upgrading ethanol distilleries to dual-feed units. The move is expected to benefit 63 cooperative sugar mills with attached distilleries. Ethanol production can now use grains and corn, alongside traditional molasses-based production.

Loan Subsidy Details

• Cooperative sugar mills will get a 50% interest subvention on project loans or 6%—whichever is lower.
• The subsidy is applicable for five years, including a one-year moratorium.
• Impact on borrowing costs:
  • Most cooperative mills secure loans through National Cooperative Development Corporation (NCDC), which charges ~8.5% interest.
  • Effective interest rate after subvention: ~4.25%.
  • For a ₹200 crore loan, this is a highly attractive rate, said Prakash Naiknavare, MD, National Federation of Cooperative Sugar Factories.

Economic & Operational Impact

• The move extends distillery operations by 2-3 months, beyond the usual 4-5 month molasses supply window.
• Investment requirement:
  • Converting molasses-based distilleries into dual-feed units requires ₹50-60 crore per plant.
  • With lower interest rates, investments will be smoother.
• Until now, only private sugar companies had access to similar incentives.

Ethanol Blending & Future Prospects

• The scheme aligns with the Ethanol Blending Program (EBP), helping India achieve higher ethanol production targets.
• Diversifying feedstock will reduce dependence on sugarcane and ensure year-round ethanol production.
• Strengthens India’s energy security and promotes the biofuel economy.

The scheme marks a major policy shift, supporting cooperative sugar mills and reinforcing India’s ethanol strategy.

Source: BS

Facts To Remember

1. At least one Jan Aushadhi Kendra to be set up near every hospital: Delhi CM

Delhi Chief Minister Rekha Gupta said at least one Jan Aushadhi Kendra will be opened within a 500-metre radius of every hospital in the city.

2. South Korean court orders release of impeached Yoon to stand trial

A South Korean court ordered impeached President Yoon Suk Yeol to be released from jail, a move that could allow Mr. Yoon to stand trial for his rebellion charge without being physically detained. Mr. Yoon was arrested and indicted in January over the December 3 martial law decree that plunged the country into turmoil.

3. Sri Lanka signs deal worth $2.5 bn with Japan to restructure debt

Sri Lanka signed a deal with Japan on Friday to restructure $2.5 billion in loans, marking the first agreement with official creditors who had pledged debt relief to the cash-strapped nation last year. Japan said it was granting concessions on a 369.45 billion yen ($2.5 billion) loan under a comprehensive debt treatment plan.

4. Philippines set to sign agreement for troop deployment with Canada

The Philippines and Canada have negotiated a deal for the deployment of troops, Manila said. While the two parties held talks, no timetable was given for the deal. Manila already has similar pacts with the United States, Australia and Japan, against a backdrop of China’s actions in the disputed South China Sea.

5. U.S. cancels $400 million in grants to Columbia

U.S. President Donald Trump has cancelled grants and contracts totalling $400 million to Columbia University due to “inaction in the face of persistent harassment of Jewish students”, the Education Department said.

6. Pranav is World junior champion

V. Pranav is the World junior chess champion. He won the title after drawing his 11th and final round game with Matic Lavrencic of Slovenia at Petrovac (Montenegro). The draw took Pranav’s tally to nine points. He had begun the campaign as the second seed behind Daniel Dardha of Belgium.

7. IndusInd Bank MD & CEO gets 1 yr extension

The Reserve Bank of India (RBI) has granted only a one yearr extension to Sumant Kathpalia, managingg director (MD) and chief executive officer (CEO), IndusInd Bank.

8. International Women's Day

International Women's Day (IWD) is a holiday celebrated annually on 8 March as a focal point in the women's rights movement.

9. President Droupadi Murmu inaugurates national conference on ‘Nari Shakti Se Viksit Bharat’

A day long conference on ‘Nari Shakti Se Viksit Bharat’ began in New Delhi today to mark the International Women’s Day.

10. President, Vice Prez and PM extend greetings to people on International Women’s Day

President Droupadi Murmu, Vice President Jagdeep Dhankhar and Prime Minister Narendra Modi have extended greetings to the people on the occasion of International Women’s Day.

11. Indian Grandmaster Pranav Venkatesh becomes World Junior Chess Champion 2025

In chess, 18-year-old Indian Grandmaster Pranav Venkatesh dominated the FIDE World Junior Championship 2025 to claim the title in Montenegro last night. Pranav becomes the fourth Indian to win the World Junior title, following Viswanathan Anand, Pentala Harikrishna, and Abhijeet Gupta.

12. India Clinch 5th Asian Women’s Kabaddi Title, Defeat Iran 32-25 in Final

The Indian Women’s Kabaddi Team has been crowned Asian Champions for the fifth time. The defending champions, India, defeated hosts Iran, 32-25, in the final of the 6th Asian Women’s Kabaddi Championship at Tehran this afternoon.

Daily Current Affairs Quiz
9&10 March, 2025

International Affairs

1. OIC's Rejections Against Trump's Gaza Takeover Plan

Context

The Organization of Islamic Cooperation (OIC) has officially accepted an Arab League backed counter proposal to the controversial American proposal for Gaza by President Donald Trump. It signals the regional resistance to external control over Gaza and heralds an alternate view led by Arab states.

Key Developments

OIC Endorsing the Arab League Plan

• The Egyptian drafted plan proposes Gaza's reconstruction under the Palestinian Authority (PA) rather than a U.S. administration.
• OIC's 57 member states called for international and regional financial support for this to happen.
• The Arab League had ratified the proposal in Cairo three days earlier.

Rejection of Trump's Proposal

• Trump's plan involved U.S. control over Gaza, calling it the "Riviera of the Middle East [West Asia]."
• The plan faced widespread global condemnation, especially for its move to displace Palestinians to Egypt or Jordan.
• The adoption of this Arab League plan by the OIC, thus, is a very strong rejection of Trump's vision.

Strategic & Diplomatic Implication

Regional Unity against U.S. & Israeli Proposals

• OIC and Arab League will present a coordinated alternative to Western backed plans for Gaza.
• Egypt will lead diplomatic efforts to internationalize this plan and seek support from the US, Japan, Russia, and China.
• This move could strengthen Palestinian diplomatic leverage.

U.S. and Israeli Opposition to the Arab Plan

• Washington rejected the plan stating it "does not meet expectations".
• U.S. envoy Steve Witkoff, however, called it a "good faith first step", probably hinting at future diplomatic engagement.
• Israel has not yet endorsed any long term governance plan about post war Gaza, rendering implementation very difficult.

Financial/Political Challenges in Rebuilding Gaza

• The plan's success, therefore, depends heavily on international funding.
• Hamas' exclusion from governance brings doubts about its practical viability on the ground.
• Long term stabilization in Gaza remains uncertain without an agreed on political settlement.

What is Next?

This move by the OIC signifies a very harsh geopolitical stance against U.S. proposals for Gaza. However, gaining broad international support and political intricacies such as the role of Hamas with the plan will be key challenges in actualizing the Arab League plan.

The Organisation of Islamic Cooperation (OIC)

The Organisation of Islamic Cooperation (OIC), formerly the Organisation of the Islamic Conference, is an intergovernmental organization founded in 1969.^[1] It consists of 57 member states, 48 of which are Muslim-majority.

• Secretary-General
  • Hissein Brahim Taha

2. India-Mauritius Relations

Context

PM Modi will visit Mauritius (March 11-12, 2025) as the Guest of Honour for its Independence Day celebrations on March 12.

Political Context

• Mauritius has a new government led by Navinchandra Ramgoolam (Labour Party), who won a landslide victory in November 2024 elections.
• India-Mauritius relations have remained strong regardless of party leadership in either country.
• Modi’s visit will reaffirm India’s support for Mauritius’ security and economic prosperity.

Historical & Cultural Ties

• Shared Colonial Past: Mauritius’ first PM, Sir Seewosagur Ramgoolam, worked with Netaji Subhas Chandra Bose in London (1919-21).
• Indian Diaspora:
  • Nearly 70% of Mauritius’ population is of Indian origin, descended from indentured laborers.
  • Major linguistic groups: Bhojpuri, Tamil, Telugu, Marathi.
  • Mahatma Gandhi Institute & World Hindi Secretariat promote Indian culture and languages in Mauritius.
• Diplomatic Challenge:
  • Mauritius is a multi-ethnic society, including influential French-origin elites who dominate business sectors.
  • India’s diplomacy must balance ties with all communities, beyond just the India-origin population.

Economic & Trade Relations

• Rapid trade growth: India-Mauritius bilateral trade reached $554 million (2022-23).
• Strategic Business Hub:
  • Mauritius has preferential trade agreements with Africa and is bilingual (English & French).
  • Well-developed finance & banking sector makes it a gateway to Francophone Africa.
• Investment & Financial Sector:
  • Mauritius is a major source of foreign investment into India due to the Double Taxation Avoidance Agreement (DTAA).
  • Has emerged as an international financial hub, leveraging its strong legal framework.

Maritime Security & Strategic Cooperation

• Mauritius’ Strategic Role:
  • Exclusive Economic Zone (EEZ): 2.3 million sq. km.
  • India has installed coastal radar stations and redeveloped Agaléga island as a joint surveillance facility.
  • Mauritius has access to India’s Information Fusion Centre for the Indian Ocean Region (IFC-IOR) for enhanced maritime security.
• Regional Security Alliances:
  • Colombo Security Conclave (India, Sri Lanka, Maldives, Mauritius, Bangladesh) ensures a safe & secure Indian Ocean region.
  • INS Sarvekshak recently mapped 25,000 sq. km of Mauritius’ ocean territory.
• China Factor:
  • With China’s increasing presence in the Indian Ocean, India-Mauritius security cooperation has gained strategic importance.

Outlook

• PM Modi’s visit will reinforce India’s historical, economic, and strategic ties with Mauritius.
• Discussions will focus on:
  • Deepening economic partnerships
  • Strengthening maritime security
  • Ensuring Mauritius remains India’s reliable ally in the Indian Ocean

India-Mauritius ties must remain a strong and stable anchor in an increasingly uncertain geopolitical landscape.

Source: TH

3. India Raises Concerns Over Pakistan’s Investment in NDB

Context

IMF is conducting its first review of a $7 billion bailout granted to Pakistan in 2023. India has previously abstained from voting on Pakistan’s IMF loan requests but took a stricter stance in January 2024. India urged the IMF to ensure "stringent monitoring" of funds provided to Pakistan to prevent diversion towards defense spending or external debt repayment.

Pakistan’s Plan to Invest in NDB

• Pakistan’s Economic Coordination Committee (ECC) has approved a $582 million investment in the New Development Bank (NDB) for a 1.1% stake.
• NDB, founded by BRICS nations (Brazil, Russia, India, China, South Africa) in 2015, finances infrastructure and sustainable development projects.
• Pakistan argues that the investment will:
  • Strengthen its economic ties with BRICS.
  • Reduce reliance on Western lenders like the IMF.

India’s Objection & Concerns

• India is set to red-flag Pakistan’s investment in NDB when the second tranche of the IMF loan is reviewed.
• The key concerns India will raise:
  • Contradiction: A nation seeking emergency funds from IMF should not simultaneously invest hundreds of millions in another financial institution.
  • Use of IMF funds: India wants to ensure that Pakistan does not divert IMF aid for non-priority expenditures.
  • Lack of financial discipline: Pakistan is in a debt crisis, yet it is using forex reserves for investments rather than economic stabilization.

India’s Prior Stand on Pakistan’s IMF Loans

• In January 2024, during the review of Pakistan’s $3 billion Stand-By Arrangement (SBA), India demanded:
  • Strict monitoring of IMF funds.
  • Checks to prevent misuse for repaying third-country debts or boosting military spending.

Implications & Next Steps

• If India raises formal objections, the IMF board might tighten oversight on Pakistan’s loan utilization.
• Pakistan may have to justify its financial priorities and face scrutiny over its economic strategy.
• The issue could impact Pakistan’s IMF funding prospects and its diplomatic standing in BRICS nations.

This development adds another layer to India-Pakistan tensions and raises questions about Pakistan’s financial strategy amid its ongoing economic crisis.

New Development Bank (NDB)

The New Development Bank (NDB), formerly referred to as the BRICS Development Bank, is a multilateral development bank established by the BRICS states (Brazil, Russia, India, China, and South Africa). According to the Agreement on the NDB, "the Bank shall support public or private projects through loans, guarantees, equity participation and other financial instruments."

• Headquarter
  • Shanghai, China
• President
  • Dilma Rousseff
• Member Countries
  • Algeria
  • Brazil
  • China
  • Egypt
  • India
  • Russia
  • South Africa
  • United Arab Emirates
  • Uruguay

National Affairs

1. Geo Mapping of Plantations in Kerala by the Rubber Board

Context

The Rubber Board of India will commence geo mapping rubber plantations in Kerala from next week to enable the growers to have more market access for better price realization and compliance with international sustainability norms.

It is at the initiative overview:

• Objective
  • Better and improved market access.
  • It verifies the material under the certification towards Indian Sustainable Natural Rubber (iSNR) framework.
• Compliance
  • On the European Union Deforestation Regulation (EUDR).
• Implementation
  • Phase 1: 10 of the major rubber growing districts of Kerala.
  • Other regions: Will be covered after this.
  • Partnered by: Trayambu Tech Solutions Pvt. Ltd., Hyderabad.

What is Geo Mapping?

• Means digital recording of
  • Land ownership details.
  • Area and boundary of the plantation.
  • Techniques for supply chain mapping and traceability.

This gives clear origin tracking, thus making Indian rubber products more competitive in world markets.

Why is This Important?

• EUDR Compliance
  • This requires that all commodities that go into the EU must be deforestation free (post Dec. 31, 2020).
  • Rubber must be derived lawfully and according to environmental sustainability.
• International Trade and Marketability
  • It fortifies the Indian position in international rubber markets.
  • Supports the sustainable and transparent production of rubber.
• iSNR Certification and Due Diligence
  • Certification will imply compliance with EUDR regulations.
  • Due Diligence Certificate will be issued after the risk assessment and legality analysis.
• Facilities
  • Access to essential traceability certificates and documents.
  • Get Due Diligence Declarations and Geolocation datasets.
  • Compliance to the world deforestation free regulations.

This geo mapping initiative lays an important milestone in determining the sustainable production of rubber in India. Integrating into a status of digital tracking and certification with long term commitment towards global regulatory compliance gives better prices, improved trade access, and long term sustainability to Indian rubber growers and exporters.

Source: TH

2. TB Elimination Campaign

Context

The 100 day intensified TB elimination campaign, which began on December 7, 2024, covered 33 States and Union Territories, with 455 intervention districts. It tried to find symptomatic and asymptomatic TB cases among high risk groups by way of chest X ray screening and bacteriological confirmation through molecular tests.

Key Highlights of the Campaign

Objectives

• Screening of vulnerable populations including diabetics, smokers, alcoholics, people living with HIV, past TB patients, elderly individuals, and household contacts of TB patients.
• Identification of subclinical/asymptomatic TB cases through AI assisted chest X ray screening.
• Case detection efforts are being genuinely expedited to reduce the time to diagnosis.

TB Notification Data

The increase in TB notifications compared to last year is slight(+220 cases). Increased notifications between Dec 7, 2024, and Feb 22, 2025, against same intervals of last year: +44,585 cases.

• These increments cannot be considered solely as the impact of the intensified campaign, because TB notifications have been hardly escalating for some years now:
• 2021: 21,35,830 cases
• 2022: 24,22,121 cases
• 2023: 25,37,235 cases
• 2024: 26,18,499 cases

Challenges and Limitations

Overclaim of Campaign Efficacy

• The government’s assumption that all 3.5 lakh cases in intervention districts were detected solely due to the campaign is dubious.
• The near statistics of total TB notifications across India only suggests that many of these cases would have been identified in the absence of the campaign.

Low Utilization of X Ray Screening

• Though the campaign claimed a new strategy to early detection using chest X rays, only 3.8 lakh of the 10 crore (100 million) people screened (3.8%) were reported to have undergone an X ray.
• The National TB Prevalence Survey (2019-2021) estimates that 42.6% of TB cases might have been missed without an X ray, thus making it a very useful tool.
• This was a further dampener on campaign efficacy: if not all the 3.8 lakh X ray screenings were meant for asymptomatic cases in the campaign, the campaign did not have other tools for intervention.

Poor Infrastructure

• Deployment was limited to 836 portable X ray vans across 455 districts, affecting coverage.
• Meanwhile, AI assisted chest X ray interpretation tools remain untested and unapproved by Health Technology Assessment (HTA).

Short Duration & Unrealistic Goal

• The 100-day campaign is too brief to achieve meaningful long-term TB reduction.
• Given India’s high TB burden, eliminating TB by 2025—as envisioned by Prime Minister Narendra Modi—appears overly ambitious without sustained and improved interventions.

While the 100-day intensified TB elimination campaign likely improved case detection to some extent, its overall impact has been overstated. Key limitations, including low X-ray screening coverage, inadequate infrastructure, and a short intervention period, undermine the effectiveness of the initiative.

Source: TH

India’s Tuberculosis (TB) Elimination Program

3. River Dolphin Conservation in India

Context

The recent population study released by the Ministry of Environment, Forests and Climate Change reports 6,327 river dolphins in India, highlighting the critical status of these freshwater mammals. The study also raises concerns regarding their threats, ecological role, and conservation strategies. A deeper analysis is essential to understand whether existing efforts are sufficient or if stronger intervention is needed.

River Dolphins

River dolphins are categorized into facultative and obligate species, each with unique habitat preferences and conservation concerns.

Facultative River Dolphins (Both Freshwater and Marine)

• Irrawaddy dolphin (India: 155 in Chilka Lake; also found in Sunderbans).
• Tucuxi (Amazon and Orinoco Rivers).
• Yangtze finless porpoise (China).

Obligate River Dolphins (Exclusively Freshwater)

• Ganges river dolphin (found in Ganges and Brahmaputra).
• Indus river dolphin (State aquatic animal of Punjab; only 3 spotted in Beas River, India; 1,800 survive in Pakistan).
• Yangtze river dolphin (China; presumed extinct since 2007).

Key Analytical Insights

• The Indus river dolphin’s numbers in India are critically low, raising concerns about its survival.
• The Yangtze river dolphin’s extinction serves as a warning for India’s conservation efforts.
• Irrawaddy dolphins have stable populations in Chilka Lake, driven by eco-tourism, highlighting the role of conservation-linked tourism.

Adaptations

The Ganges and Indus river dolphins have evolved unique adaptations to survive in muddy, freshwater environments with low visibility.

Sensory Adaptations

• Echolocation-based navigation (biosonar system for detecting objects).
• Melon (forehead mass) as a sound lens for focusing ultrasonic waves.
• Poor eyesight:
  • Eyes only 1 cm across, lacking an eye lens.
  • Limited to detecting light direction rather than forming images.
  • Small visual processing areas in the brain but enhanced hearing regions.

Key Analytical Insights

• The shift from vision to echolocation highlights their dependence on acoustic signals for survival.
• Increasing water pollution (chemical contaminants, noise pollution) could disrupt their echolocation ability, threatening their survival.

Conservation Challenges

Despite their legal protection under the Wildlife Protection Act (1972), river dolphins in India face multiple anthropogenic (human-induced) threats.

1. Habitat Destruction & River Pollution

• Dam construction (e.g., Farakka Barrage) disrupts water flow and isolates populations.
• Chemical pollutants from industries and agriculture contaminate rivers, affecting dolphin health.

2. Overfishing & Bycatch Mortality

• Declining fish populations reduce dolphin food supply.
• Accidental entanglement in fishing nets (bycatch) leads to high mortality rates.

3. Poaching & Use in Traditional Medicine

• Dolphin oil and body parts are used in folk medicine for arthritis and muscular strains, fueling illegal hunting.

Key Analytical Insights

• Dams and pollution are systemic threats, requiring long-term solutions like habitat restoration and sustainable water management.
• Bycatch reduction measures (modified fishing nets, dolphin-safe zones) are urgently needed.
• Stronger enforcement against poaching is necessary to curb illegal hunting.

4. Conservation Efforts: Are They Sufficient?

Current Strategies

• Project Dolphin (Launched 2020): Aims to protect river dolphins through habitat conservation and awareness campaigns.
• Ganges Dolphin Conservation Action Plan (2010-2020): Focused on reducing pollution, promoting eco-tourism, and improving research.
• Biosphere reserves & dolphin sanctuaries:
  • Vikramshila Gangetic Dolphin Sanctuary (Bihar).
  • Chambal National Sanctuary (MP, UP, Rajasthan).

Limitations & Gaps

• Lack of effective monitoring: The actual population trends remain unclear, despite advancements in tracking methods.
• Limited expansion of conservation areas: No new protected zones have been added in recent years.
• Weak enforcement against poaching & habitat destruction.

Analytical Insights

• While conservation frameworks exist, implementation gaps reduce their effectiveness.
• More dolphin sanctuaries should be designated to protect critical habitats.
• Stronger pollution control and stricter enforcement of conservation laws are needed.

Way Forward

1. Expansion of Protected Areas & Dolphin Reserves

• Increase the number of dolphin sanctuaries along the Ganges and Brahmaputra rivers.
• Designate protected zones in the Beas River to prevent Indus river dolphin extinction in India.

2. Stricter Regulation of Fishing Practices

• Promote dolphin-safe fishing gear to prevent bycatch.
• Impose seasonal fishing bans in high-risk zones.

3. Pollution Control & Sustainable Water Management

• Reduce industrial effluents & agricultural runoff in dolphin habitats.
• Implement stricter wastewater treatment laws for rivers.

4. Community Involvement & Eco-Tourism

• Successful model: Chilka Lake’s Irrawaddy dolphins attract eco-tourists, boosting conservation efforts.
• Community-driven conservation programs should be expanded to other regions.

4. The IndiaAI Mission

Context

The IndiaAI Mission, worth ₹10,371.92 crore, aims at driving India's artificial intelligence development and reducing the dependence on foreign AI models through indigenous capacity building. In this sense, the mission has aims in compute infrastructure, datasets, model development, safety, and skill building. It is a mission, too, that stands of great importance in light of rapid advances in AI technology across the globe and a rapidly emerging necessity for developing culturally and linguistically relevant AI tools for India's diversity.

Key Pillars and Their Strategic Impact

AI Kosha

• Aim: Creating a national dataset platform for supplying quality Indian data, non personal, for the purpose of conducting AI research.
• Initiatives Underway: Initial datasets contain translation models for Indian languages.
• Barriers
  • Very few," annotated high quality datasets for several Indian languages.
  • AI models developed hitherto have a bias toward English language content.
• Impacts: A "major enabling factor" for AI models which train on Indian languages, dialects, and local contexts, leading to much higher accuracy and relevance in India.

Democratizing AI Infrastructure

• Aim: Provide GPU access to startups and researchers who cannot afford costly AI hardware for themselves.
• Current Progress: 14,000 GPUs deployed through empaneled data centers; expansion is planned quarterly.
• Hurdles
  • Because they include allocation management in the ongoing analysis—fairness of allocation and efficiency of distribution will be very important in this regard.
  • Scalability issues because of the increasing demand for AI across the world, with the rise of GPU shortages.
• Impact: Levels the playing field for Indian AI startups, helping them compete with their wealthy global AI counterparts.

AI Safety & Governance

• Aim: Setting up the AI Safety Institute of India to manage risks in deploying artificial intelligence and develop ethical guidelines.
• Current Progress: Awaiting a formal launch.
• Barriers
  • Lack of a formal regulatory framework for AI in India.
  • Threats of misinformation, deepfakes, algorithmic bias, etc., due to AI adoption.
• Impact: This is making AI secure, transparent, and explainable a must have condition for public trust and sectoral adoption in areas like healthcare and finance.

Indigenous AI Model Development

• Aim: Develop India’s own artificial intelligence foundation models instead of relying on OpenAI, Google, or Meta.
• Current Progress: 67 proposals were received concerning AI models supported by the government.
• Challenges
  • Mining cost. Large artificial intelligence models with localized training require enormous computing resource availability.
  • Deep expertise is needed in the area of AI development.
• Impact: Diminish reliance on foreign AI models, thereby boosting the sovereignty of Indian AI and strengthening its global competitiveness.

AI Innovation & Skill Development: Building a Talent Pipeline

• Objective: Support AI research through the IndiaAI Innovation Centre and FutureSkills initiative.
• Current Progress: Plans to set up AI labs in Tier-2 & Tier-3 cities.
• Challenges:
  • Bridging the gap between industry needs and academic research.
  • Addressing brain drain—keeping top AI talent in India.
• Impact: Ensures a strong domestic talent base, crucial for sustaining AI innovation.

Assessment of the IndiaAI Mission

Source: Mint

5. Centre's Special Assistance Scheme

Context

Almost 97% of the entire financing of ₹1.25 trillion, provided by the Special Assistance scheme for states, has been approved by the Centre making interest free loans for a period of 50 years available to the states for enhancing capital investments and reforms.

Key Features

Fund Allocation & Utilization

• Total Revised Allocation (FY25): ₹1.25 trillion (originally ₹1.5 trillion).
• Approved Amount (First 10 months): ₹1.22 trillion (~97% of allocation).
• Breakdown of Fund Usage
  • ₹55,000 crore: Allocated based on states' share of central taxes & duties.
  • ₹95,000 crore: Linked to reform implementation upon such reforms as:
    • Iconic tourism destination development.
    • Vehicle scrappage incentives.
    • Development of industry.
    • Advancement of NCR development.

Desirable Conditions for Assistance

• As in other Centrally Sponsored Schemes (CSSs).
• Transparency in fund management.
• Capital expenditure renderable additional, not alternative, to state budget expenditure.
• Others: Land reforms.

Genesis of the Scheme

• Initiated in FY21, with the initial allocation of ₹12,000 crore.
• FY22: Enhanced to ₹15,000 crore.
• FY23: Increased manifold to ₹1.07 trillion, with ₹27,000 crore contingent on state-specific reforms.
• FY24: Allocation of ₹1.3 trillion, out of which ₹30,000 crore constitutes the outcome-based assistance.

Strategic Implications

• For States
  • Increase capital investments in infrastructure, tourism, and industrial development.
  • Long-term fiscal space with no immediate debt burden on the states.
  • Encourages adherence to central policies & transparency in fund utilization.
• For the Centre
  • Ensures uniform economic development across states.
  • Encourage state-level structural reforms in governance and urban planning.
  • Augment public investment in capital projects aiding economic recovery.

The Special Assistance scheme ensured capital investments biennially, and with reforms implemented, have been a sharper focus on the development of states. The fact that 97% of the funds have been approved is itself a testimony to the efficiency of the scheme in its disbursement, and to the strong fiscal coordination between the Centre and states.

6. India’s Semiconductor

Domestic Semiconductor Production Initiative

• Government Announcement:
  • India’s first domestically manufactured semiconductor chip will roll out in 2025.
  • Aim: Reduce import dependency and boost domestic production.
• Key Manufacturing Facilities Under Construction:
  • Tata Semiconductor Assembly and Test facility (Morigaon).
  • Dholera Semiconductor Fabrication Facility (fab) by Tata Electronics & Taiwan’s Powerchip Semiconductor Manufacturing Corporation.

Semicon India Programme (2021)

• Objective: Develop semiconductor & display manufacturing ecosystem.
• Budget and Expenditure Trends:
  • FY23: Budgeted ₹200 crore → Spent ₹13 crore.
  • FY24: Budgeted ₹3,000 crore → Revised ₹1,503 crore → Spent ₹681 crore.
  • FY25: Budgeted ₹6,903 crore → Revised ₹3,816 crore.
  • RE for FY25 doubled compared to FY24, indicating better implementation focus.

Rising Import Dependency on Semiconductor Chips

• Import Trends (FY16–FY24):
  • Monolithic Integrated Circuits (ICs): ₹1.05 lakh crore in FY24 (2,000% increase from FY16).
  • Memory Chips: 4,500% increase from FY16.
  • Amplifiers: 4,800% increase from FY16.
• Share of Semiconductor Chips in Total Imports:
  • Monolithic ICs: Increased from 0.19% (FY16) to 2.09% (FY25, April-November).

Key Semiconductor Suppliers to India

• Major Suppliers (Past 10 Years):
  • China (Dominant supplier, except FY19).
  • Hong Kong, Japan, South Korea, Singapore, Taiwan.

India’s Role in the Global Semiconductor Value Chain

• Strengths:
  • Growing capabilities in assembly, testing, packaging (ATP), and fabrication (fab).
• Challenges & Gaps:
  • No major breakthroughs in critical areas such as:
    • EDA (Electronic Design Automation) software (chip design tools).
    • Core IP (patents & licensing).
    • Wafers & fab tools (raw semiconductor materials & manufacturing machinery).
    • Advanced chip design.

Way Forward

• India’s semiconductor industry is growing but faces challenges in core R&D, materials, and high-end manufacturing.
• The Semicon India Programme needs better execution to reduce reliance on imports.
• With increasing investments and strategic partnerships, India is positioning itself as a key player in semiconductor assembly and fabrication.

7. India's Startup Boom

Context

India has witnessed an unprecedented startup boom, fueled by government enthusiasm, incubators, and a growing tech ecosystem. However, concerns remain about whether this momentum can be sustained without unintended negative consequences, similar to India’s past import-substitution policies.

The Scale of India's Startup Ecosystem

• India is the world’s third-largest startup ecosystem (after the US and China), with over 120,000 startups registered in the last decade.
• Incubation centers across IITs, IIMs, and Nasscom are fostering innovation.
• Atal Tinkering Labs in 10,000 schools are encouraging early innovation among students.

Despite these positive trends, structural challenges exist that could hinder long-term success.

Challenges Facing Indian Startups

A. Limited Early Adopters and Price Sensitivity

• Indian consumers are highly price-sensitive ("paisa vasool" mindset).
• Even with interest in new tech, affordability is key.
• Adoption of new technologies tends to be cautious, with many preferring a "wait and see" approach.
• Consumers expect products to be priced at "Indian market prices", making profitability difficult for startups.

B. High Startup Failure Rate and Funding Gaps

• 90% of startups fail globally—India is no exception.
• Indian startups struggle with limited domestic venture capital.
• Income tax policies may not be adequately supporting startup investment.

C. Lessons from UPI: A Blueprint for Scaling Startups

Despite these challenges, India has demonstrated tech-driven success stories—the most striking example being Unified Payments Interface (UPI).

Why did UPI succeed?

1. Government Support: Developed by NPCI (a not-for-profit entity backed by RBI and Indian Banks’ Association).
2. Part of a Broader Digital Stack: Integrated with Aadhaar, eKYC, and DigiLocker for seamless transactions.
3. Incentives for Adoption: Mandates (Aadhaar-bank linking), cashbacks, and zero charges for small transactions boosted adoption.
4. Open API Architecture: Enabled banks and fintechs to innovate freely, increasing competition.
5. Gradual Cultural Shift: Over time, digital payments became a norm, even for rickshaw drivers and fisherwomen.

Policy Tweaks to Ensure Startup Success

To replicate UPI’s success in startups, India may need policy interventions such as:

• Government-backed innovation platforms (similar to NPCI).
• Startup-specific incentives (e.g., tax breaks, subsidies, zero-cost incubation).
• Encouraging domestic venture capital investment through tax benefits.
• Building trust and familiarity with technology through public awareness initiatives.

The UPI model demonstrates that policy, infrastructure, and incentives can drive mass adoption of new technology. If India applies similar principles to its startup ecosystem, it could unlock world-scale success and avoid the pitfalls of past policy missteps.

Source: BS

8. Bridging the Gender Gap in Entrepreneurship and Finance

Introduction

While India has made significant progress in women’s economic participation, gender disparities in entrepreneurship, employment, and access to finance remain stark. Despite increased participation in SHGs (Self-Help Groups) and government-backed loan schemes, women entrepreneurs still face funding and credit access challenges.

Gender Disparities in Finance and Entrepreneurship

A. Startup Funding Gap

• Male entrepreneurs raised $10.8 billion for tech startups in 2004, while women-founded firms secured only $1 billion.
• India ranks 57th out of 65 countries in female entrepreneurship progress.
• Women-led enterprises account for just 13.76% of all businesses, contributing 17% to GDP (global average: 37%).

B. Employment and Workforce Participation

• Only 19.2% of Indian women participated in the workforce in 2022 (ILO data).
• In financial markets, the gender ratio is 20:1 in equity dealing rooms.
• Female Labour Force Participation Rate (LFPR) rose from 23.3% in FY18 to 37% in FY23, driven by rural employment initiatives.

Government Initiatives Supporting Women Entrepreneurs

A. Lakhpati Didi Scheme

• Ensures ₹1 lakh minimum annual income for SHG women members.
• 11.5 million women have become ‘Lakhpati Didis’ through the initiative.

B. Financial Inclusion and Credit Access

• Pradhan Mantri Jan Dhan Yojana (PMJDY): 303.7 million of 545.8 million bank accounts belong to women (as of January 2025).
• Pradhan Mantri Mudra Yojana (PMMY):
  • 68% of loans sanctioned to women entrepreneurs.
  • 77.7% of Stand Up India beneficiaries are women.
  • However, while women hold 67.92% of Mudra loan accounts, they receive only 44.46% of total credit sanctioned.

Declining Trends in Women’s Access to Credit

A. Decline in Women Borrowers under Mudra Scheme

• SFBs (Small Finance Banks): Women borrowers dropped from 1.8M (FY22) to 700K (FY24).
• Private Banks: Women borrowers declined from 4.5M (FY22) to 1.1M (FY24).

B. Fluctuating Loan Disbursements

• Public Sector Banks (PSBs): Loans to women fell by ₹4,000 crore (FY22), rose by ₹41,000 crore (FY23), then fell ₹21,000 crore (FY24).
• SFBs: Declined from ₹10,000 crore (FY22) to ₹7,000 crore (FY24).
• Microfinance Institutions (MFIs): Fluctuated from ₹2,000 crore (FY22) to ₹18,000 crore (FY23), then dropped to ₹10,000 crore (FY24).

Past Efforts and Challenges in Women-Centric Banking

• Bharatiya Mahila Bank, a dedicated women’s bank, failed due to limited outreach and operational inefficiencies.
• Women-led cooperative banks (e.g., SEWA Bank, Mann Deshi Bank) remain geographically restricted.
• Jan Dhan Plus (2019) by Bank of Baroda and Women’s World Banking (WWB) aims to improve women’s savings habits.

Bridging the Gender Gap

1. Increase Gender-Specific Financial Products
   • Expand Jan Dhan Plus across banks.
   • Introduce higher credit limits for women-led startups under government schemes.
2. Improve Credit Disbursement to Women
   • Address funding disparities in Mudra loans by revising lending policies.
   • Encourage higher investment from private VCs in women-led businesses.
3. Enhance Women’s Entrepreneurial Ecosystem
   • Set up women-focused startup incubators.
   • Strengthen mentorship networks for female entrepreneurs.
4. Scale Up Successful Models
   • Expand SHG-led entrepreneurship programs like Lakhpati Didi.
   • Improve financial literacy and digital banking access for rural women.

If India aims to achieve developed nation status by 2047, narrowing the gender gap in entrepreneurship, employment, and finance is critical. While progress is evident, sustained policy action, better access to credit, and cultural shifts are essential for women to thrive in India’s economy.

Source: BS

9. India: The Prime Target for Hacktivist Attacks in 2024

Context

India has become the top global target for hacktivist attacks, accounting for 13% of worldwide incidents in 2024, as per the High Tech Crime Trends Report – 2025 by Group-IB. It also ranks among the top three countries for data leaks, advanced persistent threats (APTs), and attacks by Initial Access Brokers (IABs).

Key Findings from the Report

A. Hacktivist Attacks

• India leads globally in hacktivist attacks (13%), followed by Israel (7%).
• In the Asia-Pacific (APAC) region, India alone accounted for 49.3% of such attacks, with Indonesia trailing at 14%.
• Education institutions suffered the most, followed by government, military, and financial sectors.
• Key reasons for the surge:
  • Regional geopolitical tensions with neighboring countries.
  • India’s diplomatic stance on Palestine and Israel.
  • Retaliatory cyberattacks from domestic and foreign hacktivist groups.
  • Increased coordination of politically motivated cyber activities.

B. Data Leaks & Cybercrime

• India ranked third globally for public data leaks, behind the US and Russia.
• 60 data breaches in India contributed to 1,107 global instances of public data exposure.
• Most commonly exploited data:
  • Email addresses
  • Phone numbers
  • Passwords
• 2024 Dark Web statistics:
  • 248.9 crore unique email addresses leaked and sold.

C. Advanced Persistent Threats (APTs)

• India leads APT attacks in APAC (10.3%), but globally, its share is only 2%.
• The US, Israel, Egypt, and GCC nations face a higher global share (3–6%).
• APTs are highly sophisticated cyberattacks, often state-sponsored, targeting governments and large enterprises.

D. Initial Access Brokers (IABs) Attacks

• India leads IAB attacks in APAC (20%), but globally, it ranks lower at 2.3%.
• The US (35.5%) dominates worldwide, followed by Brazil (6.3%) and several European nations.
• IABs gain access to corporate networks and sell this access on the Dark Web.

E. Compromised Hosts

• India ranked second globally for compromised hosts (106,312), behind Pakistan (108,674) in 2024.

The Growing Cybersecurity Threat

• Hacktivist attacks are undermining trust in India's digital infrastructure.
• A lack of robust cybersecurity measures makes key sectors (education, government, finance, military) highly vulnerable.
• The rise of politically motivated cyber warfare highlights India’s need for stronger defensive strategies.

Strengthening Cyber Defenses

1. Enhance Cybersecurity Infrastructure
   • Implement AI-driven threat detection systems.
   • Increase cyber awareness training for organizations.
2. Strengthen Policy & Regulation
   • Update cybercrime laws to address evolving threats.
   • Increase international cooperation on cyber intelligence.
3. Improve Enterprise Security Measures
   • Mandate multi-factor authentication (MFA) and stronger encryption.
   • Establish real-time threat monitoring systems.
4. Public-Private Collaboration
   • Encourage collaboration between government agencies and private firms to combat cyber threats.

India’s rising cyber vulnerabilities demand urgent action from policymakers, businesses, and cybersecurity experts. With hacktivism, data breaches, and cyber warfare increasing, strengthening national cyber resilience is critical to securing India's digital future.

Source: BS

Banking and Finance

1. Futures and Options (F&O) Trading

Context

Leading financial services firm Motilal Oswal Financial Services will bar its clients from taking intraday short-selling position on stocks that are not part of the futures and options (F&O) segment. Motilal Oswal Financial Services, with 10.3 lakh clients at the end of January, is the first large brokerage to undertake such a move at a time when the markets have been battered for five straight months.

Futures and Options (F&O) Trading

Futures and Options (F&Os) are derivatives which can be traded in financial markets for all and sundry. They are primarily used to hedge risk, speculate outcomes, and diversify portfolios.

Futures Contracts

• Definition
  • An agreement legally binding between two parties in contract to buy or sell an asset (stocks, commodities, indices, or currencies) at a predetermined price, at a specific future date.
• Obligation
  • Buyer and seller must fulfill the contract. It applies in the event where there exist movements in the market price.
• Profit & Loss
  • If the market price rises above the agreed price, the buyer profits while the seller incurs a loss.
  • The seller profits and the buyer incurs loss if the market price tumbles.
• Use Cases
  • Traders and institutions use it frequently for hedging against price fluctuations or speculating about their possible price changes in the future.

Options Contracts

• Definition
  • The contract refers to a financial contract which entitles the buyer, but does not obligate the buyer, to the right to buy (Call Option) or sell (Put Option) an asset at a predetermined price before or on expiration of the contract.
• Types of Options
  • Call Option: Grants the bearer the right to purchase the asset at a set price. Profitable when the market price is higher.
  • Put Option: Grants the bearer the right to sell the asset at a set price. Profitable when the market price is lower.
• Risk & Reward
  • Losses incurred by a buyer are maximally equal to the price of the option. However, profits can be very high when the market moves favorably.
  • The seller or writer of the option can incur losses that may be of unlimited possible amounts.
• They Use This For
  • Hedging against price risk, sources of income, as well as tactical trading methods.

Major Differences between Futures and Options

Benefits and Risks Associated with F&O Trading

• Benefits
  • Leverage increases the sensitivity ratio, allowing owners to expose larger amounts of money without raising their liability.
  • Hedged against adverse price movements.
  • Highly liquid in major financial markets.
• Risks
  • Very high volatility may lead to severe losses.
  • Understanding high market and having a strategized plan are required before making an entry.
  • Margin calls in futures trading often mean financial distress.

2. Issues for the New SEBI Chief to Address

Investor Protection as the Primary Goal

• SEBI’s Preamble outlines three objectives: market development, regulation, and investor protection. However, investor protection should take precedence.
• Small investors’ participation is crucial for market stability, and their education must be prioritized.
• Investor education has been underfunded, with only ₹2.8 crore allocated in 2023-24.
• The National Institute of Securities Markets (NISM) was originally meant to have a dedicated School for Investor Education, but its focus has shifted towards training SEBI officials and intermediaries.

Expanding Investment Advisory Services Nationwide

• India lacks a strong network of trained and ethical investment advisors, particularly in rural areas.
• The SMARTS program, aimed at training advisors, needs more momentum to replace product pushers.

Improving Quality of SEBI’s Adjudication Orders

• Adjudicating Officers (AOs) often lack judicial training, leading to weak orders that get overturned at the Securities Appellate Tribunal (SAT).
• Some officers are appointed as AOs due to underperformance elsewhere—this must change.
• SEBI should consider judicial officers on deputation for better enforcement.

Speeding Up Enforcement Actions

• Surveillance, investigation, and enforcement take years, allowing market manipulators to profit unjustly.
• SEBI must focus on speed and exemplary punishment to deter wrongdoers.

Ensuring Regulatory Stability & Market Orderliness

• Conflict of interest and asymmetry of information remain major risks in the securities market.
• Frequent amendments to Insider Trading Regulations and Related Party Transaction norms create instability. Regulatory clarity and consistency are key.

Rethinking the ‘Independent Director’ Definition

• The definition of ‘Independent Directors’ should not be frequently changed.
• Independence is a state of mind and cannot be legislated or overregulated.

The new SEBI Chief is encouraged to lead with decisiveness, balancing regulation with market growth. The letter expresses good wishes and high expectations for a productive tenure.

3. SBI Asmita Digital SME Loan & Nari Shakti Debit Card

Empowering Women in Business & Banking

• State Bank of India (SBI) has launched two women-centric financial products:
  • ‘SBI Asmita’: A collateral-free digital SME loan for women entrepreneurs.
  • ‘Nari Shakti’ Platinum Debit Card: A RuPay-powered debit card catering to women's financial needs.

SBI Asmita: Digital Loan for Women Entrepreneurs

• Objective: Provide hassle-free digital financing for women-led MSMEs.
• Key Features:
  • No collateral required.
  • Uses APIs (Application Programming Interface) to automate data verification (GSTIN, bank statements, CIC database).
  • No physical document submission.
  • Quick loan assessment & sanction based on business requirements.
• Special Add-On:
  • Top-performing women entrepreneurs under the scheme will receive entrepreneurial and management training.

‘Nari Shakti’ Platinum Debit Card

• Eco-friendly card: Made from 100% recycled plastic.
• Benefits across multiple sectors:
  • Entertainment, shopping, travel, lifestyle, insurance, etc.
  • RuPay-powered, offering exclusive discounts & privileges.

SBI’s Vision & Leadership Statements

• Challa Sreenivasulu Setty (Chairman, SBI):
  • SBI Asmita is designed for fast, easy finance for women-led MSMEs through a fully digital, self-initiated process.
  • The ‘Nari Shakti’ debit card enhances financial inclusion and caters to diverse financial needs of women.
• Vinay Tonse (MD - Retail Banking & Operations, SBI):
  • SBI Asmita is a comprehensive solution for MSMEs, covering working capital and capital investment needs via digital mode.

Additional Initiatives in Women’s Banking

• Bank of Baroda (BoB) Initiatives for Women NRIs:
  • ‘bob Global Women NRE & NRO Savings Account’:
    • Auto sweep facility for higher interest earnings.
    • Concessional home & auto loan rates, reduced processing fees.
    • 100% locker rent concession.
    • Customized debit card with free domestic & international airport lounge access.
    • Free Personal & Air Accident Insurance coverage (first among PSBs to offer NRI insurance benefits).

A Step Towards Women’s Financial Inclusion & Empowerment

• SBI’s Asmita loan & Nari Shakti debit card align with the broader goal of financial empowerment for women entrepreneurs.
• Tech-driven finance solutions will enhance access to capital & banking services for women-led MSMEs.
• Bank of Baroda’s exclusive NRI women’s banking products offer premium benefits to female customers abroad.

These initiatives strengthen financial inclusion and women’s participation in India’s banking and business ecosystem.

Source: Business Line

4. US Creates Strategic Crypto Reserve

Context

On March 2, 2025, US President Donald Trump announced the creation of a US Crypto Strategic Reserve comprising Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA). This landmark move is expected to legitimize cryptocurrencies further and potentially fuel a major bull run in the market.

Market Impact

• Trading Volume Surge: The announcement led to an inflow of nearly ₹300 billion overnight in the crypto market.
• Institutional Adoption:
  • Balaji Srihari (CoinSwitch VP) believes the move could spark a global crypto accumulation race.
  • Bitcoin and Ethereum are expected to retain dominance due to institutional backing and security.
  • The inclusion of XRP, Solana, and Cardano could boost their adoption significantly (Raj Karkara, COO, ZebPay).
• ETF Influence:
  • US Bitcoin Exchange-Traded Funds (ETFs) have driven massive institutional inflows.
  • BlackRock now recommends cryptos as part of its model portfolio.

Risks and Challenges

A. Market Volatility

• Crypto assets remain highly volatile due to their nascent market stage and sentiment-driven trading (Abhishek Kumar, SEBI-registered RIA).
• Only investors with high risk tolerance should increase exposure.